Kevin Smith, of API Capital and portfolio manager of the TAMIM Asia Small Companies strategy, highlights one of the more interesting stocks in the Asia Small Companies portfolio, China Water Affairs Group (0855.HKG). While water is not glamorous, it is the one commodity we cannot live with out, read further to find out why the Asia Small Companies team believes this is a stock we need to hold in our portfolio.
China Water Affairs Group Limited (CWA), through its subsidiaries, supplies city water and sewage treatment. CWA supplies raw water and tap water, treats sewage, constructs water supply pipe networks, and installs water meters. CWA has 7,662 employees with staff turnover reported as 1.62% in the 2018 ESG Report. In March 2018 CWA had a total daily supply capacity of 12.15 million cubic metres operating 101 water plants and 22 sewage treatment plants.
Accounting, Strategy and Governance Comments
Map showing location of water distribution for China Water Affairs Group
CWA has a good business model and is well placed to deliver strong returns to their investors in the medium to long term. We will continue to monitor the behaviour of management with respect to non-core businesses, in particular property development and the potential divestment of the ESD business. We are satisfied that CWA meets our standards for accounting, strategy and governance.
Value, Momentum and Quality Comments
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TAMIM Asset Management provides general information to help you understand our investment approach. Any financial information we provide is not advice, has not considered your personal circumstances and may not be suitable for you.