On July 7, Grandblue Environment (600323. SH) disclosed that the company is planning to privatize and acquire Canvest Environmental Power Co., Ltd. (01381.HK), a company listed on the Hong Kong Stock Exchange, through its indirect subsidiary, Grandblue (Hong Kong) Environmental Investment Co., Ltd. (hereinafter referred to as "Grandblue Hong Kong") by way of a scheme of arrangement. HK) (hereinafter referred to as "Canvest"), the indicative cancellation price of the transaction is tentatively set at HK$4.90 per share, and the overall amount corresponding to 100% equity is about HK$11.95 billion. Upon completion of the transaction, Canvest will become a subsidiary of Hanlan Hong Kong Holdings and will be delisted from the Hong Kong Stock Exchange.
Industry insiders said that the alliance of the two companies will jointly create a more competitive environmental protection service model and lead the industry to continue to develop to a higher level. According to the analysis of waste incineration scale data disclosed in the annual reports of Grandblue Environment and Canvest Environmental Protection, after the completion of this transaction, Grandblue Environment is expected to jump to the first place in the A-share market and the top three in the industry, with a significant increase in business scale and industry status, and further scale effects.
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Guangdong and Foshan state-owned assets jointly support strategic industrial restructuring
Build the main environmental protection industry chain
According to the announcement, the transaction will be jointly implemented by Guangdong Hengjian Investment Holding Co., Ltd. (hereinafter referred to as "Guangdong Hengjian") and Guangdong Nanhai Holding Group Co., Ltd. (hereinafter referred to as "Nanhai Holdings"). According to the data, the actual controller of Guangdong Hengjian is the State-owned Assets Supervision and Administration Commission of Guangdong Province; The actual controller of Nanhai Holdings is the State-owned Assets Supervision and Administration Bureau of Nanhai District, Foshan City, which is the same actual controller as Hanlan Environment.
It is understood that in 2022, the Foshan Municipal Government and Guangdong Hengjian signed a cooperation agreement on promoting the development of strategic industries to strengthen cooperation around Foshan's key industries and key projects, help the core enterprises of the industrial chain accelerate their development, the high-quality development of listed companies, and promote the development and growth of Foshan's strategic emerging industrial clusters.
In recent years, Guangdong Province has made arrangements around high-quality development, vigorously promoted the high-quality development of listed companies and the strengthening of the industrial chain, and supported high-quality listed companies to carry out industrial chain mergers and acquisitions, so as to achieve stronger, better and bigger. This year, the "New Nine Articles" clearly stated that listed companies are encouraged to focus on their main business, comprehensively use mergers and acquisitions, equity incentives and other methods to improve the quality of development, and promote listed companies to enhance their investment value.
M&A and restructuring is an important means to promote industrial integration and listed companies to become better and stronger, and in recent years, mergers and acquisitions in the market have paid more attention to marketization and commercialization logic. Through mergers and acquisitions, it not only promotes the transformation and upgrading of existing companies, but also promotes mergers and acquisitions between existing companies to alleviate market pressure. Industry insiders said that Guangdong Hengjian is a wholly state-owned company by the State-owned Assets Supervision and Administration Commission of Guangdong Province to perform the duties of the investor, and is a state-owned capital operation company at the Guangdong provincial level.
As one of the strategic emerging industries in the South China Sea, the environmental protection industry is an important starting point for the transformation and upgrading of the economic structure and the construction of a "brand South China Sea". As a major shareholder of Grandblue Environment, Nanhai Holdings has increased its efforts to help Grandblue Environment expand and strengthen its core business, reflecting its confidence in the future development of Grandblue Environment.
Increase high-quality incineration power generation projects
Hanlan is expected to jump to the first place in A-shares and the top three in the industry
In recent years, the country has vigorously promoted the construction of "zero-waste cities", and the solid waste treatment industry has ushered in unprecedented development opportunities. As the core link of solid waste treatment, waste-to-energy incineration is the terminal treatment facility of municipal solid waste, which plays a very important role in the solid waste industry chain.
As a leading enterprise in comprehensive environmental protection operation in the field of solid waste treatment, Grandblue Environment firmly implements the strategy of "large solid waste", builds a development pattern of "one body, two wings" with solid waste as the core body and energy and water affairs as the two wings, and actively grasps the window period for high-quality domestic waste incineration power generation projects, and continues to expand the scale of domestic waste incineration power generation and treatment.
Canvest Environmental Protection is the largest waste-to-energy company in Guangdong Province, with a total municipal solid waste processing capacity of 54,540 tonnes per day. In 2023, most of the company's waste-to-energy projects will be put into operation, and the project construction revenue will drop by 76.7%, resulting in a decline in revenue, but the company's gross profit margin has increased significantly to 41.8%; Excluding construction business expenses, the company's operating income increased by 1.6% year-on-year, and the cash flow from operating activities reached HK$1.935 billion, with the quality of earnings and financial soundness continuing to improve, and the hematopoietic capacity of the business steadily enhanced.
Canvest's environmental protection projects have an excellent location layout, covering 12 provinces and cities including Guangdong, Shanghai, Sichuan, Shandong and Jiangsu, of which 17 projects are deployed in Guangdong Province, which has a huge demand for waste treatment, accounting for 49% of the total treatment capacity. Relying on its location advantages and refined operation, Canvest's environmental waste-to-energy business leads its peers in terms of operational efficiency, with an overall capacity utilization rate of over 100% and a high level of overall operating efficiency. In addition, as a number of projects have entered a period of stable operation, the company's capital expenditure has decreased significantly year-on-year, and the operating cash flow has improved significantly, with the potential for high dividend payouts.
According to the analysis of waste incineration scale data disclosed in the annual reports of Hanlan Environment and Canvest Environmental Protection, after the completion of this transaction, the waste treatment capacity of Hanlan Environment's operating projects will reach 73,500 tons/day, and the projects to be built and planned will reach 16,800 tons/day, with a total of more than 90,000 tons/day, which is expected to jump to the first place in A-shares and the top three in the industry.
The two industry leaders have joined forces
Open up the strategic development space of "large solid waste".
As the waste-to-energy industry enters a mature period, both Grandblue Environment and Canvest Environmental Protection, as leading waste-to-energy companies in China, have adjusted their strategies in a timely manner, shifting from the construction period in the rapid development period to the operation period with the core business philosophy of "operation is king, reducing costs and increasing efficiency", so as to achieve stable growth. After the strong alliance between the two parties, there is a lot of room for refined management and overall operational efficiency improvement, and there is broad room for development with incineration power generation as the core business.
Both Grandblue Environment and Canvest have a number of waste-to-energy projects in hand, with the majority of Grandblue Environment's projects located in Fujian Province and many of Canvest's projects located in Guangdong Province, both of which are located in the eastern coastal provinces with strong economic strength and high per capita waste generation. After the strong alliance, it will be more conducive to the integration of high-value resources of Grandblue Environment in advantageous regional markets, and the two parties are expected to play a synergistic and resonant effect, opening up a broader space for the strategic development of "large solid waste".
According to the information, Canvest has obtained a service contract of HK$2.8 billion for the garbage transfer business in Hong Kong to provide garbage transfer services for Hong Kong. At the same time, Canvest Environmental Protection is also a subsidiary of Hong Kong Johnson Holdings (01955. HK). Canvest has in-depth familiarity with the Hong Kong environmental protection market, which has also created imagination for the international development of Grandblue Environment.
As leaders in the environmental protection industry, Grandblue Environment and Canvest Environmental Protection both attach great importance to ESG management and have been recognized by the industry, and have maintained a steady development trend and excellent market performance. Since its listing in 2000, Grandblue Environment has completed a number of major mergers and acquisitions, extending from a single business to comprehensive services, rapidly expanding its business scale, and accumulating rich experience in mergers and acquisitions.
Industry insiders said that the combination of the two companies will not only bring complementary advantages in the resources and markets of the environmental protection industry, but also is expected to jointly create a more competitive environmental protection service model through collaborative innovation and optimization of resource allocation, leading the industry to continue to develop to a higher level.
Wentu/Foshan News Media Center reporter Li Qiaoting correspondent Zhong Yanting
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