Interview: CANVEST Hoping To Keep Home Fires Burning

CHINA'S NO.4 waste-to-energy (WTE) provider, Canvest Environmental Protection Group Co Ltd (01381) is looking to expand in its home province of Guangdong, where it enjoys a top-ranked market share, an official told Asia Fund Space.

The Hong Kong listco recently announced that wholly-owned subsidiary Dongguan Kewei Environmental Power Co Ltd agreed to fully acquire Qianxinanzhou Xingyi City Hongda Environmental Power Co Ltd for a consideration of 110 million yuan.

Hongda currently operates a WTE plant under build-operate-transfer concession rights in Xingyi City, Guizhou Province.


Asia Fund Space:  Does this WTE investment represent a continued preference by Canvest to expand via M&As?

Or will organic expansion by on the table going forward also?

Mr. Carven Tsui, IR Manager with Canvest Environmental:  We will continue to grow our business via both M&A and organic expansion.

To expand our business, we prefer to be in high GDP and economically developed areas, where the demand for WTE is high.

When we select a project, be it via M&As or greenfield, we emphasize on the individual project's quality, which includes real waste treatment demand, tipping fees, capacity size, etc.

For Greenfield projects in particular, since we are the largest non-SOE background WTE operator in Guangdong Province, we believe we have competitive advantages to bid for greenfield projects in Guangdong.

And we have advantages in Guangxi Province as well because of our Laiban track record and having a Guangxi government fund as one of our shareholders.

Asia Fund Space:  With decade lows for oil and coal prices, is Beijing still very supportive of WTE?

Or is the incentive decreasing given low coal prices?

Mr. Carven Tsui:  As the main reason for our existence is to treat garbage, oil and coal prices are not the key factors affecting our business.

Especially for moving grate technologies that we adopt, we do not need coal as the auxiliary fuel.

The plants which use fluidized technology do use coal as an auxiliary fuel, but coal only represents part of the direct costs and this technology is getting less popular anyway.

A new Standard for Pollution Control on WTE has been announced in July 2014 and the requirements for various kinds of emission limits have been tightened.

For example, under the new standard, permitted amount of dioxin emission has been reduced from 1ng TEQ/m3 to 0.1ng TEQ/m3; limit of total suspended particulates has been cut from 80mg/m3 to 30mg/m3 (per one hour average) or 20mg/m3 (per 24 hour average).

The new standard is effective from 1 January 2016.

However, most fluidized bed plants cannot comply with the new standards.

We believe the Government will continue to support the WTE industry and at the same time more inspections are expected to ensure the WTE plants meet environmental standards.

Asia Fund Space:  How does Canvest work with both local governments and citizens to ensure full acceptance of its WTE projects?

Mr. Carven Tsui:  Our plants are open for government officials and industry practitioners to come for site visits and to exchange ideas.

Every month we also have "open days" for local citizens and schools to come and learn about WTE plants and what we do to protect our environment.

Before project initiation and after plant operation, relevant governmental officials will come and inspect sites and we have to prepare various reports.

We also have a display screen at the entrance which shows the real-time emission data, and it has key emission indicators such as fine dust, sulfur dioxide, etc, which compare the real time data with the latest national standards and Euro 2000 standards, respectively.

Our system is also linked in real time to the system of the Environmental Protection Bureau for continuous monitoring.

In addition, the data of our China Scivest plant is also linked to the official website of the Dongguan Urban Management Bureau and is available to the public 24/7 via the Internet.

We believe China Scivest is the only plant in China that publishes its data on the Internet.

Canvest Environmental Protection Group Co Ltd is a waste-to-energy provider focused on the development, management and operation of waste-to-energy (WTE) plants. Its WTE business involves in the processing of municipal solid waste (MSW) and selling of electricity. Its WTE plants had a total daily MSW processing capacity of 3,000 tonnes in 2013. Out of all non-State-owned background enterprises, Canvest is the largest WTE provider in Guangdong Province and the fourth largest WTE provider in the PRC.

(Note: This story is contributed by Andrew Vanburen. Mr. Vanburen has served as a government official focused on international trade at the American Institute of Taiwan in Taipei, and worked in financial journalism for nearly a decade in both Beijing and Shenzhen. He holds a Master's Degree from New York University. He is currently Director at Hong Kong-based Asia Fund Space. For more information, please visit: www.asiafundspace.com)