HanKore Environment Tech Group is an international group investing and operating in the water environment sector. At the invitation of the company, we visited two of its projects in Jiangsu, China. The group has invested in 11 large-scale municipal water treatment projects located in Beijing and the provinces of Jiangsu, Shandong, Shaanxi and Henan, with a total contracted capacity of 1.57m tonnes per day. Hankore will spend RMB750m to expand the capacity of five other projects, which will be largely completed in 2014, and it has secured funding (both debt and equity). By focusing on the municipal waste-water treatment segment, Hankore could be also seen as a proxy to urbanization in China, based on the careful selection of its treatment plants. We currently do not have a rating on Hankore.

China-based water treatment company
HanKore Environment Tech Group is an international group investing and operating in the water environment sector. Based in Beijing, China, Hankore?s main areas of business are municipal waste water treatment, recycling of treated waste water, industrial waste water treatment and sludge treatment. As at 30 June 2013, the group has invested in 11 large-scale municipal water treatment projects located in Beijing and the provinces of Jiangsu, Shandong, Shaanxi and Henan, with a total contracted capacity of 1.57m tonnes per day. All contracts of the group contain minimum water tariff guarantees and the average concession period is 25-30 years.

Visit to treatment plants in Jiangsu
At the invitation of the company, we visited two of its projects in Jiangsu, China. The first is in Suzhou, where it is undergoing an expansion to double its capacity from 75k m3/day to 150 m3/day (contracted capacity) by end 2014. However, management is not ruling out further expansion/upgrade as the city around it expands. The second is in Kunshan, a much smaller plant with 50k m3/day capacity but Hankore expects to again double it to 100k m3/day (contracted capacity) by 2015. 

Upgrading and acquisition plans
On that same note, Hankore will spend RMB750m to expand the capacity of five other projects, which will be largely completed in 2014, and it has secured funding (both debt and equity). We understand that most, if not all, of its projects have minimum off-take agreements, and are typically close to the built capacity of the plants. Separately, Hankore is also on the lookout for acquisitions to boost its recurrent revenue (hit RMB200m in FY13) ? these would typically be existing TOT projects with expansion/upgrade opportunities in good locations, and it would raise funds when needed. 

Proxy for urbanization
By focusing on the municipal waste-water treatment segment, Hankore could also be seen as a proxy to urbanization in China, based on the careful selection of its treatment plants. We currently do not have a rating on Hankore.