China Everbright Water - DBS Research 2016-06-10: PPP project in Jiangsu

China Everbright Water - DBS Research 2016-06-10: PPP project in Jiangsu CHINA EVERBRIGHT WATER LIMITED U9E.SI 

China Everbright Water (CEWL SP) - PPP project in Jiangsu

  • Secured PPP project with treatment capacity of 90k m3.
  • On track to reach the target of adding 1-2m tons of capacity in 2016.
  • Maintain BUY with TP S$0.69.

(PPP: Public Private Partnership)

What’s new:

  • The Xinyi PPP Waste Water Treatment project was acquired by CEW
  • CEW and Jiangsu Xinyi municipal government will establish a PPP project company with equity stake of 51% and 49% respectively. The total investment is approximately Rmb300m with designed waste water treatment capacity of 90,000 m3. 
  • The project company will be responsible for the operation for Xinyi Waste Water Treatment PPP Project, which includes 
    1. the existing Xinyi City Waste Water Treatment Project and its upgrading project and 
    2. the existing Xinyi Economic Development Zone Waste Water Project Phase 1 and Phase 2 expansion project

Our view:

  • The projects were originally operated by the Xinyi municipal government. In addition, the Xinyi Economic Waste Water Treatment project was built by CEW and transferred to the local government in 2010. 
  • Winning the PPP project demonstrated government’s trust in CEW, which is built on its strong execution ability and solid track record. CEW’s total project wins YTD amounted to Rmb2.05bn. 
  • CEW acquired more than 455k tons of WWT projects, on track to reach its target of adding 1-2m tons of new capacity in 2016. 
  • We are seeing an accelerated number of PPP projects this year as 3 out of 4 projects acquired by CEW are PPP projects. We believe the project flow will accelerate in 2H2016 as we enter the traditional peak season.
  • We have a BUY rating on the counter with TP S$0.69.

Patricia YEUNG DBS Vickers | Tony WU CFA DBS Vickers | http://www.dbsvickers.com/ 2016-06-10
DBS Vickers SGX Stock Analyst Report BUY Maintain BUY 0.69 Same 0.69