SIIC Environment

SIIC Environment: According to Maybank-KE, substantial shareholder, China Investment Corp (CIC), has cleared all its 660m shares (6.9% stake) in SIIC at $0.149 apiece through a married deal on 5 Dec. The unexpected move was done at an 8% discount to SIIC’s 4 Dec closing price, and 75% above CIC’s cost a year ago, which may have led to SIIC’s 14% slump since then. House holds on to its belief that China’s water sector is expected to be plump in FY15, where catalysts include water-tariff revisions, further policy support and industry consolidation. Operationally, SIIC continues to make progress after acquiring 1.1m tonnes of water-treatment capacity this year, slightly above the estimated 1m-tonne/year. In addition, there could be more acquisitions early next year, while some plants are also ready for expansion and upgrading. Maybank-KE thinks the current price offers good entry, maintains its BUY rating and TP of $0.20, pegged to 30x FY15E earnings.