An Interview with Mr. Jinping Dong, the CEO of CHina Industrial Waste (Ticker: CIWT) one of the leading playes in China's burgeoning industrial waste management industry.
Q: Can you please give us a breakdown of your business segments and how they contribute to your top and bottom line?
R: They are
INDUSTRIAL WASTE:
Industrial Waste Treatment and Recycling Services – Dalian Dongtai Industrial Waste Treatment, Ltd. (“Dongtai”) – full service waste treatment facilities; Dongtai accounts for the majority of the Company’s revenues to date and is currently under expansion.
Waste Catalyst Recycling – Dalian Zhuorui Resource Recycling Co., Ltd - generates valuable metals and slag used for cement; We expect it will be operational this year.
MUNICIPAL SEWAGE AND SLUDGE:
Waste Water Treatment – Dalian Dongtai Water Recycling Co. Ltd. – BOT project established to process municipal sewage for the city of Dalian; commenced production in June 2008.
Municipal Sludge Treatment – Dalian Dongtai Organic Waste Treatment Co., Ltd. - process sludge by anaerobic fermentation to generate biogas (methane). Dongtai Organic has already received the first payment of sludge treatment and biogas (methane) in 2010.
ENVIRONMENTAL ENGINEERING:
Dalian Lipp Environmental Energy Engineering & Technology Co., Ltd. - Joint venture with German Lipp - sales of Lipp tanks for waste water and sludge treatment; equipment design and manufacturing, already built up a pipeline of contracts, expect to commence in 2010.
For the time being, Dalian Dongtai is the main contributor. Dongtai Water accounts for a very small percentage and Dongtai Organic will contribute in 2010.
Q: Can you provide more details on the expansion currently underway for Dalian Dongtai Industrial Waste treatment facilities as well as how much you expect the new BOT project to generate on top and bottom line for 2010 and 2011?
R;The capacity post Dongtai’s expansion project, which will be completed in third quarter 2010, will be 114,000 tons per year which will be approximately 2 times the current amount. Our anticipation is that utilization rates will be 50%, 80% and 95-100% in 2010，2011 and 2012 respectively.
Dongtai Organic was formed to operate a Build-Operate-Transfer (“BOT”) municipal sludge treatment and disposal facility in Dalian, PRC. The facility is expected to operate for a period of 20 years. Payment of sludge treatment fees is the responsibility of the local government, at a predetermined price, at various payment intervals. In addition to sludge treatment fees, Dongtai Organic expects to generate revenues from sales of biogas, a byproduct of the sludge treatment process that will be sold to Dalian Gas Company. We have written purchase commitments by Dalian Gas Company. When the facility reaches its full capacity, 600 tons/day, sludge processing fee will be $350,000 a month and sales of biogas will yield $180,000 a month. Currently, daily volume of sludge processed by this plant is 400 tons/day as there are some sewage treatment plants are under construction. We anticipate it will take one or two years to increase rate of utilization to 100%.
Q: Is CIWT's joint venture with German Lipp, its first joint venture? What sort of revenues do you expect to see from this venture and are you exploring other joint venture with foreign companies?
R;Dalian Lipp is the first joint venture involved in Environmental Protection Equipment Engineering formed by German Lipp in China. It will generate its revenues from environmental protection equipment engineering. We will continuously seek opportunities to conduct cooperation’s with other foreign companies in various forms and may choose to form new joint ventures when it is appropriate to take advantage from advanced technology and experience.
Q;What sort of projections do you have for this project in terms of revenues and earnings?
R:Hunan Hanyang signed a BOT Agreement with the Bureau of Environmental Protection of Hunan Province, pursuant to which Hunan Hanyang has the right to construct and operate the Hazardous Waste Treatment Center of Changsha City, Hunan Province (the "Center") for 25 years upon completion of construction. The Center is one of fifty-five hazardous waste treatment centers included in the Chinese government's National Construction Planning of Hazardous Waste and Medical Waste Disposal Facilities. Hunan Hanyang is also authorized to perform collection, disposal and treatment of hazardous waste generated from 10 cities including Changsha, Zhuzhou, Changde, Yiyang, Xiangtan, Yueyang, Zhangjiakou, Huaihua, Loudi and Xiangxi in northern Hunan Province during the franchising period.
The total cost to construct the new facility is estimated to be RMB185 million (approximately $27.1 million), 60% of which, RMB110 million (approximately $16.1 million), will be subsidized by the central government. The subsidy of RMB110 million will be allocated to Hunan Hanyang by installment based on construction progress. The Center will include a storage facility, an incinerator, a hazardous waste landfill, and an industrial effluent treatment facility, with a total capacity of 46,000 tons per year. Management anticipates that the Center will be operational in early 2012 as it will take two years to complete the construction.
Due to the increasing labor cost in costal cities, it is anticipated that more and more labor-intensive and capital-intensive enterprises, take for example, machining, auto manufacturing, pharmaceuticals, and electronics industries, will relocate in Hunan and other Central China provinces. There are no professional waste management service providers in Hunan Province. We are pleased to execute our expansion into this fast-growing region to satisfy increasing need for waste management. It is anticipated that the utilization rate will be increased to 100% within 5 years upon completion and bring $8 million USD in revenues and $2.4 million USD in net profit respectively on average for the first three years
Q: Can you please give us a breakdown of your business segments and how they contribute to your top and bottom line?
R: They are
INDUSTRIAL WASTE:
Industrial Waste Treatment and Recycling Services – Dalian Dongtai Industrial Waste Treatment, Ltd. (“Dongtai”) – full service waste treatment facilities; Dongtai accounts for the majority of the Company’s revenues to date and is currently under expansion.
Waste Catalyst Recycling – Dalian Zhuorui Resource Recycling Co., Ltd - generates valuable metals and slag used for cement; We expect it will be operational this year.
MUNICIPAL SEWAGE AND SLUDGE:
Waste Water Treatment – Dalian Dongtai Water Recycling Co. Ltd. – BOT project established to process municipal sewage for the city of Dalian; commenced production in June 2008.
Municipal Sludge Treatment – Dalian Dongtai Organic Waste Treatment Co., Ltd. - process sludge by anaerobic fermentation to generate biogas (methane). Dongtai Organic has already received the first payment of sludge treatment and biogas (methane) in 2010.
ENVIRONMENTAL ENGINEERING:
Dalian Lipp Environmental Energy Engineering & Technology Co., Ltd. - Joint venture with German Lipp - sales of Lipp tanks for waste water and sludge treatment; equipment design and manufacturing, already built up a pipeline of contracts, expect to commence in 2010.
For the time being, Dalian Dongtai is the main contributor. Dongtai Water accounts for a very small percentage and Dongtai Organic will contribute in 2010.
Q: Can you provide more details on the expansion currently underway for Dalian Dongtai Industrial Waste treatment facilities as well as how much you expect the new BOT project to generate on top and bottom line for 2010 and 2011?
R;The capacity post Dongtai’s expansion project, which will be completed in third quarter 2010, will be 114,000 tons per year which will be approximately 2 times the current amount. Our anticipation is that utilization rates will be 50%, 80% and 95-100% in 2010，2011 and 2012 respectively.
Dongtai Organic was formed to operate a Build-Operate-Transfer (“BOT”) municipal sludge treatment and disposal facility in Dalian, PRC. The facility is expected to operate for a period of 20 years. Payment of sludge treatment fees is the responsibility of the local government, at a predetermined price, at various payment intervals. In addition to sludge treatment fees, Dongtai Organic expects to generate revenues from sales of biogas, a byproduct of the sludge treatment process that will be sold to Dalian Gas Company. We have written purchase commitments by Dalian Gas Company. When the facility reaches its full capacity, 600 tons/day, sludge processing fee will be $350,000 a month and sales of biogas will yield $180,000 a month. Currently, daily volume of sludge processed by this plant is 400 tons/day as there are some sewage treatment plants are under construction. We anticipate it will take one or two years to increase rate of utilization to 100%.
Q: Is CIWT's joint venture with German Lipp, its first joint venture? What sort of revenues do you expect to see from this venture and are you exploring other joint venture with foreign companies?
R;Dalian Lipp is the first joint venture involved in Environmental Protection Equipment Engineering formed by German Lipp in China. It will generate its revenues from environmental protection equipment engineering. We will continuously seek opportunities to conduct cooperation’s with other foreign companies in various forms and may choose to form new joint ventures when it is appropriate to take advantage from advanced technology and experience.
Q;What sort of projections do you have for this project in terms of revenues and earnings?
R:Hunan Hanyang signed a BOT Agreement with the Bureau of Environmental Protection of Hunan Province, pursuant to which Hunan Hanyang has the right to construct and operate the Hazardous Waste Treatment Center of Changsha City, Hunan Province (the "Center") for 25 years upon completion of construction. The Center is one of fifty-five hazardous waste treatment centers included in the Chinese government's National Construction Planning of Hazardous Waste and Medical Waste Disposal Facilities. Hunan Hanyang is also authorized to perform collection, disposal and treatment of hazardous waste generated from 10 cities including Changsha, Zhuzhou, Changde, Yiyang, Xiangtan, Yueyang, Zhangjiakou, Huaihua, Loudi and Xiangxi in northern Hunan Province during the franchising period.
The total cost to construct the new facility is estimated to be RMB185 million (approximately $27.1 million), 60% of which, RMB110 million (approximately $16.1 million), will be subsidized by the central government. The subsidy of RMB110 million will be allocated to Hunan Hanyang by installment based on construction progress. The Center will include a storage facility, an incinerator, a hazardous waste landfill, and an industrial effluent treatment facility, with a total capacity of 46,000 tons per year. Management anticipates that the Center will be operational in early 2012 as it will take two years to complete the construction.
Due to the increasing labor cost in costal cities, it is anticipated that more and more labor-intensive and capital-intensive enterprises, take for example, machining, auto manufacturing, pharmaceuticals, and electronics industries, will relocate in Hunan and other Central China provinces. There are no professional waste management service providers in Hunan Province. We are pleased to execute our expansion into this fast-growing region to satisfy increasing need for waste management. It is anticipated that the utilization rate will be increased to 100% within 5 years upon completion and bring $8 million USD in revenues and $2.4 million USD in net profit respectively on average for the first three years
Q: What will be the key drivers for revenue and profit generation in 2010 and in terms of new projects coming online and or industry changes that will be affecting your businesses?
R: As to the fiscal year 2010, we believe Dalian Dongtai and Dongtai Organic play a major role for revenue and profit generation. Dongtai Organic’s coming online will have effect on the company’s business as we are diversifying our revenue streams. Dongtai is engaged in Industrial Waste Disposal and Treatment with high profit margin but it will be influenced by economic cycles. On top of that, it ‘s revenue stream takes years to design, construction and market nurturing are all time consuming. Dongtai Organic, which is a BOT project, is guaranteed by local government for sludge and processing fee during the next 20 years and we can yield income from sales from biogas(Methane). The profit margin is good enough and brings in long term stable cash flow.
Q: Does CIWT plan on trying to uplist to NASDAQ or AMEX anytime in the near future?
R: We have 4 independent directors on board already and we have formed a compensation committee and audit committee already. We have sufficient shareholders and the spot price of our shares is pretty close to the minimum standards of a major stock exchange. Hopefully, we can realized up listing within in 2010 and it will be our primary aim this year.
Q: Going forward what role do you see acquisitions playing in your growth strategy and will you need to raise capital if you look to make acquisitions or make further expansions in 2010?
R: Surely we will continuously seek for potential acquisition targets in the future but to be honest the environmental protection industry in China is still in its infancy. At this stage, it is not easy to identify quality and sizeable targets. Each individual company is just trying to make an expansion into several segments in their regional markets. It is the management’s anticipation that most likely we’ll have to wait 3-5 years before we see a surge of acquisition. As for 2010, just see what opportunities present themselves.
Q: China has earmarked a significant budget for improving the environment, are there special initiatives that you are focusing on or are there specific projects that CIWT will be bidding on?
R: The majority of funds will be spent on infrastructures and we will focus on sludge treatment plants. All negotiation with potential clients are underway and we are confident that our success in Dongtai Organic will demonstrate our competitive advantages.
R: As to the fiscal year 2010, we believe Dalian Dongtai and Dongtai Organic play a major role for revenue and profit generation. Dongtai Organic’s coming online will have effect on the company’s business as we are diversifying our revenue streams. Dongtai is engaged in Industrial Waste Disposal and Treatment with high profit margin but it will be influenced by economic cycles. On top of that, it ‘s revenue stream takes years to design, construction and market nurturing are all time consuming. Dongtai Organic, which is a BOT project, is guaranteed by local government for sludge and processing fee during the next 20 years and we can yield income from sales from biogas(Methane). The profit margin is good enough and brings in long term stable cash flow.
Q: Does CIWT plan on trying to uplist to NASDAQ or AMEX anytime in the near future?
R: We have 4 independent directors on board already and we have formed a compensation committee and audit committee already. We have sufficient shareholders and the spot price of our shares is pretty close to the minimum standards of a major stock exchange. Hopefully, we can realized up listing within in 2010 and it will be our primary aim this year.
Q: Going forward what role do you see acquisitions playing in your growth strategy and will you need to raise capital if you look to make acquisitions or make further expansions in 2010?
R: Surely we will continuously seek for potential acquisition targets in the future but to be honest the environmental protection industry in China is still in its infancy. At this stage, it is not easy to identify quality and sizeable targets. Each individual company is just trying to make an expansion into several segments in their regional markets. It is the management’s anticipation that most likely we’ll have to wait 3-5 years before we see a surge of acquisition. As for 2010, just see what opportunities present themselves.
Q: China has earmarked a significant budget for improving the environment, are there special initiatives that you are focusing on or are there specific projects that CIWT will be bidding on?
R: The majority of funds will be spent on infrastructures and we will focus on sludge treatment plants. All negotiation with potential clients are underway and we are confident that our success in Dongtai Organic will demonstrate our competitive advantages.
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15 millions d'actions sur le marché....attention ce stock est sur l'Otc.BB
et il n'y a pas beaucoup de volume. Je le met sur ma "watch list"
1 commentaire:
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