China Water Affairs Group Limited — Update 13 December 2016

China Water Affairs Group (HK: 855)

Last close As at 21/11/2024

6.11

0.00 (0.00%)

Market capitalisation

9,684m

More on this equity

Research: Industrials

China Water Affairs Group Limited — Update 13 December 2016

China Water Affairs Group Limited

Analyst avatar placeholder

Written by

Industrials

China Water Affairs Group

Continuing growth

H117 results

Utilities

13 December 2016

Price

HK$4.72

Market cap

HK$7,087m

HK$7.76/US$

Net debt (HK$) at 30 September 2016

6,016

Shares in issue

1,501.4m

Free float

46.8%

Code

855

Primary exchange

HK

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(13.7)

(0.4)

24.9

Rel (local)

(13.3)

3.4

19.5

52-week high/low

HK$5.98

HK$3.19

Business description

China Water Affairs Group owns and operates regulated water supply assets across 40 cities in mainland China, serving eight million customers in the residential, commercial and industrial sectors.

Next events

FY17 results

June 2017

Analysts

Jamie Aitkenhead

+44 (0)20 3077 5700

Roger Johnston

+44 (0)20 3077 5722

China Water Affairs Group is a research client of Edison Investment Research Limited

China Water Affairs Group’s (CWA’s) reported 59% half-on-half (h-o-h) increase in revenue and 62% operating profit improvement were flattered by HK$1,336m non-cash revenues and a HK$248m non-cash operating profit contribution from a property revaluation. Excluding non-cash effects, h-o-h operating profit increased by 30%. City Water Supply (CWS), CWA’s most significant business unit, grew revenue at an underlying rate of 25% h-o-h (70% reported; see Exhibit 3) and operating profit surprised on the upside. We increase our estimates to take account of the improved operating performance and work through various non-cash items in FY17e. Our 1.3% increase in FY18e EBITDA, together with improved cash generation, has the effect of increasing our fair value per share by 9.6% to HK$7.12 from HK$6.52.

Year end

Revenue (HK$m)

PBT*
(HK$m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

03/15

2,859

886

16.6

7.0

28.4

1.5

03/16

4,033

1,337

38.5

8.0

12.3

1.7

03/17e

6,255

2,031

55.5

10.0

8.5

2.1

03/18e

7,535

2,168

58.8

12.5

8.0

2.6

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Earnings beat driven by City Water Supply

CWA delivered a strong set of H117 numbers showing an exceptionally robust performance in its CWS business. After stripping out a HK$248m fair value gain in the Property division, CWA’s 30% h-o-h EBIT increase was predominantly driven by the CWS unit.

Forecasts increased, cash flow and leverage better

We increase our FY18e group EBITDA forecast by 1.3%, which is driven by a superior FY18e CWS segment EBIT (HK$2,073m vs HK$2,004m previously). Superficially, we increase FY17e forecasts significantly (16.2% increase in EBITDA), although this is mainly due to the Property fair value adjustment. Once this is stripped out, the underlying EBITDA increase is 4.4%. CWA did not release a figure for capex over the first half but we reduce our FY17e forecast substantially from HK$1,901m to HK$1,082m to reflect the absence of M&A in the first half. Consequently our FY17e net debt to EBITDA improves from 2.6x to 2.0x.

Valuation: SOTP increased by 9.6%

Our EV/EBITDA multiple-based, sum-of-the-parts valuation model implies a fair value per share of HK$7.12, which is a 9.6% increase on our previous fair value estimate. This is partly driven by the 2.4% increase in our CWS EBIT forecast for FY18, but mostly (HK$0.52 out of HK$0.60) due to our reduction in M&A capex converting into a lower net debt estimate, which expands the equity component of our forecast enterprise value. Peer-based multiples concur with the thesis that CWA trades at a significant discount to fair value as the company is 34% undervalued in comparison to its peers on a one-year forward EV/EBITDA.

Interims: City Water Supply drives growth

Accounting for 81.5% of FY16 group operating profit, CWS benefits from increasing private penetration in tap water provision in China and has consistently grown both revenue and profit by double-digit percentages in recent years. Even within the context of such stellar returns, CWS’s H117 segment operating profit surprised on the upside with tariff increases cited by management as a major driver. The other notable moving part was the non-cash fair value gain on property in the property division.

Exhibit 1: CWA segment profit earnings bridge

Source: Edison Investment Research

The 62% h-o-h increase in reported group operating profit converts to a 43% increase in PBT after the effects of a higher interest charge and a negative contribution from associates. However, once the effect of a smaller deduction for minority interests (36% versus 58%) is taken into account, the h-o-h increase in profits for the period attributable to owners of the company more than doubles to HK$429m.

Exhibit 2: H117 vs H116

HK$m

H116

H117

% h-o-h

City Water Supply Operation and Construction

591

917

55%

Sewage Treatment Operation and Construction

78

80

2%

Property Development and Investment

62

248

303%

Concrete Related Products and Services

21

5

-76%

All other segments

14

(9)

-162%

Segment profit

766

1,241

62%

Reconciliation of segment profit to profit from operation

(58)

(58)

0%

Profit from operation

708

1,183

67%

Finance costs

(93)

(136)

 

Share of results of associates

57

(82)

 

Profit before tax

673

965

43%

Income tax expense

(181)

(293)

 

Profit for the period

492

672

36%

Attributable to owners of the company

205

429

109%

Non-controlling interests

287

243

-15%

EPS (HK cents)

19.20

28.43

48%

Diluted EPS (HK cents)

19.11

28.19

47%

DPS (HK cents)

3.00

4.00

33%

Source: China Water Affairs Group accounts, Edison Investment Research

Divisional analysis: All about CWS but watch for non-cash

An h-o-h comparison of CWA’s results has been made more difficult by the adoption of new accounting standards. Below, we explain the key moving parts in analysing CWA’s H117 numbers and find that, while strong, CWA’s underlying results were not as extraordinary as the headlines suggest.

City Water Supply operation and construction: After adjusting for currency and a significant increase in non-cash IFRIC 12 revenues, the half-on-half increase in CWS revenues was 25% rather than the headline figure of 70% (see Exhibit 3). This figure is roughly in line with our prior year-on-year revenue increase of 28%. Of note is that Water Supply Connection Income lagged with a 6.6% (11.4% before currency effects) h-o-h revenue increase, which is well below our previous 25% estimate. Water Supply Operation Services grew at 12.3% (17.1% before currency effects). The largest change was in the non-cash revenues associated with IFRIC 12 intangibles, which has no cash effect but optically increases revenues and depresses operating margins. IFRIC 12 is standard accounting practice for concessions and involves recognising non-cash revenues over the duration of the concession as well as carrying the value of the contract as an intangible asset. Despite mixed revenue drivers, CWS surprised on the upside with a 55% increase in operating profit to HK$917m (H116 HK$591m). Management attributes this sharp rise to tariff increases in seven cities.

Exhibit 3: City Water Supply revenue analysis

HK$m

H116

H117

H-o-h

Notes

Water Supply operation services

740

831

12.3%

 

Water Supply connection income

408

435

6.6%

 

Water Supply Construction Services

358

1,336

272.9%

 

Unknown

49

43

 

City Water Supply operation and construction

1,556

2,645

1,089

 

 

70%

 

Deduct non-cash IFRIC 12 revenue

(358)

(1,336)

 

Other revenue deductions

0

131

131m for BT projects

Impact of non-cash items

(358)

(1,205)

 

Underlying cash revenues

1,197

1,440

243

 

% h-o-h

20%

 

Currency effect

(75)

 

% h-o-h

-4.8%

 

Underlying growth rate

 

 

25%

 

Source: China Water Affairs Group accounts, Edison Investment Research

Sewage Treatment operation and construction: Once HK$117.1m of non-cash IFRIC 12 is removed from the half-on-half increase, the underlying cash increase is 2.6%.

Property development and investment: While revenue declined in this unit from HK$15.2m to HK$10.4m, the significant increase in reported operating profit was mainly driven by a non-cash upwards revaluation of HK$248m.

Financials and forecasts

We upgrade our CWS divisional operating forecast to take account of the increase in profitability witnessed in H117. At divisional level, the upgrades increase EBIT by 5.2% in FY17e and 3.4% in FY18e. We increase our estimate for the Sewage Treatment business too, but it makes only a minimal difference at group level. Although non-cash in nature, we also work through the fair value increase in the property unit which flatters headline FY17e earnings estimates. Note, underlying EBITDA in FY17e (excluding the non-cash FV adjustment in Property and IFRIC 12) is 4.4% rather than 16.2%.

Exhibit 4: Summary of forecast changes

EPS* (c)

PBT* (HK$m)

EBITDA (HK$m)

Old

New

% chg.

Old

New

% chg.

Old

New

% chg.

2017e

45.77

55.50

21.2

1,686.2

2,031.0

20.4

2,279.8

2,649.5

16.2

2018e

56.05

58.83

5.0

2,065.3

2,167.6

5.0

2,759.9

2,796.1

1.3

Source: Edison Investment Research, China Water Affairs Group accounts. Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Not directly captured in our earnings forecast changes is our cut in capital investment to HK$1,082m from HK$1,901m in FY17e and to HK$2,129m from HK$2,265m in FY18e. This is a reflection of the slow first half performance from CWA in terms of M&A. We acknowledge that M&A (privatising small urban water networks) is likely to be lumpy in nature and give CWA the benefit of the doubt with strong H117 capacity expansion and a high increase again in FY18e. In the short term however, the reduction in capex lowers our net debt forecast by 9.8% in FY17e and 12.1% in FY18e. We will be reassured to see further progress on M&A as this is a key driver of CWA’s equity proposition.

Valuation: Fair value nudged up

We increase our sum-of-the-parts fair value per share to HK$7.12 from HK$6.52. The largest driver in our improved equity fair value per share is the decline in our net debt forecast outlined above. This accounts for HK$0.52 of our HK$0.60 improvement, with the rest a mixture of our earnings upgrade and a decline in minorities. Our new fair value per share implies 51% upside to the current share price of HK$4.72.

Exhibit 5: Peer comparison

Company

Share Price (local)

Number of shares (m)

Market Cap (local m)

Div yield

Current P/E

Next P/E

Current EV/ EBITDA

Next EV/ EBITDA

Net debt to +1y EBITDA

China Water Affairs

4.91

1501

7,567

2.0%

8.8x

8.3x

6.1x

6.3x

2.0x

Guangdong Investment Ltd

10.46

6264.9

65,531

3.3%

14.7

13.4

8.2

7.5

-1.1x

Beijing Enterprises Water Group Ltd

5.23

8737.4

45,696

1.8%

14.8

12.0

12.9

10.6

4.5x

Tianjin Capital Environmental Protection Group Co Ltd

4.04

340.0

1,374

1.7%

13.8

13.3

2.8

2.6

1.3x

Average Hong Kong Listed

 

2.3%

14.4x

12.9x

7.9x

6.9x

1.6x

Beijing Originwater Technology Co Ltd

17.77

3123.4

55,503

0.2%

26.7

19.5

20.4

14.0

-1.7

Chongqing Water Group Co Ltd

7.56

4800.0

36,288

3.4%

24.4

24.8

14.6

15.1

-1.1

Tus-Sound Environmental Resources Co Ltd

32.06

854.3

27,389

0.5%

24.3

20.2

16.5

12.5

2.4

Average Mainland China Listed

 

1.4%

25.1x

21.5x

17.2x

13.9x

-0.1x

Veolia Environnement SA

15.92

563.4

8,969

4.6%

16.1

13.5

5.5

5.2

2.5

Suez

13.47

564.4

7,600

4.8%

17.5

15.1

5.9

5.6

3.0

Severn Trent PLC

2,163.00

235.7

5,098

3.7%

20.8

20.1

11.8

11.3

5.7

United Utilities Group PLC

893.50

681.9

6,093

4.3%

19.5

19.2

13.1

12.5

6.9

Average Europe

 

 

 

4.4%

18.5x

17.0x

9.0x

8.6x

4.5x

Average Global

 

 

 

2.8%

19.3x

17.1x

11.2x

9.7x

2.2x

Source: Edison Investment Research. Note: Bloomberg prices as at 13 December 2016.

CWA trades at a discount to its closest listed peers. It trades on a steep discount to other HK-listed water utilities on one-year forward P/E (8.3x versus 12.9x). On a one-year forward EV/EBITDA, CWA trades at a 34% discount to global water utilities. We continue to believe the market underestimates CWA’s growth trajectory and prices the stock accordingly and, therefore, we have confidence in our fundamental analysis, which implies 51% upside for equity holders.


Exhibit 6: Financial summary

HK$m

2014

2015

2016

2017e

2018e

2019e

2020e

Year end 31 March

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

2,747

2,859

4,033

6,255

7,535

9,114

10,542

EBITDA

 

 

1,075.8

1,299.8

1,820.2

2,649.5

2,796.1

3,425.4

3,972.7

Operating Profit (before amort. and except.)

771

1,001

1,479

2,218

2,338

2,899

3,365

Intangible Amortisation

0

0

0

0

0

0

0

Exceptionals

58

136

(30)

0

0

0

0

Other

0

0

0

0

0

0

0

Operating Profit

829

1,137

1,449.1

2,218.1

2,337.7

2,899

3,365

Net Interest

(107)

(117)

(171)

(162)

(185)

(214)

(252)

Profit Before Tax (norm)

 

 

729.7

885.6

1,337.4

2,031.0

2,167.6

2,699.8

3,127.8

Profit Before Tax (FRS 3)

 

 

788

1,021

1,308

2,031

2,168

2,700

3,128

Tax

(230)

(317)

(305)

(508)

(542)

(675)

(782)

Profit After Tax (norm)

500

569

1,033

1,523

1,626

2,025

2,346

Profit After Tax (FRS 3)

558

704

1,003

1,523

1,626

2,025

2,346

Average Number of Shares Outstanding (m)

1,423.2

1,416.9

1,508.5

1,509.4

1,519.9

1,519.9

1,519.9

EPS - normalised (c)

 

 

15.7

16.6

38.5

55.5

58.8

73.3

84.9

EPS - normalised and fully diluted (c)

 

15.69

16.59

38.54

55.50

58.83

73.27

84.89

EPS - (IFRS) (c)

 

 

19.8

26.2

36.6

55.5

58.8

73.3

84.9

Dividend per share (c)

5.0

7.0

8.0

10.0

12.5

15.0

17.5

EBITDA Margin (%)

39.2

45.5

45.1

42.4

37.1

37.6

37.7

Operating Margin (before GW and except.) (%)

28.1

35.0

36.7

35.5

31.0

31.8

31.9

BALANCE SHEET

Fixed Assets

 

 

8,578

9,416

11,313

11,989

13,645

15,635

16,688

Intangible Assets

424

415

1,428

1,428

1,428

1,428

1,428

Tangible Assets

5,425

5,995

6,716

7,367

9,038

11,043

12,111

Investments

1,827

2,106

2,242

2,267

2,252

2,237

2,222

Other

902

901

928

928

928

928

928

Current Assets

 

 

4,929

5,686

7,507

9,337

10,440

11,469

12,445

Stocks

249

301

289

448

539

652

754

Debtors

578

656

1,084

1,681

2,025

2,449

2,832

Cash

1,590

1,501

2,552

3,092

3,451

3,563

3,710

Other

2,513

3,228

3,583

4,117

4,425

4,805

5,149

Current Liabilities

 

 

(3,972)

(5,214)

(5,557)

(5,668)

(5,973)

(6,228)

(6,464)

Creditors

(529)

(486)

(855)

(966)

(1,271)

(1,526)

(1,762)

Short term borrowings

(1,299)

(2,376)

(2,156)

(2,156)

(2,156)

(2,156)

(2,156)

Other

(2,143)

(2,352)

(2,546)

(2,546)

(2,546)

(2,546)

(2,546)

Long Term Liabilities

 

 

(3,839)

(3,452)

(5,715)

(6,915)

(8,115)

(9,315)

(9,315)

Long term borrowings

(3,524)

(3,024)

(5,076)

(6,276)

(7,476)

(8,676)

(8,676)

Other long term liabilities

(316)

(428)

(639)

(639)

(639)

(639)

(639)

Net Assets

 

 

5,696

6,436

7,548

8,743

9,998

11,562

13,354

CASH FLOW

Operating Cash Flow

 

 

554

566

1,494

1,445

2,372

2,779

3,395

Net Interest

(34)

(0)

(72)

(162)

(185)

(214)

(252)

Tax

(106)

(201)

(160)

(508)

(542)

(675)

(782)

Capex

(794)

(781)

(670)

(1,082)

(2,129)

(2,532)

(1,676)

Acquisitions/disposals

0

0

(972)

0

0

0

0

Financing

(343)

(134)

(82)

0

0

0

0

Dividends

(71)

(85)

(106)

(136)

(167)

(205)

(258)

Net Cash Flow

(792)

(635)

(569)

(443)

(651)

(848)

427

Opening net debt/(cash)

 

 

2,234

3,377

3,966

4,649

5,092

5,743

6,590

HP finance leases initiated

0

0

0

0

0

0

0

Other

(351)

46

(114)

0

0

0

0

Closing net debt/(cash)

 

 

3,377

3,966

4,649

5,092

5,743

6,590

6,163

Source: China Water Affairs Group accounts, Edison Investment Research

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by China Water Affairs Group and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by China Water Affairs Group and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

More on China Water Affairs Group

View All

Latest from the Industrials sector

View All Industrials content

Celyad — Update 13 December 2016

Celyad

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free