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The state-owned assets have entered the environmental protection industry intensively.

  • Categories:INDUSTRY NEWS
  • Author:Lu Jiangtao
  • Origin:"China Economic Weekly" reporter Li Huimin | Beijing report
  • Time of issue:2020-04-28 10:23
  • Views:

(Summary description)Recently, many listed companies in the environmental protection industry, such as Tiehan Ecology, Guozhen Environmental Protection, Bishuiyuan, announced that they have reached cooperation with relevant state-owned enterprises and state-owned enterprises and will soon become state-owned holding companies.

The state-owned assets have entered the environmental protection industry intensively.

(Summary description)Recently, many listed companies in the environmental protection industry, such as Tiehan Ecology, Guozhen Environmental Protection, Bishuiyuan, announced that they have reached cooperation with relevant state-owned enterprises and state-owned enterprises and will soon become state-owned holding companies.

  • Categories:INDUSTRY NEWS
  • Author:Lu Jiangtao
  • Origin:"China Economic Weekly" reporter Li Huimin | Beijing report
  • Time of issue:2020-04-28 10:23
  • Views:
Information

Recently, many listed companies in the environmental protection industry, such as Tiehan Ecology, Guozhen Environmental Protection, Bishuiyuan, announced that they have reached cooperation with relevant state-owned enterprises and state-owned enterprises and will soon become state-owned holding companies.

Since the beginning of this year, the pace of the “national team” entering the environmental industry enterprises has accelerated. Experts said that a major reshuffle of the environmental industry has begun. In the future, central enterprises and state-owned enterprises will lead investment, allocate resources, and private environmental protection enterprises will turn to market segments. Or participate in the pattern of industrial division of labor with core technology, products and service capabilities.

State-owned assets intensively dominated the listed companies in the environmental protection industry

Tiehan Ecology (300197.SZ) recently announced that in order to further optimize the company's shareholder structure, comprehensively enhance the company's competitiveness, and promote the realization of the strategic goals of listed companies, the company's controlling shareholder, actual controller Liu Shui and its concerted parties plan to transfer by agreement A total of approximately 10.11% of the company's shares were transferred to China Energy Conservation and Environmental Protection Group Co., Ltd. (hereinafter referred to as "China Energy Conservation"). At the same time, the company is planning a non-public offering of shares. China Energy Conservation intends to subscribe for the company's non-public offering of new shares in cash. After the completion of a series of transactions, China Energy Conservation may hold more than 20% of Tiehan Ecology and will become the controlling shareholder of the listed company. Tiehan Ecological Stock was suspended from the market opening on April 13.

In the past few days, state-owned assets have intensively entered the environmental protection and ecological enterprises, causing market attention. Just in the middle of March, China Energy Conservation just completed the "marriage" with Guozhen Environmental Protection (300388.SZ).

On March 13, Guozhen Group announced the termination of the equity transfer with Changjiang Environmental Protection and Three Gorges Capital, and instead signed an equity transfer and voting rights entrustment agreement with China Energy Conservation, intending to transfer 15% of the shares to China Energy Conservation, and about 6.26 % Voting power is entrusted to China Energy Conservation. After the transaction is completed, China Energy Conservation will have 29.95% of the voting rights of Guozhen Environmental Protection, and China Energy Conservation will become the controlling shareholder of Guozhen Environmental Protection.

On March 11, Bishuiyuan (300070.SZ) also issued an announcement that CCCC plans to increase its shareholding to become the company's largest shareholder, and plans to subscribe for 480 million shares, accounting for 15.2% of the company's total share capital before the non-public offering. The price is 7.72 yuan/share.

Public information shows that China Energy Conservation is a state-owned enterprise specializing in environmental protection water affairs, with more than 500 subordinate companies, including 26 secondary companies, and 5 listed company platforms under its banner: solar energy, energy-saving wind power, Wanrun shares, Zhonghuan equipment, China Earth Energy.

The "Three Gorges System" has also begun to "sweep goods" in the A-share market this year. Although it has not reached an equity cooperation with Guozhen Environmental Protection, it has successively invested in Xiong'anpu Huashui and Xingrong Environment (000598. SZ), Nachuan (300198.SZ) and Shanghai Environment (601200.SH). At the same time, it has further increased its holdings in the Hong Kong-listed company Beikong Water (00371.HK), which is not a small move.

In fact, in the past two years, there have been many joint ventures and cooperation between state-owned enterprises and private enterprises in the environmental protection industry, covering almost all environmental protection industry fields, including many private environmental protection leading enterprises.

Table: Summary of cooperation between state-owned enterprises and listed environmental companies in 2018 and 2019 Source: Everbright Securities Research Report

In addition to investing in environmental protection companies, state-owned assets also enter the field of environmental industry in many other forms.

For example, China Railway Corporation, a state-owned infrastructure company, directly enters the field of environmental industry through the project project. On April 8, China Railway Water with a registered capital of 1 billion yuan was officially established, becoming China Railway's ninth largest business segment.

In an interview with a reporter from China Economic Weekly, Ma Hui, secretary general of the Environmental Chamber of Commerce of the All-China Federation of Industry and Commerce, said that the entry of state-owned enterprises has reached a climax around 2015, and has slowed down in 2017. Since 2019, many private enterprises need to relieve Due to difficulties and other reasons, the entry of state-owned enterprises began to accelerate again. Ma Hui mentioned that there are four ways for state-owned enterprises to enter the market. The first is to rescue private enterprises and accelerate the reverse mixed reform of the industry. It mainly focuses on local state-owned assets such as Sichuan and Zhejiang and large central enterprises. This behavior is a policy. The result of the superposition of sex and market driving; the second is that it came for the environmental protection market around 2015, mainly in large central enterprises such as Gezhouba, China Communications Construction, China Power Construction, China CRRC, CITIC, etc. This is a partial market behavior; third is The policy-oriented behavior comes from the national strategy, mainly represented by the Three Gorges Group; fourth, a group of local environmental protection groups that have risen in the past two years, mainly based on local state-owned capital platforms such as Jiangsu, Henan, and Shaanxi.

The new era of the environmental protection industry needs "national progress"

Due to the intensive entry of state-owned assets, the voice of "national advancement and national retreat" in the environmental protection industry continues.

"The current trend in the field of environmental protection should be said to be'community of the people'," Li Jin, chief researcher of the Central Enterprise Research Institute and vice chairman of the China Enterprise Reform and Development Research Association, said in an interview with a reporter from China Economic Weekly that the overall environmental protection industry Private enterprises come in early and state-owned enterprises come in late, but the basic investment in the environmental protection industry is large and cannot be supported by private enterprises alone. Both must play a role. At present, some private environmental protection enterprises, including some listed companies, are facing the risk of breaking the capital chain and have the need to actively seek the entry of state-owned capital.

In fact, after decades of development, while the environmental protection industry has grown bigger, it has also faced the problems of extensive industry growth and over-reliance on investment drivers.

The "Review and Policy Recommendations on the Status of Investment and Financing of China's Environmental Protection Industry" issued by the Green Finance International Research Institute of the Central University of Finance and Economics pointed out that from the end of 2017, my country's financial "de-leveraging" efforts have continued to increase. With the implementation of the "New Asset Management Regulations" and PPP clearance, etc., the pressure on funds in the environmental protection industry due to the early substantial expansion has further increased. At the same time, with the increasing uncertainty in the development of the overall domestic and international economic situation in 2018, the overall risk appetite of the capital market has decreased, and financing for environmental protection companies has been tightened.

Li Jin pointed out that in recent years, some private environmental protection enterprises have developed more aggressively, with generally high debt ratios, long-term investment in short-term debt and mismatched funds, and pressure from deleveraging and financial supervision and correction, and operating difficulties. For example, Oriental Garden, Enlighten Sand, Fresh Environment, Bishuiyuan, etc., all have cash flow crisis, so they actively invite central enterprises to enter.

The main business of Tiehan Eco is contracted construction of eco-environmental protection and municipal garden projects. It was listed on the Shenzhen Stock Exchange in 2011. The revenue of Tiehan Eco's IPO in the previous year was only 416 million yuan, but by 2017, its revenue reached 8.188 billion yuan, creating a high-growth myth. But since 2018, the company's performance has plunged, and the debt ratio has been high.

The performance forecast shows that in the first quarter of this year, Tiehan Ecological suffered a loss of 195 million to 200 million yuan, compared with a loss of 93.42 million yuan in the same period last year. According to the 2019 performance report, Tiehan Eco achieved operating income of 5.131 billion yuan last year, a year-on-year decrease of 33.78%; the net profit attributable to shareholders of listed companies was a loss of 888 million yuan, and a profit of 304 million yuan in the same period last year. According to the 2019 Interim Report, as of the end of the first half of 2019, Tiehan Ecological's asset-liability ratio was 74.7%.

At the same time, the pledge level of the shares held by Liu Shui is also high. The announcement shows that as of January 6 this year, the cumulative pledged number of Tiehan Ecological stocks held by Liu Shui and its concerted parties was 736 million shares, accounting for 92.5% of the total shares held by the company and 31.38 of Tiehan Ecological's total share capital. %. Among them, Liu Shui's cumulative pledged shares amounted to 679 million shares, accounting for 94.26% of the total shares held by the company and 28.95% of Tiehan Ecological's total share capital.

On the one hand, for the relief of private enterprises, as well as greater support for local construction, etc., more is the "centralized enterprises to undertake" mission.

According to incomplete statistics from the Environmental Chamber of Commerce of the All-China Federation of Industry and Commerce, from 2018 to the end of 2019, private enterprises with head-trapped large-scale private equity rescues. There are 16 environmental protection private enterprises in the industry that have undergone substantial equity transfers, of which 15 transferees are State-owned assets, 10 actual controllers changed, involving about 18 billion transactions.

Everbright Securities Research pointed out that in the long run, the introduction of state-owned capital by private environmental protection companies will help solve the short-term debt and pledge problems, and will help solve the problems of credit enhancement, guarantees and risk sharing when using financing tools. In addition, the entry of state-owned capital helps to connect with more abundant local government resources. With the help of state-owned capital, the “relief” of environmental protection industry investment and financing has been solved to a certain extent.

Bishuiyuan's 2019 third quarter report showed that its performance growth rate changed from falling to rising. In the third quarter, it achieved a net profit of 340 million yuan, an increase of 61.7% year-on-year. Cash flow improved better than expected. The net operating cash flow in the first three quarters was 1.24 billion. Yuan, which is equivalent to the 1.13 billion yuan level in 2018. Guosheng Securities said that the improvement of the indicators of Bishuiyuan shows that the China Communications Group has cooperated well with it after its shareholding, which has helped the company return to a high growth track.

On the other hand, central enterprises and state-owned enterprises enter the environmental protection industry through cooperation with private enterprises, which is also good for their own business development.

In the view of Yan Rong, chief analyst of the environmental protection and public utilities industry in West China Securities, from the launch of the environmental protection infrastructure in 2009 to the present, it is mainly based on the participation of private enterprises. "At the beginning, the market may be relatively small, and it is not suitable for large-scale enterprises to come in. However, after years of development, the environmental protection market space continues to grow. Now some central enterprises are also facing the problem of finding new development areas, both public welfare and economy. The profitable environmental protection industry meets the needs of some central enterprises and state-owned enterprises. After the market adjustment in the environmental field from 2018 to 2019, the state-owned assets will make corresponding acquisitions and the prices will be more appropriate." Yan Rong was interviewed by the reporter of China Economic Weekly Said.

Ma Hui told the reporter of China Economic Weekly that private enterprises and state-owned enterprises are very important and indispensable in the field of environmental industry. "Now that pollution prevention and control are entering the deep water zone, the task is very arduous. Several large platforms have been established at the national level, such as The Three Gorges Group and the Yangtze River Environmental Protection Group, etc., have led them to do some large regional centralized environmental governance. Only central enterprises and state-owned enterprises have such a large capital allocation capacity and resource allocation capacity."

"In addition, some state-owned enterprises and state-owned enterprises have entered a bottleneck period in their industries, and they also need to make some transformations, including horizontally cross-regional layout. As a state-supported emerging industry, there is also great market demand and environment The industry is naturally brought into view by these central and state-owned enterprises," Ma Hui said.

And through cooperation with private environmental protection enterprises, state-owned enterprises can also fill their own gaps in the corresponding fields or strengthen their own advantages.

Yan Rong introduced that taking China Energy Conservation as an example, the recent holding of Tiehan Ecology and Guozhen Environmental Protection was due to the fact that China Energy Conservation had previously been the target of five listed companies, and none of them was fully involved in the field of environmental protection in the field of water and solid waste. However, the largest assets in China's energy-saving body are water treatment assets such as sewage treatment and water supply, as well as solid waste assets and waste incineration assets. In addition, China Energy Conservation is also involved in the "Yangtze River Protection" project. Therefore, it has the need to acquire corresponding targets in the capital market. In this way, in the future it will be able to better fulfill national tasks such as the "Yangtze River Great Protection".

trillion-level industry reshuffle channel opened

"The accelerated entry of state-owned enterprises has had a profound impact on the environmental protection industry, and the industrial pattern has changed a lot." Ma Hui said that comparing the 2018 and 2019 top 50 Chinese environmental protection companies, the number of state-owned enterprises and private enterprises has basically remained unchanged from 2018. It is close to 2:1 in 2019. In addition, among the top 10 enterprises, enterprises with mixed ownership account for half, including Beijing Water, Oriental Garden, Bishuiyuan, and Enlightenment. Compared with 10 years ago, even 5 years ago, the environmental protection industry can be said to have a qualitative leap.

"Environmental protection industry is a policy-driven and market-driven industry, and it is at the stage of transition from policy-driven to market-driven," Li Jin said that within the next five years, the environmental protection industry will enter a major reshuffle Restructuring phase.

"The investment period of the green environmental protection industry is relatively long, and the general private enterprises cannot bear it. Central enterprises and state-owned enterprises enter into large-scale and become the main body of investment, and private enterprises focus on the one-way business field and technology field, or future trends." Li Jin said.

The report of the 19th National Congress of the Communist Party of China stated that building an ecological civilization is a millennium plan for the sustainable development of the Chinese nation. To develop green finance, strengthen the energy conservation and environmental protection industry, clean production industry, and clean energy industry.

"The policy is driven at the national level, and the attitude is very obvious." Li Jin said that pollution prevention is one of the three major battles for building a well-off society in an all-round way. The construction of a green ecological environment in the new era ranks extremely important, building a green, low-carbon, and environmentally friendly green economy. The system is a starting point for achieving high-quality development. At present, the conversion of old and new kinetic energy, the environmental protection industry is rising rapidly, and the industry will have a greater investment trend in the "14th Five-Year Plan". National policies will also give full support, and the green environmental protection industry will become a sunrise industry.

In addition, the "China Environmental Protection Industry Analysis Report (2019)" issued by the China Environmental Protection Industry Association and the Environmental Planning Institute of the Ministry of Ecology and Environment shows that the national environmental protection industry's operating income in 2018 was about 1.60 billion yuan, an increase of about 18.2% over 2017. Among them, the environment The service business income was about 909 billion yuan, a year-on-year increase of about 20.4%.

The environmental protection industry has already become a trillion-level industry. However, the "Report" also shows that while the scale of the environmental protection industry continues to maintain rapid growth, it also faces the problem of declining profits and increasing downward pressure.

In addition, the low concentration of environmental industries, insufficient business model innovation, shortage of funds, and weak scientific and technological innovation motivation, some enterprises have insufficient independent innovation capabilities, weak competitiveness, and difficulty in forming economies of scale are also indisputable facts.

Against this background, the environmental protection industry urgently needs further transformation and upgrading to a more standardized development path.

"To this day, almost all sewage treatment plants, garbage treatment facilities, and coal-fired power plant desulfurization and desulfurization facilities nationwide are at a high level. At this time, it is time to return to the essence of environmental governance. Environmental governance is definitely not an investment industry, nor is it an infrastructure project. Industry, it is a technology service industry," Ma Hui said.

Ma Hui believes that the current industrial structure is already very clear. Central enterprises and state-owned enterprises are holding the banner of investment, carrying out resource integration, and doing some centralized environmental remediation, including national-level and regional large-scale projects. Private enterprises should pay attention to subdivided fields and technological innovation, so as to achieve complementary advantages.

"Compared with international environmental protection giants, there is still much room for the current environmental protection enterprises to seek development in services. During the process of large integration and reshuffle, the environmental protection industry is moving towards a period of deep technical cultivation and will return to the essence of the service industry," Ma Hui emphasized that environmental pollution control is ultimately a technical activity and a technology industry. Investment alone cannot ensure the achievement of environmental pollution control goals. It also requires environmental technology, environmental equipment, and environmental professional service capabilities. In the future, private environmental protection companies will mainly participate in environmental pollution control through core technologies, products and service capabilities.

Looking forward to the future, Li Jin said, "In the next few years, there will be green ecological industrial clusters led by central enterprises and state-owned enterprises, and large green ecological industrial group groups.

As a center, it drives the development of green ecological industries throughout the country, which has become a major trend in China's economic development. "

After the admission of state-owned assets: integration should not be a problem

"For some private environmental protection companies in trouble, find a better central enterprise that can cooperate with their own business. The original actual controller can become the second largest shareholder of the integrated company, and the company can also Keep the original management basically unchanged. This is actually the best ending." Yan Rong said.

It is understood that some private environmental protection enterprises have seen positive growth in economic benefits after the state-owned assets became shares. Yan Rong told the reporter of China Economic Weekly, "There are generally two reasons for this effect. One is the order acquisition and other business aspects. If the synergy with the major shareholders is good, the order acquisition will definitely be better than before, so that you can take The second is the increase in operating income. Second, financial expenses and other aspects. After the state-owned enterprises invested, private enterprises became enterprises controlled by the state-owned enterprises. The company can make replacements for long-term loans and short-term loans, especially short-term loans. After the replacement, the finance can be reduced. Expenses, which leads to an increase in net profit."

"Especially for some private environmental protection enterprises with large capital problems, when the central enterprises enter, they can first provide them with a certain amount of capital to solve the short-term loan and interest repayment pressure of these private enterprises. Secondly, with the help of the central enterprise platform, these Enterprises can obtain low-cost financing. Coupled with the obvious improvement in orders and business, for companies with poor fundamentals, the performance reversal will be more obvious." Yan Rong emphasized.

Regarding the integration of state-owned assets after entering, Yan Rong said, "According to the current situation, central enterprises may have some commitments when negotiating with private enterprises. For example, the management will not make major changes in the next three years, and the future Three years of performance on gambling, etc. Generally, during these three years, the central enterprises have relatively little control over the actual operational level of private enterprises, and will basically retain the original management style, so after the merger is completed, especially in the head In three years, integration should be relatively harmonious."

"After three years of unraveling, the management of the original private enterprise would like to further transfer its equity and make further withdrawals, or continue to maintain the current status, there should be no great difficulty." Yan Rong continued.

In the eyes of industry insiders, the prospects for cooperation between private environmental protection enterprises and central and state-owned enterprises are relatively optimistic.

However, it is worth noting that the environmental protection enterprises that are regarded by state-owned assets are generally leading enterprises with certain industry status or advantages. In the environmental protection industry, small and medium-sized private enterprises account for a large proportion, and the future development of these enterprises cannot be ignored.

"China Environmental Protection Industry Analysis Report (2019)" shows that from the perspective of enterprise size, China's environmental protection enterprises are still mainly small and micro enterprises. The environmental protection enterprises included in the annual statistical analysis account for 3.6% of large and medium-sized enterprises. 24.8%, small and micro enterprises accounted for 71.5%.

Ma Hui said that in recent years, many support policies for small, medium and micro enterprises have been issued. In the future, small and medium-sized micro-environmental companies or private environmental protection companies must have their own hard-core strengths, including core technology and core business. Ability etc. Only after having its own hard core can it gain a foothold in the market space under such a macro background. For small and medium-sized micro-environmental companies, continuous innovation in technology, product and service capabilities is the key.

Editor in charge: Lv Jiangtao

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