SINGAPORE (Oct 20): Phillip Capital is maintaining its “buy” call on China Everbright Water (CEW) with a lower target price of 54 cents.
In a Friday report, analyst Chen Guangzhi says that CEW is riding on the trend of integrated industrial waste water treatment (WWT) which involves whole or parts of the water supply chain.
While this will drive out small and medium sized WWT enterprises as most fail to meet the higher capital and operational requirements, CEW will survive as it has strong funding support and integrated project managing capabilities, says Chen.
As of October, CEW has 73 projects under operation with 21 more in the pipeline. It also has a bid success rate of 60%.
In the past two years, the group has won nurmerous integrated projects worth up to RMB3 billion ($615 million) in contract value.
On Oct 11, Chen visited the group’s Wuzhong Chengnan WWT plant in Suzhou, Jiangsu.
See also: Test debug host entity
The total investment of the plant is RMB780 million, with both Phase 1 and Phase 2 of the project qualifying for the national Grade 1A wastewater discharge standard.
The plant’s system comprises three phases – wastewater treatment, sludge treatment and deodorisation – and operates 24/7 with maintenance once a year.
“In terms of water quality inspection, the officials from the municipal government will sample once in a month while those from the district government will do once in a week,” says Chen.
As at 11.21am, shares in CEW are trading at 46 cents or 15.9 times FY17 earnings with a dividend yield of 0.6%.
