Governmental Policy to Address the Water Shortage Problem
In order to cope with water shortages, the Chinese government has explored new sources of water, increased water charges to discourage excessive consumption and decreed that provincial authorities should strengthen water management. Currently, around 90% of the 52 coastal cities in China are facing water shortage problems in one form or another.
In order to resolve these problems, the National Development and Reform Commission issued a plan for the development of the water desalination industry during the 12th five-year plan. It has targeted a water desalination capacity of 2.2 million cubic meters per day by 2015.
In response to the central government policy, provincial governments have implemented various measures to restrict water usage and increase water supply. Twenty Chinese provinces and cities, including Jiangsu, Shandong, Beijing, Chongqing, and Guangzhou, have launched water reforms including increased water charges or the implementation of a laddered water charge system. Additionally, Beijing has started making use of reclaimed water technology. The reclaimed water supply has increased from less than 3 tons per year in 2000 to 8 tons per year in 2012.
The Performance of Waste Water Treatment Companies
The value chain of China’s water sector can be divided into three stages. The first stage is the transportation of raw water from the water source to tap water plants. The second stage is tap water supply operation. Finally, the third stage is the collection and treatment of waste water. The top 20 waste water treatment companies operating in China are listed in Table II:
Table II: Top 20 wastewater treatment companies in China
|
Company Name |
Ticker code (Origin) |
Tap Water Supply (mn m3) |
Wastewater treatment per year (mn m3) |
|
Beijing Capital |
600008 CH |
5.58 |
5.91 |
|
Beijing Enterprise Water |
371 HK |
0.66 |
3.44 |
|
China Everbright International |
257 HK |
1.69 |
- |
|
China Water Affairs Group |
855 HK |
4 |
0.13 |
|
China Water Affairs Investment |
Unlisted |
2.95 |
0.24 |
|
China Water Industry Group |
1129 HK |
2.15 |
0.12 |
|
General Water China |
Unlisted |
3.79 |
1.89 |
|
Gold State Environment |
Unlisted |
0.78 |
0.62 |
|
Goldtrust Water Group |
Unlisted |
- |
1.49 |
|
Nanhai Development |
600323 CH |
1.17 |
0.46 |
|
Shenzhen Water Investment |
Unlisted |
0.87 |
0.81 |
|
Sound Group |
Unlisted |
0.63 |
2.68 |
|
Suez Environment |
SEV FP |
6.62 |
0.35 |
|
Tianjin Capital Environmental |
1065 HK |
0.26 |
3.69 |
|
Tongfang Water Affairs |
Unlisted |
- |
2.08 |
|
Veolia |
VIE FP |
10.94 |
3.45 |
|
Western Water Group |
Unlisted |
0.13 |
1.14 |
|
Wuhan Holdings Ltd |
600186 CH |
1.3 |
0.15 |
|
Zhenxing Environmental Protection |
Unlisted |
0.15 |
1.42 |
|
Zhongshan Public Utilities |
000685 CH |
2.14 |
0.5 |
Source: Nomura (2010)
The waste water treatment companies listed on the Shanghai stock market are: Beijing Capital, Zhongshan Public Utilities, Nanhai Development and Wuhan Holdings Ltd, and those listed on the Hong Kong stock market are: China Water Affairs Group, Beijing Enterprise Water, Tianjin Capital Environmental, China Water Industry Group and China Everbright International. Among these companies, Beijing Capital, Beijing Enterprise Water, and Tianjin Capital Environmental process the largest amount of waste water each year.
Table III: Total revenue of waste water treatment companies operating in China
|
Total Revenue in US$ million |
Total Revenue Growth |
|||||||
|
Company |
Base |
2009 |
2010 |
2011 |
2012 |
2010 |
2011 |
2012 |
|
Beijing Capital |
China |
423.9 |
488.1 |
568.8 |
328.5 (Q1-Q3) |
15.10% |
16.50% |
- |
|
Beijing Enterprise Water |
China |
223 |
818.3 |
342.1 |
180.6 (Q1-Q2) |
237.00% |
-58.20% |
- |
|
China Everbright International |
China |
332.6 |
496.8 |
607.4 |
178.9(Q1-Q2) |
49.40% |
22.30% |
- |
|
China Water Affairs Group |
China |
133.2 |
180.2 |
190.5 |
244.5 |
35.30% |
5.70% |
28.30% |
|
China Water Industry Group |
China |
26 |
30.8 |
36.7 |
18.6 (Q1-Q2) |
18.50% |
19.20% |
- |
|
Epure |
Singapore |
208 |
295 |
395 |
NA |
41.80% |
33.90% |
- |
|
Hyflux |
Singapore |
491.4 |
589 |
761.8 |
NA |
19.90% |
29.30% |
- |
|
Nanhai Development |
China |
74.8 |
95.7 |
120.1 |
105.5 (Q1-Q3) |
27.90% |
25.50% |
- |
|
Suez |
France |
15,923.90 |
17,960.80 |
19,204.40 |
19,556.60 |
12.80% |
6.90% |
1.80% |
|
Veolia |
France |
44,743.60 |
36,067.90 |
37,006.60 |
38,122.90 |
-19.40% |
2.60% |
3.00% |
|
Tianjin Capital Environmental |
China |
201.3 |
174.8 |
149.8 |
111.3 (Q1-Q3) |
-13.20% |
-14.30% |
- |
|
Zhongshan Public Utilities |
China |
120.1 |
137.3 |
127.8 |
28.3 (Q1) |
14.30% |
-6.90% |
- |
Source: Nomura and Censere
Table IV: Net Profit of waste water treatment companies operating in China
|
Net Profit in US$ million |
Revenue Growth |
|||||||
|
Company |
Based Country |
2009 |
2010 |
2011 |
2012 |
2010 |
2011 |
2012 |
|
Beijing Capital |
China |
48.1 |
57.1 |
63.7 |
56.8 (Q1-Q3) |
18.70% |
11.60% |
- |
|
Beijing Enterprise Water |
China |
66.5 |
144.5 |
117 |
83.3 (Q1-Q2) |
117.30% |
-19.00% |
- |
|
China Everbright International |
China |
64.1 |
94.9 |
116.6 |
48.3 (Q1-Q2) |
48.00% |
22.90% |
- |
|
China Water Affairs Group |
China |
29.5 |
57.4 |
77.3 |
68.6 |
94.60% |
34.70% |
-11.30% |
|
China Water Industry Group |
China |
-44.1 |
-19.2 |
-66.5 |
1.2 (Q1-Q2) |
56.50% |
-246.40% |
- |
|
Epure |
Singapore |
42 |
59.9 |
78.2 |
NA |
42.60% |
30.60% |
- |
|
Hyflux |
Singapore |
55.1 |
65.2 |
91.4 |
NA |
18.30% |
40.20% |
- |
|
Nanhai Development |
China |
15.8 |
17.5 |
21.9 |
20.6 (Q1-Q3) |
10.80% |
25.10% |
- |
|
Suez (France) |
France |
497.3 |
582.8 |
670.8 |
643.1 |
17.20% |
15.10% |
-4.10% |
|
Tianjin Capital Environmental |
China |
36.8 |
27.7 |
15.1 |
31.0 (Q1-Q3) |
-24.70% |
-45.50% |
- |
|
Zhongshan Public Utilities |
China |
131.3 |
107.7 |
175.7 |
12.5 (Q1) |
-18.00% |
63.10% |
- |
|
Veolia (France) |
France |
762.8 |
883.2 |
1037.3 |
686.1 |
15.40% |
17.40% |
-33.90% |
Source: Nomura and Censere