United Enviro takes 49% stake in Sichuan JV
Partnership with Chengdu Xingrong
Singapore
UNITED Envirotech continued to reap the reward of its new membrane-making business with a partial stake in an initial 1.5 billion yuan (S$300 million) pro-ject in western China, the water-treatment specialist said.
United Envirotech will take 49 per cent of a new joint venture in Sichuan, with Chengdu Xingrong Investment Co taking the remaining 51 per cent. The partnership will have an initial paid-up capital of 50 million yuan.
The joint venture will provide engineering, procurement and construction using United Envirotech's membrane technology and products. United Envirotech estimates that the first block of projects, which will start immediately and be completed by the end of 2015, will use about 300 million yuan of its Memstar membrane products.
United Envirotech acquired Memstar in April for S$293 million in cash and shares, in a move to become a fully vertically integrated water-treatment outfit.
The impact of that move has been sizeable. For the first fiscal quarter ended June 30, United Envirotech posted a 50.5 per cent year-on-year revenue increase to S$66.3 million. Net profit almost quadrupled to S$22.5 million from S$5.7 million, as both its water-treatment and engineering businesses grew.
United Envirotech has also been guiding for a bright outlook in its industry, citing the Chinese government's plans to increase investment in environment and water-related projects and stricter environmental standards.
Commenting on the latest deal, United Envirotech chairman and chief executive Lin Yucheng said: "The growing market share of membrane technology for upgrading, expansion and recycling is great news for our Memstar membrane products."
United Envirotech shares closed at S$1.33 on Friday, lower by 0.4 per cent or half a cent, before the deal was announced.
