SIIC Environment

SIIC Environment: Mgt held an analyst briefing session yesterday. Plans to use $260.2m in net proceeds from a proposed share placement (3.1b new shares @ 8.5¢ each) to help fund expansion of wastewater treatment plants and completion of two M&A deals in Shanghai over the next six months. These include: - a 70% interest in Shanghai Qingpu Second Waste Water Treatment Plant Co for Rmb126m, which aims to have a treatment capacity of 120,000 tpd, - a 50% stake in Shanghai Pucheng Thermal Power Energy for Rmb530m, which generates 17 MW of electricity a year and has waste processing capacity of more than 900 tpd. SIIC will be the largest water treatment and mgt co, based on mkt cap, among the Chinese water players listed in Spore once the share placement is completed. SIIC’s mkt cap stands at ~US$500m now. The group also intends to pursue a dual listing on the HKEx by next year. Formerly known as Asia Water Technology, the company faced debt problems in 2009, and was acquired by Hong Kong-listed and China state-owned conglomerate Shanghai Industrial Holdings Limited (SIHL) in 2010. It was renamed SIIC Environment when it transferred from the Catalist to the mainboard last November, and its shares have rallied since. Looking ahead, SIIC intends to complete one to two M&A projects each year and is targeting future projects in waste incineration and thermal power generation, as well as air purification and soil treatment. It also plans to increase its daily treatment capacity by more than 1m tonnes each year. Already, its daily treatment capacity has almost quadrupled to 3.91m tonnes in 2013 from 1m tonnes in 2010.