Source: Prospectus
Source|LiveReport Big Data
Summary:Beautiful natural environment in ChinaIt was first listed on the Hong Kong Stock Exchange on June 30, 2023, and is to be listed on the Hong Kong Main Board. The company is one of the leading sewage treatment service providers in Anhui Province, China. Revenue in 2022 was 289 million yuan, gross margin was 51.33%, and net profit was 104 million yuan.
LiveReport Big Data learned that China Beauty Natural Environment Technology Co., Ltd. (“China Beauty Environment” for short), founded in 2011, submitted a listing application on the Hong Kong Stock Exchange on June 30, 2023, to be listed on the Hong Kong Main Board. The company submitted a listing application for the first time, and the exclusive sponsor is Huatai International.
Over the past ten years, the company has expanded its business to four cities in Anhui Province and Hebei Province, covering industrial wastewater treatment and domestic sewage treatment services. On December 31, 2022, the company's industrial wastewater treatment design capacity was about 55,000 tons per day, ranking 7th in Anhui Province. According to Frost & Sullivan's data, in 2022, the company is the second largest non-state industrial wastewater treatment service provider in Anhui Province by designing treatment capacity on a daily basis.
The company carries out sewage treatment projects according to the EPC/EPC+O model and the franchise model. The company's project model is illustrated by the following image:
Investment highlights
(i) The company is one of the leading sewage treatment service providers in Anhui Province, China, and is capable of providing one-stop sewage treatment services in large specialized industrial parks;
(ii) The company benefits from favorable government policies and industry trends relating to the environment;
(iii) The company's solid internal capabilities in sewage treatment process development and process improvement and equipment production, plus establishing cooperation with well-known universities and research centers, support the company to improve the company's service efficiency and quality;
(iv) The company has established strong and stable relationships with customers, which helps the company maintain a strong project reserve;
(v) The company has an intelligent and efficient automated control system to support the sewage treatment business;
(vi) The company has an experienced and dedicated management team
Company information
Official website: www.mzrhb.com
Hong Kong Headquarters Address: 40th Floor, Daxin Financial Centre, 248 Queen's Road East, Wanchai, Hong Kong
China Headquarters: Room 2201-2219, Beauty Building, Meishanhu Road, Modern Industrial Park, Jinzhai County, Lu'an City, Anhui Province, China
Financial analysis
For the three years ended December 31, 2022
Revenue was approximately RMB 159 million, RMB 159 million and RMB 289 million respectively, with a compound annual growth rate of 34.79%;
Gross profit was approximately RMB 66 million, RMB 78 million and RMB 148 million respectively, with a compound annual growth rate of 49.74%;
Net profit was approximately RMB 339 million, RMB 046 million and RMB 104 million respectively;
The gross margins were about 41.59%, 48.89%, and 51.33%, respectively;
Net interest rates are approximately 24.39%, 28.90%, and 36.19%, respectively.
The company's revenue by service type in 2022 increased compared to 2021, mainly due to:
(i) The increase in revenue from the provision of industrial wastewater treatment services is mainly related to the design and construction fees charged by the company for designing and constructing wastewater treatment facilities in the US Central Industrial Park.
(ii) The increase in the company's revenue from domestic sewage treatment services is mainly related to the company's expansion of domestic sewage treatment services in Yingshang County, Fuyang City, Anhui Province during the year. The expansion of services is due to the company's acquisition of a number of new concessions from relevant concessionaires in Jinzhai County.
Industry prospects
Treatment capacity and treatment capacity of China's industrial wastewater treatment industry
From 2017 to 2022, China's industrial wastewater treatment capacity increased from 180.0 million tons/day to 184.7 million tons/day, with a compound annual growth rate of 0.5%. During the same period, industrial wastewater treatment volume increased from 29 billion tons to 31.1 billion tons, a compound annual growth rate of 1.4%. In the future, with the development of Chinese industry and the increase in the industrial wastewater treatment ratio (amount of treated wastewater divided by total wastewater discharge), it is expected that the treatment capacity and treatment volume of industrial wastewater will increase steadily.
In 2027, China's industrial wastewater treatment capacity is expected to reach 208.7 million tons/day, with a compound annual growth rate of 2.5%, while treatment capacity is expected to reach 36 billion tons, with a compound annual growth rate of 3.0%. The increase in industrial wastewater treatment capacity in industrial parks has exceeded the growth rate of the industrial wastewater treatment industry as a whole. The industrial wastewater treatment capacity in the industrial park was 20.2% in 2022, compared to 19.0% in 2017. It is expected that this ratio will increase to 24.7% in 2027.
Source: Prospectus
The amount of industrial wastewater treated in Anhui Province has been growing steadily. From 2017 to 2022, the industrial wastewater treatment volume in Anhui Province increased from 387.1 million tons to 421.3 million tons, with a compound annual growth rate of 1.7%. According to data from Frost & Sullivan, industrial wastewater treatment capacity in Anhui Province is expected to increase from 421.3 million tons in 2022 to 478.8 million tons in 2027, with a compound annual growth rate of 3.2% during the period.
Source: Prospectus
Industry status
The competitive pattern of industrial wastewater treatment market in Anhui Province
The industrial wastewater treatment market in Anhui Province is highly fragmented. In 2022, there will be more than 100 industry participants. According to Frost & Sullivan's data, according to the total design treatment capacity of industrial wastewater treatment facilities that have been put into operation in 2022, the top ten industry participants account for 9.6% of the total treatment capacity. According to Frost & Sullivan's data, according to the 2022 Anhui industrial wastewater design treatment capacity, the company ranked 7th, and according to the average daily design treatment capacity in 2022, the company is the second largest non-state industrial wastewater treatment service provider in Anhui Province.
Source: Prospectus
Comparing IPOs of companies in the same industry
The companies selected this time are: Dali Environmental (01790.HK)
Dali Environmental Protection is a sewage treatment service provider under the LGB Group. It operates and manages four sewage treatment facilities in Yinchuan, the capital of the Ningxia Hui Autonomous Region of the People's Republic of China, and provides sewage treatment services to the local government. The company was founded in the Cayman Islands in April 2018 and listed on the main board of the Stock Exchange of Hong Kong Limited in November 2018 (stock code: 1790).
Source: LiveReport Big Data
Major shareholders
Mr. Zhou, Ms. Li Weihua, Ecobeauty Holding and Lvyuan Ecology are each controlling shareholders of the company.
On the last practical date, Mr. Zhou held 84.24% of the company's issued share capital through his wholly-owned company Ecobeauty Holding. Therefore, Mr. Zhou and Ecobeauty Holding are both controlling shareholders of the company.
Source: Prospectus
Management situation
The board of directors consists of four executive directors and three independent non-executive directors.
Mr. Zhou, 48 years old, is the chairman, executive director and CEO. He is the founder of the company and was appointed Executive Director on June 17, 2023. As CEO, Mr. Zhou is mainly responsible for overseeing the overall management and operation of the company and setting the direction and strategy of the enterprise. Mr. Zhou has over 28 years of experience in environmental engineering. He is also a director of the company's other member companies (namely Anhui Beauty Nature, Jinzhai Rural Water, and Anhui Meichen).
Ms. Zhou Dexia, 47, is the Chief Financial Officer. She was appointed Executive Director on June 17, 2023. She is mainly responsible for planning, implementing and monitoring the company's accounting and financial structure, budget policies and procedures. Ms. Chow has over 14 years of experience in the field of accounting and auditing. He has been the financial director of Anhui Beauty Nature since July 2018.
Mr. Zhao Jun, 34, is the chief technology officer. He was appointed Executive Director on June 17, 2023. He is mainly responsible for the company's R&D and construction projects. Mr. Zhao has over eight years of experience in the environmental engineering industry. He has been the deputy general manager of Anhui Beauty Nature since July 2018.
Mr. Cheng Hao, 46, is the chief marketing officer. He was appointed Executive Director on June 17, 2023. He is mainly responsible for coordinating the company's external communications and overseeing the human resources department. Mr. Cheng has been the deputy general manager of Anhui Beauty Nature since January 2016.
Pre-IPO financing
Source: LiveReport Big Data
Intermediary team
According to LiveReport's big statistics, China's beautiful natural environment agency team has a total of 8, including 1 sponsor. Nearly 10 sponsor projects have average data performance; there are 3 corporate lawyers, and comprehensive project data is average. Overall, the intermediary team's historical data performance is average.
Source: LiveReport Big Data
Sponsor underwriting history
Huatai International's recent sponsorship rate was 41.94%;
Source: LiveReport Big Data