China Everbright Water Limited (SGX:U9E) is primarily a water environment management company with a business presence in 13 provinces, municipalities, and autonomous regions in China, as well as Mauritius. CEWL focuses on raw water protection, water supply, municipal wastewater treatment, industrial wastewater treatment, reusable water, river-basin ecological restoration, and sludge treatment and disposal.
The Company has also expanded into new rural construction, ecological agriculture, agricultural non-point source pollution control, and the resource utilisation of livestock and poultry manure.
CEWL was listed on the SGX in 2014 through the acquisition of HanKore Environment Tech via a reverse takeover.
#1 CEWL maintained strong cash and liquidity levels, with cash and cash equivalents of HK$1.85 billion as of 31 December 2024. How does CEWL plan to deploy its capital n 2025?
In 2025, CEWL plans on diverse capital deployment, in 4 specific areas, namely:
- Allocating a CAPEX of HKD1.7 billion to HKD2.0 billion for project construction and other purposes to drive business growth.
- Maintaining a stable dividend policy and rewarding shareholders.
- Keeping gearing ratio within 65% for 2025 (61% in 2024, which is below the average of major peers in China) and the debt-to-equity ratio below 180%.
- Expanding financing channels both within and outside mainland China, balancing equity and debt financing portfolio to ensure financial stability while actively developing the business, and optimising its capital structure, for sustainable long-term growth.
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#2 With close to 100% of revenue derived from mainland China, does CEWL plan to diversify geographically to mitigate market concentration risks?
Over the past twenty years, the Chinese economy and environmental protection industry has experienced rapid development and reform. In the current complex international environment, the stability and sustainable development advantages of the Chinese market are increasingly prominent.
CEWL sees the Chinese market as the foundation of its strategic development, focusing on China’s major strategies such as the Yangtze River protection, and initiatives relating to carbon and pollution reduction. The Company has strengthened its presence in key regions such as Beijing-Tianjin-Hebei, the Yangtze River Delta, and the Guangdong-Hong Kong-Macau Greater Bay Area, achieving positive results.
According to the 2023 Statistical Yearbook of Urban and Rural Construction in China, water supply coverage rates in urban areas reached 99.43%, while county areas recorded 98.27%; wastewater treatment rates were 98.69% and 97.66%, respectively. This suggests that China’s traditional water industry market is nearing saturation, with fixed asset investment growth gradually slowing. In contrast, many Southeast Asian countries offer significant opportunities for infrastructure development in municipal water supply and drainage.
Adopting a prudent approach, CEWL is entering the Southeast Asian markets through asset-light business models, gradually promoting its water treatment expertise. Leveraging on the advantages of China’s “Belt and Road” initiative, the Company is prioritising investment in stable markets, such as Singapore, Indonesia, and Vietnam.
#3 How have disruptive technologies like artificial intelligence (AI) and machine learning changed the way the Group carries out its business?
CEWL is actively integrating artificial intelligence (AI) technology to drive the digital transformation of its operations. The initiative enhances the accuracy and stability of related equipment operations while improving the overall quality and efficiency of project operations.
One notable example is the introduction of image recognition technology during the equipment inspection phase of its wastewater treatment projects. This innovation enables real-time automatic alerts, significantly enhancing operational intelligence. It effectively addresses the limitations of traditional inspection methods, which are often characterised by low efficiency, high risks, and inadequate safety assurance in wastewater treatment plants.
The technology is built on a deep learning framework using a Convolutional Neural Network (CNN), which facilitates precise recognition through multidimensional data training. By incorporating both normal and abnormal image samples under various lighting conditions, time periods, and environments, a dynamic dataset is developed.
The algorithm parameters are continuously optimised to minimise both false negatives and false positives, ensuring detection accuracy aligns with project requirements. In pilot wastewater treatment projects, the system has achieved accuracy, recall, and precision rates exceeding 90%, significantly reducing the workload of inspection personnel.
#4 What impact would a change in interest rate have on the Group’s businesses, and how is it managing this risk?
As of the end of 2024, CEWL’s interest-bearing debt balance stood at approximately HKD16.4 billion. However, about HKD9 billion (55%) of debts were on fixed interest rates, significantly reducing exposure to interest rate fluctuations.
Since the U.S. interest rate hike began, the Company has progressively reduced the proportion of borrowings in U.S. and Hong Kong dollars. As of June 2024, all foreign currency borrowings were fully repaid, leaving only Renminbi-denominated debts.
The Company also maintains sufficient credit lines of HKD1.9 billion with banks within mainland China and HKD1.7 billion outside mainland China, including a cross-border Renminbi fund pool with the People’s Republic of China. Accordingly, the Company may draw loans within and outside mainland China at lower rates based on the prevailing interest rate conditions.
The Company has an unissued bond quota of RMB4.8 billion. It will continue to monitor monetary policy and adjust its debt structure in line with market interest rate trends.
In line with China’s current rate-cutting cycle, the Company has reduced the rate adjustment period for most project loans to one month.
In summary, CEWL adopts a comprehensive strategy comprising 100% Renminbi-denominated debt, adjustments to the proportion of fixed-rate debts, short-term interest rate adjustments, and sufficient credit support to maintain stable financial cost and improve profit certainty. The Company remains committed to further optimising its debt structure and dynamically adjusting its hedging strategies in response to market changes.
#5 What should shareholders and potential investors know about CEWL’s stable returns?
As the sole water operation platform under China Everbright Group Ltd., a leading financial holding group in China, the Company leverages the strengths of a state-owned enterprise while maintaining market-oriented operational efficiency.
The Company benefits from China’s environmental protection policies and the growing demand for water treatment and environmental management, driven by rapid urbanisation and industrial development in Southeast and Central Asia.
The Company’s existing projects generate relatively stable cash flows, primarily from local government clients.
Historically, the Company has a payout ratio exceeding 30% and a dividend yield over 7%, reflecting its commitment to sharing the achievements of corporate growth with shareholders.
It is among the few water environment management companies in China that offer comprehensive business coverage and a complete industrial chain.
The Company has achieved a return on equity exceeding 8% over the past three years. However, CEWL’s current price-to-earnings ratio is only half the average of its key industry peers, while its price-to-book ratio stands at approximately 70% of the average, and there is potential for valuations to improve.
Editor’s Note: Some answers for this article were extracted from the SGX 10 in 10 series published on 8 July 2025 and republished with permission. You can read more about China Everbright Water (SGX:U9E) on the SGX website. You can also read other featured companies from SGX’s 10 in 10 series on the DollarsAndSense website.
