On January 15, North Control Urban Resources was listed on the Hong Kong Stock Exchange. The stock intends to raise 540 million Hong Kong dollars (about 478 million yuan), the issue price of 0.69 Hong Kong dollars (about 0.61 yuan).
Founded in 2013, North Control Urban Resources is a provider of integrated waste management solutions, with its main businesses including environmental sanitation services and hazardous waste treatment.
The prospectus shows that the company's environmental sanitation services mainly include road cleaning, garbage classification, garbage collection and transportation, and garbage transfer station management.
According to a report by consulting firm Frost & Sullivan, BeiJing Urban Resources is the fourth-largest provider in the corporate sector of China's environmental sanitation services market in terms of 2018 revenues, accounting for about 0.6% of the overall market share.
The company's hazardous waste treatment business mainly covers the collection, transportation, storage and disposal of hazardous waste. According to the official website, it mainly treats and safely disposes of hazardous waste for industrial companies as well as healthcare organizations.
In the first half of 2019, the revenue of BeiJing Urban Resources was HK$1.475 billion (about RMB 1.307 billion); the net profit was HK$154 million (about RMB 137 million). Among them, the revenue from the environmental sanitation services business accounted for about 70%.
Benefiting from the promotion of relevant policies, the revenue of the environmental sanitation services segment of NCLR has increased significantly in recent years.
In March 2017, the General Office of the State Council issued a notice on the forwarding of the National Development and Reform Commission and the Ministry of Housing and Urban-Rural Development's "Implementation Plan for the Classification System of Domestic Waste", which set out a roadmap for the implementation of the domestic waste classification system.
In 2018, solid waste industry chain policies continued to be introduced. The Ministry of Housing and Construction and others issued the Notice on Comprehensively Carrying Out the Work of Classification of Domestic Waste in Prefecture-level and Above Cities Across the Country, which requires the classification of garbage for placement and transportation, and accelerates the construction of matching disposal capacity, among other things.
The prospectus shows that in 2017, the revenue of the environmental sanitation services business of North Control Urban Resources amounted to 662 million Hong Kong dollars (about 587 million yuan), and in 2018 it reached 1.613 billion Hong Kong dollars (about 1.43 billion yuan), an increase of 143.66% year-on-year.
The domestic environmental sanitation services market is expected to continue to grow at a CAGR of 29.4% from 2018-2023 and reach a market size of RMB 366.8 billion in 2023, according to NC Urban Resources.
According to the "Ranking and Analysis Report of Listed Companies in Ecological and Environmental Industry" released by China Environment News and China Environmental Protection Industry Research Institute, the market capitalization of listed companies in the environmental protection industry grew by a cumulative 6.5% in 2019, losing out to the Shanghai Composite Index and the GEM (weighted average of total market capitalization).
However, due to policies such as garbage classification to stimulate the market, the solid waste segment operated steadily. in the first half of 2019, the total revenue of the segment was 89.66 billion yuan, an increase of about 20% year-on-year.
The above report also said that the current market concentration of the hazardous waste segment is relatively small, and the industry is in a state of rapid development. In the future, along with the backward capacity of insufficient technical ability to clear, hazardous waste industry earnings will rise steadily.
As of the close of business on January 16th, the share price of North Control City Resources was HK$0.64, down 7.25%, with a total market capitalization of HK$2.304 billion.