A worker of Hanoi Water Co Ltd (Hawacom). Hawacom is among the enterprises that occupy the largest market shares in the water supply industry. (Photo: hawacom.vn)Hanoi (VNS/VNA) - Thewater supply and drainage sector is drawing investment thanks to its highprofit margins and good growth potential.
According to the HCM CitySecurities Corporation (HSC), the water industry has positive prospects asrapid urbanisation and population growth have led to a higher demand for waterfor industrial production and clean water consumption.
The annual compound growth rate(CAGR) of the water sector in 2017-2020 is 43 percent for industrial productionand 35 percent for clean water consumption.
Enterprisesthat occupy the largest market shares in the water supply industryinclude Dong Nai Plastic JSC, Binh Duong Water Environment JSC, Thu Dau Mot Water JSC, Ha Dong Clean Water JSC, Hanoi Water Co Ltd (Hawacom) and Song Da Clean Water Investment JSC (Viwasupco).
HSC said more than 80 percentof enterprises in the industry have gross profit margins of more than 30 percent.In the first quarter of this year, the firms with the highest gross profitmargins were Vinh Long Water Supply JSC with65 percent, Thai Nguyen Clean Water JSC with 58 percent andViwasupco at 47 percent.
Viwasupco provides about 25 percentof the total clean water output for Hanoi via its distribution partners, serving more than 1.1 millionpeople in the city.
Although Viwasupco's marketshare in Hanoi is forecast to fluctuate in thenear future due to the founding of many new rivals, Viwasupco plans to upgradeits system to increase competitiveness and strengthen cooperation withdistribution partners.
The company's revenue from theclean water supply segment increased from 373 billion VND in 2018 to 540 billion VND in2019, reaching the highest growth rate in the segment with an increase of 45percent. Gross profit rose 28 percent from 218 billion VND in2018 to 279 billion VNDin 2019, becoming one of the segments with the highest profitgrowth in the company.
Son Ha Group has also announced plans to expandoperations. Clean water supply will be one of three new strategic areas Son Ha will expand in this year, in addition torenewable energy and industrial real estate.
Earlier, Son Ha acquired stakes in Ha Dong Clean Water JSC and Lang Son Water JSC as well as in some other waterplants. The firm expects to earn revenue of 200 billion VND from the water segment.
The group is working with aJapanese partner to provide a solution to filter wastewater before discharginginto the environment while providing this solution for manufacturing plants inthe near future, Son said.
With the positive growthprospects of the water supply industry, many foreign investors have increasedtheir ownership in local water companies on Vietnam's stock market.
Vietnam-OmanInvestment JSC, a joint venture between the Oman National Reserve Fund and theState Capital Investment Corporation (SCIC), has poured 19 million USD into the Song Hau Water Plant.
This factory serves waterdemand in the southern provinces of Soc Trang and Hau Giang.
Philippines-based Manila WaterAsia Pacific has also invested in Saigon Water Infrastructure JSC./.
