24 October 2016
The proposed higher emission standards for sewage treatment plants will benefit membrane technology companies. Photo: CNSA
The proposed higher emission standards for sewage treatment plants will benefit membrane technology companies. Photo: CNSA

TCEP to gain from govt focus on environmental protection

Nearly 1,500 stocks in the A-share market fell by the 10 percent daily limit last Thursday. 

Only 35 shares rose, one of which was Tianjin Capital Environmental Protection Group Co. Ltd. (TCEP, 001065.HK, 600874.CN).

It closed at 10.55 yuan (US$1.60) per share, recouping its losses since the beginning of the year. The transaction volume also sharply rose.

TCEP’s main businesses include sewage and water treatment facilities, public infrastructure investment, construction, services, and environmental protection.

It operates in Tianjin, Hangzhou, Qujing, Xi’an and Fuyang. About 63 percent of revenue in the first half of last year came from Tianjin.

The Tianjin government owns 50.14 percent of TCEP through an investment unit.

In the first three quarters last year, the company recorded a revenue of 1.46 billion yuan, up 12.01 percent from a year earlier.

Net profit surged 28.45 percent to was 327 million yuan, while basic earnings per share rose 27.78 percent to 23 fen.

In the third quarter alone, revenue was up 13.58 percent at 532 million yuan, while net profit jumped 31.6 percent to 145 million yuan.

Its gross profit margin for the first three quarters was 46.23 percent, up 0.97 percentage point from a year ago.

Management costs in the third quarter rose 2.5 percent, much lower than the revenue growth rate. Financial expenses were down 28.8 percent at 36.92 million yuan.

The company’s efforts at cost reduction have been very effective, indeed.

But it is its ability to transform research results into products that constitutes its core competitiveness.

Last September, TCEP signed a cooperation agreement with Tianjin Motimo Membrane Technology (TMMT) to explore the sewage treatment market. TMMT is a leader in the field.

Earlier, environmental protection authorities launched a public consultation on emission standards for urban sewage treatment plants. The proposed standards will require sewage treatment plants to upgrade their facilities and therefore benefit membrane technology companies.

TCEP is a leading water treatment company in the mainland with comprehensive competitive advantages on research and development, operation, distribution network and brand value.

It is expected to introduce strategic or financial investors into the company and, taking advantage of the reform policies for state-owned enterprises, continue to improve its core competitiveness.

With higher emission standards and the government’s promotion of private-public partnership model, more opportunities are expected to open up for the company.

This article appeared in the Hong Kong Economic Journal on Jan. 12.

Translation by Myssie You

[Chinese version 中文版]

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Department of Investment Analysis at HKEJ

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