Thursday, December 20, 2012
Sound Global: recall, the co recently announced a Rmb 2,035m build-transfer (BT) project to construct a water project with 500,000 tons of daily treatment capacity in Changchun City, Jilin province. JPM has an Overweight rating with TP $0.70, notes this is Sound Global’s first significant BT project but believes EPC projects are better. Highlights concern that this BT project may put constraints on Sound Global’s cash flow as the capex will not be recovered until 2015 or later. Believes the winning of this project may be a sign that Sound Global is seeing limited flow of large projects. Believes growth of China’s wastewater treatment sector is slowing and currently prefers the solid waste treatment sector. Tips top pick in the sector is waste-to-energy play China Everbright Int’l (257 HK, Overweight).