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Environmental protection industry, mergers and acquisitions boom, listed companies have obvious advantages

Recently, environmental protection industry mergers and acquisitions have been frequent. The reason behind this is that the IPO cycle gate has been closed for a long time, and the number of queues is numerous. On the other hand, under the background of the introduction of “environmental tax”, the price reform of public utilities, and the strict assessment of ecological performance, China's environmental protection industry is in a rapid growth period. Analysts believe that environmentally-listed companies will take the lead in this round of environmental protection development because of their financing channel advantages.

Environmental protection industry mergers and acquisitions boom

According to incomplete statistics of the reporter, since December last year, more than 10 energy-saving and environmental protection companies have suspended their licensing due to major issues. For example, Tianrui Instruments and Indigo Environment have successively announced that they intend to acquire shares of unlisted environmental protection companies. M&A has set off a boom in the environmental protection industry. According to the statistics of Guangzheng Hang Seng, in 2012, there were only 17 M&A projects of environmentally-friendly listed companies, and the total capital of the purchased products was only 1.2 billion yuan. In the first three quarters of 2013, the number of M&A projects reached 28, and the scale of investment reached 9.9 billion yuan. . In the fourth quarter of 2013, the M&A efforts were further overweight, involving 11 projects and an amount of 5.6 billion yuan.

For the tide of mergers and acquisitions in the environmental protection industry, Ping An Securities analyst Yu Zhenjia believes that the IPO cycle has been closed for a long time, and there are many queues. This means that if an environmental company seeks an IPO, there is not only a lot of uncertainty, but also a high time cost. Therefore, many companies choose to be listed or listed on the backdoor, which has become an important topic in the field of environmental protection this year. Under the situation that the IPO is becoming stricter and the investment in environmental protection is not decreasing, the case of mergers and acquisitions in the field of environmental protection will continue to be staged. For listed companies, choosing the right target to actively promote the acquisition can not only achieve rapid expansion and achieve complementary advantages, but also an opportunity for the company to carry out supporting financing and reduce financial pressure.

Listed companies have obvious advantages

Under the background of the introduction of “environmental tax”, the price reform of public utilities, and the strict assessment of ecological performance, China’s environmental protection industry is still in a rapid growth period in 2014. Galaxy Securities believes that the scale of output value of environmental protection industry is expected to continue to grow rapidly. From the perspective of international experience, mergers and acquisitions are the only way for large companies to grow. 2014 will be the year of mergers and acquisitions in the environmental protection industry, and the wave of asset securitization in the environmental protection industry will come. Listed companies have obvious first-mover advantages in terms of controllable funds and financing capabilities. If the refinancing of the GEM is liberalized, the financing advantages of the listed companies will be further amplified.

In addition, as the most important investor in environmental protection projects, the government has gradually increased its debt pressure in recent years. Modes such as BT and BOT can extend the payment cycle of customers and are quickly accepted by the market in the field of environmental protection. At the same time, financial pressure is also transferred from the client to the supplier of the equipment or project. Pingzhen Securities analyst Yu Zhenjia believes that under the background of high environmental protection infrastructure, equipment sales and engineering services are still the main business models of the current environmental protection industry. With the increase in the number of projects, the scale of environmental protection enterprises has increased, and they are generally facing greater financial pressure. Listed companies have the advantage of financing channels and will take the lead in this round of environmental protection development.

Specifically, in the tide of industry mergers and acquisitions, companies with sufficient project operation experience in sub-sectors and companies with strong business innovation capabilities (capability to acquire orders) are expected to gain opportunities. Galaxy Securities reports that project operation experience and business Innovative ability is an important indicator to consider the competitiveness of environmental protection companies. The water treatment industry chain, the dominant companies in the domestic waste treatment industry chain, as well as the improvement and innovation of business models in the fields of industrial waste treatment and soil remediation, and tap relevant project experience. And companies with innovative capabilities are worthy of attention.