Investor sentiment that ran high early this year on a China economic recovery story has cooled somewhat.

Reality is, the recovery is patchy and less strong that expected.

Still, a Chinese company listed in Singapore -- Leader Environmental Technologies -- has seen its share price surge 80+% year-to-date, ie from 5.4 cents to 9.8 cents.

It is transforming into a high-tech environmental treatment-as-a-service provider targeting massive market potential in China.


Leader E chart6.23

A significant part of that stock growth came after Leader's filing on the SGX website "Update on major business and technological developments".

In that 21 April 2023 announcementLeader said that since June 2020 till now, it has filed 37 patents, including:

• 16 invention patents and 21 utility patents.

• The 16 invention patents comprise: 6 in artificial intelligence (“AI”) technology for water management, 8 in municipal and oil sludge treatment technology, and 2 in membrane technology.


So essentially, Leader has broken new ground in its capabilities to treat wasterwater, municipal sludge and oil sludge. And it is chasing contracts.

1. Industrial wastewater

 

DR LIN YUCHENG
400 1LinYucheng
Dr Lin is executive chairman of Leader Environmental and its No.1 shareholder with a 27% stake. He was previously founder and chairman of United Envirotech, a Singapore-listed water treatment company that was ultimately acquired by CITIC for an implied valuation of S$1.9 billion.   

For 3 industrial wastewater treatment plants with a combined treatment capacity of 90,000 tons/day in Fujian and Tianjin, China, Leader's technology reduced:

• electricity consumption by approximately 10%,
• chemical consumption by approximately 40% and
• overall operating cost by approximately 10-20%.
• carbon emission by approximately 2,000 tons per thousand tons of wastewater annually.

 

2. Municipal sludge

 

NgooLinFong10.22Ngoo Lin Fong is executive director and finance director of Leader, and ex-CFO of United Envirotech.

Recently, Leader partnering with Nanyang Technological University has received a S$3.9 million grant to conduct a pilot test to demonstrate the Company’s technology for sludge treatment at a Changi wastewater treatment facility in Singapore.

 

3. Oil sludge

 

Leader believes its technology and equipment are the first in the world to treat oily drill cuttings offshore, which is superior to the current practice of transporting the cuttings back to land for onshore treatment.

"Our technology not only reduces processing cost by more than 60%, it also effectively avoids the environmental and technical risks."


Leader's capabilities are gaining recognition.

In Dec 2022, it won an operation and maintenance contract to treat up to 90,000 tons/year of sludge for the city of Suining, Sichuan Province, China.

"Management is quietly confident that with the re-opening in China, this will be the start of many more contracts to be secured by the Group in 2023," said Dr Lin Yucheng, the executive chairman in the 2022 annual report released in April 2023.

While 2022 was a loss-making year (net loss: RMB19.3 million), Leader sees 2023 to be a better one as it builds a sizeable portfolio of sludge treatment and AI water management projects.

In addition, the Group’s membrane manufacturing facility is operational and ready to take orders from customers. It is in the midst of discussing and finalizing orders with certain potential overeseas customer.

"Given the project pipelines coupled with our advanced technological capabilities, management is optimistic that 2023 will be a better year for the Group."


As at end-2022, Leader had cash balance of RMB43.3 million (S$8.1 million).

Leader received US$6.0 million in March 2023 as the first tranche of the issue of US$15 million convertible bonds.

The second tranche of US$9 million is expected by 31 July 2023 from the same investor  -- InnoVision Pomelo LP, a special purpose vehicle of Chinese private equity fund China InnoVision Capital GP Limited.

Leader's Oct 2022 Powerpoint presentation deck is here


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