United Envirotech eyes water treatment projects in China

It can inject $250m investment.

According to OCBC, UEL will continue to expand its recurring income by investing in more water treatment projects in China, noting that the current government policy is still very positive towards environmental issues and the demand for water treatment in China is still growing. 

UEL has already identified several existing industrial waste-water projects in the coastal area around Shandong and Liaoning.

Here's more from OCBC:

Funding is also not an issue as KKR will be injecting another US$40m after the recent share placement of 98.5m new shares (or 20.6% of existing share capital) at S$0.50 each.

Upon completion of the deal, KKR will have a direct interest of 45.2% on a fully diluted basis (assuming full conversion of US$113.8m of convertible bonds into shares at S$0.45 each).

Based on its usual 40/60 funding split, the net proceeds alone can finance up to S$125m worth of projects. Hence with its current S$63.2m cash (as at 31 Dec 2012), we
estimate that UEL can invest up to S$250m worth of water treatment projects.

United Envirotech Ltd (UEL) put in a strong set of 9MFY13 results, with net profit jumping 145.7% to S$22.5m, meeting 95% of our full-year forecast, after revenue surged 108.9% to S$138.2m, also 95% of our FY13 estimate.

3QFY13 revenue was up 159.4% at S$52.3m, while net profit was up 350.2% at S$8.5m. According to management, the strong showing came from higher engineering and treatment revenue over the period.