Water firms in Vietnam draw investors thanks to good business results
Positive business performance and the divestment of State capital from enterprises has helped firms in the water supply and drainage sector draw attention from investors.
The majority of water companies have solid business results, good profitability indicators and stable annual dividends, making shareholders tend to focus on long-term investment instead of short-term trading. (Photo: tinnhanhchungkhoan.vn)
The first half of 2019 was solid for most water sector enterprises.
Ben Thanh Water Supply Joint Stock Company (BTW) saw six-month revenue increase by 3.6 percent compared to the same period last year, while post-tax profit rose by 117.7 percent to 18.9 billion VND (810,000 USD).
The growth in profit was much higher than in revenue thanks to a decrease in cost of goods sold, selling expenses and administrative expenses.
Currently, BTW's shares are being traded at 25,800 VND each, up 85 percent compared to early this year.
Binh Duong Water - Environment Joint Stock Company (BWE) also reported high profit in the first half of 2019. Its post-tax profit reached 207.41 billion VND, up 101.7 percent year-on-year.
In the second quarter of 2019, BWE’s post-tax profit rose by 145.6 percent thanks to the increase in net revenue from sales and service provision and lower cost of goods sold.
Most water companies had solid business results, good profitability indicators and stable annual dividends, making shareholders focus on long-term investment.
Among more than 60 companies in the water supply and drainage sector listed on the stock exchange, most of them are small businesses with inefficient business operations and slow information publishing.
The wave of equitisation and divestment of State capital in enterprises, including the water sector, is attracting large investors such as DNP Water JSC (DNP), Refrigeration Electrical Engineering Joint Stock Company (REE) and AquaOne Water JSC.
Established in 2017, DNP Water is a subsidiary of Dong Nai Plastic JSC (DNP), currently owning 10 projects and serving more than 500,000 customers.
DNP is the first company in Vietnam's clean water industry the International Finance Organisation (IFC) pledged to provide 24.9 million USD to support its development strategy in clean water plants. In the next five years, DNP aims to become a leading clean water investor in the local market, with capacity of 1 million cubic metres per day.
REE owns three water plants in HCM City and one in Hanoi, with total capacity of 1.2 million cubic metres per day.
AquaOne Water JSC has three factories and has invested in many water supply and drainage companies.
Nguyen Van Thien, Chairman of the Board of Members and General Director of Binh Duong Water - Environment Joint Stock Company (BWE) said "the characteristics of the water industry are great demand, sustainable growth and low risk". However, to maintain positive growth, enterprises need to focus on improving service quality, apply appropriate price mechanisms and expand operations to rural areas.
On August 20, BWE and VietinBank signed a credit deal, enabling BWE to implement many large-scale projects in water supply and sewage treatment, with total capital of about 4 trillion VND, of which loans account for some 3 trillion VND.
BWE supplies clean water in the southern province of Binh Duong with capacity of 450,000 cubic metres per day and is expanding the factory to Chon Thanh district in the southern province of Binh Phuoc, serving Becamex Binh Phuoc industrial urban area and sub-areas.
From 2017 to 2019, the State has been carrying out divestment from 57 water supply and drainage companies nationwide.
According to the Ministry of Construction, it is forecast that by 2020, the country's urban population will reach 44 million people, demand for urban water supply will increase to 9.4 - 9.6 million cubic metres per day and about $10 billion will be needed to build new water plants and improve existing water systems.
Local authorities have encouraged investment in the sector.
At the German - Vietnamese Industry Forum in March, Vice Chairman of the Hanoi People's Committee Nguyen The Hung said demand for clean water of the capital was very large and expected to reach about two million cubic metres per day by 2020. By 2020, the city will strive to raise the rate of rural residents with access to clean water to 100 percent.
To achieve the target, the city encouraged investors and businesses to invest in water supply projects, Hung said.-VNS/VNA
The Mekong River Commission last month said the Mekong water levels during this early flood season from June to July are at historical low, wreaking havoc on hundreds of millions of inhabitants in downstream countries.