Green shares bucking HK stock market downtrend
Updated: 2014-09-20 06:44
By Celia Chen in Hong Kong(HK Edition)
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Major green stocks related to mainland's air & water pollution governance, solid waste disposal and garbage-to-energy project, are all bullish
Mainland green industries' shares are edging up, bucking the Hong Kong stock market downward trend as some energy stocks resisted the pullback with their outstanding interim results as well as the industry's positive response to the mainland's increased investment in cleaning up the nation's filthy environment.
Major green stocks including, Beijing Enterprises Water Group Ltd, CT Environmental Group Ltd, Everbright International and Sound Global Ltd, which are related to the mainland's air & water pollution governance, solid waste disposal and garbage-to-energy project, are all bullish, and their H-shares generally hit record monthly highs. This is in contrast with the Hong Kong main index which fell to an eight-week low after eight straight losses recently.
The gross profit of CT Environmental Group , a provider of one-stop centralized and customized wastewater treatment and industrial water supply services, increased by 71.1 percent to HK$234.5 million for the six months ended June 30, 2014 from HK$137.1 million for the first half year of 2013.
Tsui Cham-to, the chairman of CT Environmental Group, said, "Looking forward, we expect the wastewater treatment capacity to be further increased as we have secured the right of construction and development of additional wastewater treatment facilities, including an industrial wastewater treatment facility as well as an industrial water supply facility both with a daily capacity of 50,000 square meters."
The revenue of Sound Global Ltd, a one-stop integrated water and wastewater treatment solutions provider on the mainland, increased by approximately 160.1 million yuan ($ 21.6 million) or 10.9 percent from approximately 1.5 billion yuan for the six months ended June 30, 2013, reached an approximately 1.6 billion yuan for the same period in 2014. "Sound Global is expected to complete water asset acquisition from Sound Environment with 1.2 billion yuan," an insider said.
CT Environmental Group's stocks registered a huge increase of 68.78 percent, closing at a half-year high of HK$6.92 on Sept 18. Beijing Enterprises Water Group and Sound Global both saw their share prices surging about 11 percent from July.
Wu stressed that, "Shortage of water resources in China is severe and I believe water protection will gain greater national attention."
Not only is the performance of the environment protection industries outstanding, but the strong national policy support is also a major drive contributing to their shares' uptrend.
"China's environmental stocks will meet exciting prospects and (the) bull market thanks to the country's policy support and its big achievement in the industry," market participants commented. They generally expected that the investment to the mainland's environment-related business reaching 3,400 billion yuan by the end of the nation's twelfth five-year plan, increased more than 50 percent compared with the eleventh one. Mainland's twelfth five-year plan is a series of blueprints which outline key economic and development targets for the country covering the 2010 to 2015 period.
"But the actual investment will be about 5,000 billion, almost 1.4 times of the planned investment," Xu Lin, the director of development planning department under National Development and Reform Commission, said in early 2014. "And the environmental investment will increase year by year," information from the Chinese mainland's Ministry of Environmental Protection suggested.
Similarly, the solid waste disposal industry will grow because the proportion of its investment is expected to surge to 23.5 percent by end of 2015 from 9.7 percent in 2010, reaching 800 billion yuan.
Sun Shengquan, an analyst from BOCOM International Holdings Company Ltd, the international investment banking and securities business flagship of the Bank of Communications Co Ltd said,"The industry of solid waste disposal is very promising because it is closely related to air & water pollution governance."
The shares of mainland's leading companies in solid waste disposal industry including Anhui Shengyun Machinery Co Ltd, Jiangsu Welle Environmental Co Ltd and Grand Blue, posted increases of about 14.9 percent, 11.9 percent and 8.09 percent, respectively in a month.
"Environment protection involves numerous industries. I believe solid pollution governance and wind power are also promising," Wu added, "but shortage of facilities and equipment is a big constraint."
celia@chinadailyhk.com
(HK Edition 09/20/2014 page6)