Credit Suisse China Environment conference and trip. Our recent China
Environment conferenceandtripincluded12corporatesand six industry
experts/governmententities/wastetreatmentcompanies,coveringwaste
water,municipalsolidwaste,industrial waste,EPC andequipment,aswell
as government policy and regulators.
■Refining regulations lead to higher demand and higher standards. We
believe that2014-15wouldbeaperiodwherepolicyismovingintoa
refinement stage,withdetailedregulatoryand financialframeworks being
workedoutforboththewastegeneratorsandtreatmentsuppliers. Our
recentvisitstowastetreatmentplantssuggestcontinuedgrowthin
municipalwastetreatmentdemand, and a surgeinsmallindustrialwaste
customers. Atthesametime, higherdischarge/emissionstandardsleadto
higher capex andoperatingcosts forwastetreatmentoperators, although
most incrementalcostscanbepassedthrough, inourview.On a relative
basis, thebig operatorsshouldbenefitonlowercostpressure,while
competition remains modest at this stage, partly due to the 'local monopoly'
nature of the sector.
■ Launch of the CS China environment basket and top picks. We remain
positiveonthe secularuptrendofthe sector. Investors cangetexposure
fromthenewlylaunchedCreditSuisseChinaenvironmentbasket
(Bloomberg ticker CSAPCHEN). Our top picks are BEW, CEI and Dongjiang.