Deutsche Bank Markets Research Asia China Utilities Utilities Industry dbAccess China Date 21 September 2015 Industry Update Environmental & Clean Energy Corporate Day takeaways Continued high level of interest in environmental and clean energy space ________________________________________________________________________________________________________________ Deutsche Bank AG/Hong Kong Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 124/04/2015. Michael Tong Research Analyst (+852) 2203 6167 michael.tong@db.com Yuxiao Peng, CFA Research Analyst (+852) 2203 6235 yuxiao.peng@db.com Yingying Dong, CFA Research Associate (+852) 2203 6207 yingying.dong@db.com Luka Zhu Research Associate (+852) 2203 6173 luka.zhu@db.com Companies Featured CR Power (0836.HK),HKD18.98 Buy 2014A 2015E 2016E P/E (x) 7.69 7.05 7.28 EV/EBITDA (x) 9.1 6.4 6.6 Price/book (x) 1.2 1.1 1.0 GCL-Poly (3800.HK),HKD1.45 Buy 2014A 2015E 2016E P/E (x) 16.9 10.5 8.2 EV/EBITDA (x) 7.8 6.3 6.4 Price/book (x) 1.5 1.1 1.0 ENN Energy (2688.HK),HKD40.45 Hold 2014A 2015E 2016E P/E (x) 20.72 15.36 13.62 EV/EBITDA (x) 11.2 9.7 8.4 Price/book (x) 3.1 2.6 2.3 SIIC Environment (SIIC.SI),SGD0.16 Buy 2014A 2015E 2016E P/E (x) 32.69 23.02 17.60 EV/EBITDA (x) 28.9 14.0 12.6 Price/book (x) 1.7 1.7 1.5 China Everbright Water (CEWL.SI),SGD0.63 Buy 2014A 2015E 2016E P/E (x) 42.15 20.05 12.89 EV/EBITDA (x) 24.6 12.4 9.8 Price/book (x) 2.4 1.2 1.1 Source: Deutsche Bank We hosted our third annual dbAccess China Environmental & Clean Energy Corporate Day at Deutsche Bank’s Hong Kong Office on 18 September. We invited two wind and solar industry experts and 10 companies in the municipal & industrial water treatment, waste energy, natural gas, solar, wind, thermal, and UHV/distribution grid equipment sectors to discuss growth opportunities and company developments. The one-day event was attended by 90 clients. In this report, we summarize the key takeaways from the expert presentation and corporate meetings. Key findings in the water space CT Environment sees large potential for centralized industrial wastewater treatment and expects the penetration rate to rise from <15% now to >50% in the future. The company prefers BOO over BOT for the operation model. Meanwhile, China Everbright Water still sees a higher risk of industrial wastewater treatment and will continue its focus on municipal wastewater with a targeted 10mt/d of total capacity in 3-5 years’ time. SIIC Environment sees competition for new projects getting intense but will maintain its return threshold at a project IRR of 9.5%. The company is still committed to doing the Longjiang Waster asset injection and H-share dual listing in the near future. Key findings in the waste energy space Canvest Environment aims to grow its total designed capacity at a 40% CAGR in 2014-17 with a threshold project IRR of 8% given the intensifying competition. The company sees high potential of upgrading opportunities for those “Fluidized Bed” projects to convert to “Moving Grate” technology with less frequent maintenance, higher utilization and lower environmental costs. Key findings in the natural gas space ENN stated the total gas sales volume growth in 8M15 was 10% yoy, largely unchanged from 10.5% in 1H15. It expected a price cut of Rmb0.6-0.7/cm but admitted the demand recovery of existing customers depends on an economic recovery. For its North American business, the company now guides a narrowing loss from <US$25m in 2015 to <US$20m in 2016. Key findings in the solar space Our guest speaker expected China to add 20GW solar capacity this year, with the 2020 target likely raised to 150GW and renewable surcharge to be lifted again in 2016. GCL indicated wafer ASP was up in July-August due to strong demand, and it plans to produce more mono wafer in 2016 to meet increased demand from distributed projects. GCL New Energy is still on track to adding 2GW solar capacity in 2015. Kong Sun plans to have grid connected solar capacity of 1.2GW by the end of 2015 and have c.6GW in five years’ time. Key findings in the wind/power grid space Our guest speaker expected China to have 250-280GW wind capacity by 2020 and thought offshore wind would be just c.10GW then. CR Power has c.80% wind capacity located in zone 4 and may raise its renewable capacity addition target from the current 0.8-1.0GW per year. For China Power New Energy, de