China Everbright (Hankore)

China Everbright: Management expects the capital-intensive environmental industry to undergo consolidation, with smaller players withdrawing as competition intensifies, while state-owned enterprises benefit. The wastewater treatment industry is highly fragmented. Everbright Water has a market share by treatment capacity of about 2%. This puts it in an estimated #5 spot. In the municipal wastewater treatment segment, international players that have entered the market might be forced to retreat in the coming years, due to difficulties in raising capital, and weaker pricing power in China. Maybank-KE believes China Everbright will start acquiring aggressively given sufficient targets in its pipeline and its much stronger financials after the RTO deal. In addition, the company stands to benefit from the rising water tariffs, strong government policy support and industry consolidation, which makes bigger SOEs attractive investment opportunities. House has a BUY rating with TP of $1.26.