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China Cuts Interest Rates; 3 Attractive Stocks To Buy
Aspire, Hot Picks | 28 October 2015
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By: Raymond Leung
Articles (142) Profile

As China, the world’s second largest economy struggles from the slowdown of its economy, it attempts to stimulate the growth through a combination of monetary and fiscal policies. Examples include the cutting of interest rates and lowering reserve requirements.

Fiscal policies by the government will be the main driver. Yu Bin, head of the micro economy research department at the State Council’s Development Research Centre commented that keeping high growth of infrastructure investment is the key to stabilising economic growth as property and manufacturing remain weak.

To stimulate infrastructure investments, China has launched a CNY 1 trillion bond for investment in the sector. We have highlighted three counters below that are listed on the SGX that will benefit from the stronger infrastructure investment in China.

Midas Holdings (Midas) is a manufacturer of aluminum alloy extruded products for passenger rail transportation in China. Its products have been used in several high speed rails and metros in China and internationally.

Midas is also a supplier to the top train makers in the world which includes Alstom, Siemens and Bombardier Transportation. Its products were used even in Singapore’s Downtown Line, Circle Line and North East Line. The group owns a stake in a joint venture with Nanjing SR Puzhen Rail Transport (NPRT) that manufacturers and sells metro trains in China.

Metro trains and high speed railway is expected to continue to be a driver in infrastructure investments in China and Midas is well positioned to gain from it.

China Everbright Water
China Everbright Water (CEWL) is a group that engages in the environmental water industry with sites across north and central China. It was previously known as HanKore Environment Tech Group before Chine Everbright International completed its Reverse Takeover (RTO) of the group. As of December 2014, CEWL invested and operates 32 waste water treatment facilities with a daily waste water treatment capacity of 3.4 million m3.

As the Chinese government is actively trying to clean up its polluted environment, investments in the environment sector are killing two birds with one stone. The cleaning of polluted water in rivers is expected to be one of the main focuses in the 13th five year plan. With its experience and relationship with the government, CEWL is well positioned to gain from China’s booming environmental industry.

CITIC Envirotech
CITIC Envirotech was renamed from United Envirotech after CITIC (a state owned company) acquired controlling stake in the company. This is the second water treatment company to be acquired by China related firms within a year after CEWL. These acquisitions can show the determination by the Chinese government to clean up pollution in the country.

CET is an integrated water solution provider that specialises in water treatment engineering, investment and operation and advanced membrane product manufacturing and application. It engineers and constructs wastewater treatment facilities for industrial companies such as China Petrochemical Corporation, China National Petroleum Corporation, China National Offshore Oil Corporation and Sembcorp Utilities.

It proprietary membrane products and integrated membrane systems that includes 35 patents allow the group to treat biochemical wastewater before releasing them into the water streams. With the central government’s determination to clean up water pollution, local and municipal government along with private corporations can be expected to step up their game.

Trained in fund management, Raymond is familiar with shares and various investment vehicles.

Please click here for more information about this author.

Midas Hldgs  -- -- --   
Business: Manufacturer of aluminium alloy extrusion products for China's rail transportation sector. [FY16 Turnover] Aluminium alloy (99.3%), polyethylene pipe (0.7%).

Insight: Jan-18, Co announced that its JV company, CRRC Nan... Read More
China Everbright Water  0.315 -- --   
Business: Co is involved in the environmental water business, including wastewater treatment, reusable water projects and wastewater heat pump projects in PRC.

Insight: Feb-19, FY18 revenue rose 33% mainly due to increa... Read More

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