550sinopec_demoUnited Envirotech announced on 9 October a framework agreement for a JV with a leading PRC water treatment player, Chengdu Xingrong Investment, to provide EPC services using Memstar membrane technology and products. Company photo

Excerpt from analyst's report

Maybank Kim Eng analyst: Wei Bin

United Envirotech has signed a framework agreement with Chengdu Xingrong to set up a 49:51 JV. Xingrong is a water SOE listed in China’s A-share market. It has a market cap of SGD3.5 billion and owns about 5 million tonnes/day of water-treatment capacity.

570_LinYuCheng_GeHailin“The growing market share of membrane technology for upgrading, expansion and recycling is great news for our Memstar membrane products. Some S$60 million worth of Memstar membrane products will be used for our first block of projects with Chengdu Xingrong.” - United Envirotech executive chairman, Dr Lin Yu Cheng (left).

To his left is Memstar founder and executive chairman, Dr Ge Hailin. NextInsight file photo
The JV will provide EPC services using UENV’s membrane technology and products. It will also invest in water-treatment projects in Western China.

Its first block of projects will involve the expansion and upgrading of wastewater treatment plants and recycling of treated wastewater with a combined capacity of 1m tonnes/day.

Valued at more than CNY1.5 billion (SGD 300 million), the jobs will commence immediately and are expected to be completed by end-2015.

Right way to expand, in our view: We believe strategic partnerships with local players are the right way to expand for UENV. Xingrong is one of the largest water companies with a stronghold in Western China. UENV can leverage its local presence to penetrate new markets.

Still, in view of a lack of immediate catalysts, maintain HOLD and SGD1.44 TP, at 27x FY3/15E P/E, 10% discount to peers due to its smaller recurring income base. Valuations are rich at 30.3x FY3/15E P/E. We still prefer HanKore and SIIC in the sector.

UEL_stkpx_10.14At $1.32, United Envirotech's stock price is up by more than 60% year-to-date.
Bloomberg data

Related story: MEMSTAR PTE LTD: What's next post UEL merger?

You may also be interested in:

You have no rights to post comments

Counter NameLastChange
AEM Holdings3.3600.030
Avi-Tech Electronics0.255-
Best World1.640-
Broadway Ind0.076-0.002
China Sunsine0.400-0.010
Delfi Limited1.260-
Food Empire1.1200.030
Fortress Minerals0.325-0.010
Geo Energy Res0.250-0.005
GSS Energy0.033-0.001
Hong Leong Finance2.460-0.030
Hongkong Land (USD)3.4600.040
ISDN Holdings0.375-
IX Biopharma0.045-
Jiutian Chemical0.032-
KSH Holdings0.320-
Leader Env0.072-0.001
Medtecs Intl0.139-0.005
Nordic Group0.415-
Oxley Holdings0.106-0.001
REX International0.183-0.007
Sinostar PEC0.140-
Southern Alliance Mining0.690-
Straco Corp.0.4550.010
Sunpower Group0.295-
The Trendlines0.095-
Totm Technologies0.048-0.001
Uni-Asia Group0.950-
Wilmar Intl3.7400.040
Yangzijiang Shipbldg1.660-0.050

We have 460 guests and no members online

rss_2 NextInsight - Latest News