China Environment Ltd (CEL) is a provider of industrial waste gas treatment solutions in China, which is likely to benefit from the Chinese government’s increased focus on cleaning up the environment in China. At the invitation of CEL, we visited their new facility in Bengbu, Anhui Province, China, which houses 12 production buildings. We also visited one of its customers – Shanghai-listed Nanjing Iron & Steel Co (NIS) – to have a look at four dust elimination machines currently deployed in one of its facilities. CEL has built up to 15 such machines for NIS since 2004; but we understand that all these machines are due for upgrades to meet the increasingly higher discharge standards over the next few years. Currently, CEL has an order book of RMB241m as of Sep 2013, up from RMB66.8m as of end-Jun, which it expects to deliver over the next few months. Coupled with some RMB80m raised via a share placement recently, CEL adds that it has sufficient working capacity to take on bigger jobs. We currently do not have a rating on the stock.
Waste gas treatment solutions provider
China Environment Ltd (CEL) is a provider of industrial waste gas treatment solutions in China. Headquartered in Longyan City, Fujian Province, CEL designs, constructs industrial waste gas treatment systems. Its key products include Electrostatic Precipitators (ESP), Electrostatic Lentoid Precipitators (ESLP), bag-houses, and hybrid dust collectors.
Visit to new facility in Bengbu
At the invitation of CEL, we visited their new facility in Bengbu, Anhui Province, China, which houses 12 production buildings. We understand that it has started to use about six of them and when the facility swings into optimal capacity, CEL can process up to 350k tonnes of steel (which management believes is equivalent to RMB2b worth of sales) from the current 80k tonnes. And with the completion of the facility, CEL will be able to use it as collateral to secure more bank borrowings (potentially looking at RMB200m) for working capital.
Pipeline of upgrading projects
We also visited one of its customers – Shanghai-listed Nanjing Iron & Steel Co (NIS) – to have a look at four dust elimination machines currently deployed in one of its facilities. CEL has built up to 15 such machines for NIS since 2004; but we understand that all these machines are due for upgrades to meet the increasingly higher discharge standards over the next few years. CEL notes that this is just from one customer and other customers will also need to upgrade their machines as most, if not all, of them will not be able to meet the higher discharge standards.
Order book now stands at RMB241m
Currently, CEL has an order book of RMB241m as of Sep 2013, up from RMB66.8m as of end-Jun, which it expects to deliver over the next few months. Coupled with some RMB80m raised via a share placement recently, CEL adds that it has sufficient working capacity to take on bigger jobs. We currently do not have a rating on the stock.
China Environment Ltd (CEL) is a provider of industrial waste gas treatment solutions in China. Headquartered in Longyan City, Fujian Province, CEL designs, constructs industrial waste gas treatment systems. Its key products include Electrostatic Precipitators (ESP), Electrostatic Lentoid Precipitators (ESLP), bag-houses, and hybrid dust collectors.
Visit to new facility in Bengbu
At the invitation of CEL, we visited their new facility in Bengbu, Anhui Province, China, which houses 12 production buildings. We understand that it has started to use about six of them and when the facility swings into optimal capacity, CEL can process up to 350k tonnes of steel (which management believes is equivalent to RMB2b worth of sales) from the current 80k tonnes. And with the completion of the facility, CEL will be able to use it as collateral to secure more bank borrowings (potentially looking at RMB200m) for working capital.
Pipeline of upgrading projects
We also visited one of its customers – Shanghai-listed Nanjing Iron & Steel Co (NIS) – to have a look at four dust elimination machines currently deployed in one of its facilities. CEL has built up to 15 such machines for NIS since 2004; but we understand that all these machines are due for upgrades to meet the increasingly higher discharge standards over the next few years. CEL notes that this is just from one customer and other customers will also need to upgrade their machines as most, if not all, of them will not be able to meet the higher discharge standards.
Order book now stands at RMB241m
Currently, CEL has an order book of RMB241m as of Sep 2013, up from RMB66.8m as of end-Jun, which it expects to deliver over the next few months. Coupled with some RMB80m raised via a share placement recently, CEL adds that it has sufficient working capacity to take on bigger jobs. We currently do not have a rating on the stock.
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