C&G ENVIRONMENTAL PROTECTION, in its new incarnation as a waste-to-energy business, is led by new management and it is coming up with a fresh scent.
It posted a maiden net profit of RMB37.1 million for 2010, excluding one-off items. And, unlike many S-chips, it is all too ready to pay a dividend.
It is recommending a dividend of S$0.00148 per share, translating into a yield of 0.87% based on a recent stock price of 17 cents.
It’s a speck of a yield and in absolute terms it is just $1.48 for every $170 you spend to buy 1,000 shares of C&G.
But considering the profitability of the company, the payout is a commendable 20% of the net profit from continuing operations.
The Group acquired the environmental business in Feb 2010, mainly to generate electricity from processing garbage, and disposed its entire interest in the textile business in August 2010. These two transactions had one-off items that contributed a net RMB86.2 m to the bottomline.
For C&G's new waste-to-energy business, there is more scented news – which signals the start of a rising inflow of revenue for C&G:
1) In Dec 2010, C&G completed the building of three plants - namely the Huangshi plant in Hubei province, and the Hui'an and Anxi plants in Fujian province.
They are scheduled to start operations in 1Q11, doubling the Group's treatment capacity to 3,700 tonnes per day from 1,800 tonnes. A fifth plant at Fuqing, Fujian province, will start up in the first half of 2011, increasing the Group's treatment capacity to 4,500 tonnes a day.
Yesterday, a milestone was marked when the Hui'an plant successfully connected to the state electricity grid. (see announcement)
2) C&G has five more projects scheduled for completion by end 2011 and 2012.
3) C&G is setting itself an “important target” of venturing into handling scrap cars, scrap tires and e-waste over the next few years.
“There is a huge business opportunity. Currently, there is no domestic company which specialises in handling these items in an environmental friendly manner,” said Mr Lin.
C&G to be first in China to treat sludge using a certain technology
In a separate announcement, C&G said it has made its first foray into sludge treatment with its new facility which is located within its existing plant in Jinjiang city.
As a result, construction costs for the sludge treatment plant are a fraction of what a typical waste-to-energy plant would cost.
The sludge project is a build-operate-transfer arrangement. The superstructure of the new plant has been completed and is currently undergoing the phase of equipment installation and trial testing.
The new plant will start operations in the second quarter of 2011, marking a departure from the conventional method of burying sludge in landfills.
C&G is applying its patented incineration method to sludge treatment.
Using cutting-edge technology, costs and resultant pollution are reduced.
Importantly too, C&G is able to generate revenue with the by-products of the incineration process, said Mr Lin Yan, CEO and newly-appointed executive chairman of C&G.
The Jinjiang municipal government will supply the sewage sludge from the city’s municipal wastewater treatment plant.
The preliminary treatment capacity of the C&G plant is 200 tons per day and it can be ultimately scaled up to 700 tons.
This BOT project will create two key revenue streams from the sale of electricity to state grids and the provision of sludge treatment services to the City Administration.
As more power is generated upon incinerating sludge as compared to normal waster, the Group expects higher potential revenue from projects of this nature.
With an exclusive concessionary period of 35 years up to 2035, C&G will invest, construct, operate and maintain this new sludge treatment facility plant in Jinjiang, and hopes to replicate the same in other cities such as Huang Shi and Huian, where the Group’s existing plants are located.
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