Poten Enviro Goes Public in An Era when Capital Compels Environmental Protection towards A New Landscape


On February 17, 2017, Poten Environment Group Co., Ltd. (stock name: Poten Enviro and stock code: 603603) held a ceremony in celebration of its entering the A-share market at the Shanghai Stock Exchange (SSE). Director of Beijing Zhongguancun Administrative Committee Guo Hong, President of China Entrepreneur Club and former President of China Merchants Bank Ma Weihua, Chairman of Shanghai-based Fosun Group Guo Guangchang, Mayor of Zhaoqing City and Deputy Secretary of the CPC Zhaoqing Municipal Committee Chen Xudong, Chairman of SDIC Fund Management Co., Ltd. and other guests attended the ceremony and extended their congratulations. 

Zhao Lijun gave a gift named “Safeguard the Earth” to a SSE leader in memory of the company’s listing. 

Poten Enviro signed the Listing Agreement with SSE and gave it a souvenir named “Safeguard the Earth”, behind which is the listed company’s environmental vision—to hold nature in awe, protect ecology, build ecological civilization and promote green development with joint efforts. 

Zhao Lijun delivered an address.

“Successfully entering the A-share market means that Poten Enviro is able to leverage the power of capital for better development and share the results with investors. In the future, we will continue to offer high-quality environmental services, help to build an ecological civilization, and give back to the Chinese society and the vast investors with our persistent endeavors,” said Mr. Zhao. 

The persons hitting the gong at the listing ceremony of Poten Enviro were Chairman of Shanghai-based Fosun Group Guo Guangchang, Chairman and President of Poten Enviro Zhao Lijun, President of China Entrepreneur Club and former President of China Merchants Bank Ma Weihua, and Director of Beijing Zhongguancun Administrative Committee Guo Hong (From left to right). 

As the gong resounded, Poten Enviro became a listed company formally. The stock was issued at the price of RMB6.74 per share with the IPO P/E ratio reaching 22.97 times. According to the analysts, the lot winning rate of online subscription was as low as 0.0384%, which highlighted that the market values the embedded potential of high-quality, eco-friendly companies and holds a rosy view for their prospects. 

As an environmental protection company that has added up dribs and drabs to a great course of development over 22 years, Poten Enviro sheds some light on how the environmental protection sector was in the past and what great new opportunities it will embrace in the future. 

Quality, speed and trust: the spring of environmental protection sector is just around the corner

Poten Enviro was incorporated in 1995 when environmental services had a limited market and featured not so demanding treatment requirements. Even so, driven by its strong sense of responsibility for environment, the Group has always been dedicated to providing high-quality environmental services. By sticking to innovatively technological R&D and accurate control over project management, it has created a course of development that stresses on the importance of “quality, speed and trust” and become a typical quality, professional environmental protection company. Since its establishment, Poten Enviro has completed hundreds of excellent projects that others can follow suit and won a host of industry awards including “Role Models for Technical Upgrade in the Chinese Environmental Protection Industry”, “Flagship Companies Engaged in Water Affairs”, and “Environmental Protection Companies of China with Exemplary Brands”. In 2016, it had five projects included in the list of national PPP demonstration projects. From 2011 to 2015, the operating income of the Group soared to RMB1,991 million from RMB355 million and its compound annual growth rate hit 53.89%. What it has achieved is dubbed as “Poten phenomenon” among the industry, which also indirectly reveals that the Chinese environmental protection industry is all the rage. 

In recent years, the unprecedentedly stringent environmental protection laws have been promulgated, the battles in the three dimensions of air, water and soil advanced in full swing, and the environmental regulatory authorities have taken a series of measures like reform in vertical management, all of which display the Chinese government’s determination and actions in improving environmental quality and compellingly boost the development of the Chinese environmental protection industry. According to the reports of the Ministry of Environmental Protection, China’s eco-friendly and energy-saving industry grew at a pace ranging between 15% and 20% during the 12th Five-year Plan period. Some research predicts that the environmental protection industry will yield an annual growth rate higher than 20% and the total private investment in the industry is projected to reach RMB17 trillion during the 13th Five-year Plan period. As the potential of the environmental protection market is unleashed, capital is expected to play a vital role in promoting the growth of the sector. 

Capital market will help the environmental protection industry to grow larger and stronger

To date, China Securities Regulatory Commission (CSRC) and other competent departments have attached importance to the following problems identified from the environmental protection industry: energy-saving and eco-friendly projects tend to require a huge amount of fund which cannot be paid back within a short period of time or turned over rapidly; most environmental protection companies are asset-light, technology-intensive firms of small and micro sizes, thus having a poor access to banks’ credit funds. Compared to other industries, the environmental protection sector has less listed companies. According to the statistics, by the end of 2016, among the 43 major listed environmental protection companies in China, 14 went public at the SSE and 29 did so at the Shenzhen Stock Exchange (SZSE), which accounted for 1.18% of the SSE’s 1,182 listed companies and 1.55% of the SZSE’s 1,870 listed companies respectively. 

The CSRC made it clearly recently that energy-saving/eco-friendly and other strategically emerging industries had significant bearing on the transformation and upgrade of the Chinese economy. It has always attached high importance to improving the poor access to funds of small and medium-sized companies (SMEs), by taking various measures to expand their fundraising channels and lower their financing cost. So the SMEs engaged in energy-saving and eco-friendly technologies may make full use of the capital market to grow and expand. 

The national policies are now in favor of the growth of environmental protection industry. In September 2016, the National Development and Reform Commission and the Ministry of Environmental Protection in their co-issued Opinions on Cultivating Market Players for Environmental Governance and Ecological Protection pointed out that by 2020, China would foster more than 50 environmental protection companies each with the output value higher than RMB10 billion. Once met, the objective will change the scattered, small landscape of the Chinese environmental protection sector and create a healthier industry ecology. 

Platform-based environmental protection companies will dominate the industry landscape. 

So far, Poten Enviro has extended its reaches to such fields as urban water environment, industrial and energy water system, ecological restoration and soil restoration and been able to provide integrated solutions for the entire industry chain from testing and monitoring, consulting and design, system integration, project management and core equipment manufacturing to investment and operations. Behind the whole-industry-chain, diverse landscape stands the Group’s profound legacy accumulated over the past 22 years. By the end of 2016, it has obtained nearly 120 authorized patents. In addition to the work station of academicians and experts, the Group, working along with the renowned colleges and universities at home and abroad, also created the bases and alliances for coordinated innovations in environmental protection, in a bid to address many hot issues and technical difficulties in environmental protection field including “foul water treatment”, “comprehensive river regulation”, “building of sponge cities”, “smart environmental monitoring and testing”, and “recycling of high-difficulty wastewater for zero discharge”. Thanks to its leading technologies and business pattern throughout the entire industry chain, Poten Enviro has been capable of coordinating different resources for co-existence and common growth, creating a platform where industry advantages can be pooled together, and mastering the initiative for the growth of industry ecology. 

After going public, Poten Enviro will continue to play a positive role in promoting industry upgrade and constructing new industry ecology. As planned, the raised funds will be invested in the water affairs segment, one of the Group’s principal businesses, and the construction of the R&D center. This will enhance Poten Enviro’s technical advantages, help attracting more resources and talents, and bring its technical strength into full play. 

As a comprehensive environmental service provider that has entered in the A-share market, Poten Enviro boasts prominent investment value for institutional investors. Environmental protection industry, one of China’s strategically emerging industries, projects bright prospects. Poten Enviro, a professionally competent industry leader, is quick to spot trends and demonstrates great potential for growth. 

In the view of Zhao Lijun, to yield more impressive progress in the future, Poten Enviro should bring more opportunities for the industry and create greater value for the society by virtue of its own development. 

Listing at the SSE is only a new starting point. In the future, Poten Enviro is sure to go ahead on the path towards green development and deliver the performance that lives up to the expectation of the industry. 

Source: www.chinanews.com


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