Water: China's water treatment companies China Everbright Water (+3.5%) and SIIC Environment (+1.8%) are bubbling up today as investors anticipate the upcoming 13th Five-Year Plan to give a policy push for China's environment sector.
The key item to watch is government spending on the environment sector, which is expected to reach Rmb10t between 2016 and 2020, double that from the previous five-year plan and initiatives to improve water quality in the country..
This is expected to drive investments into the water sector, which makes up nearly half of the environment segment, and drive earnings visibility for industry players into 2017.
Fundamentals in the industry remains solid underpinned by robust treatment demand and supported by rising tariffs and stricter discharge rules, paving the way for specialist operators.
Below is the list of SGX-listed water plays with forward P/E valuations. HK-listed peers are trading at average 32.5x P/E.
- China Everbright Water (22.7x)
- SIIC Enviroment (22.8x)
- Citic Envirotech (27.9x)
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