Ozner Waterir.ozner.net/cms/html/client/oznerwater/attachment/201507090653021... · Ozner Water...

Regulation AC certifications and important disclosures are located at the end of this research report

Equity Research

July 9, 2015

Ozner Water

Water purification bellwether with explosive growth

Initial Coverage

Initiate with BUY Investment positives

Leading commercial water purifier supplier. 1) Ozner has a share of 5.4% in the commercial water purifier market. 2) Its leasing model can generate enough rental revenue within the first two years to cover the cash cost of the leased purifiers. 3) Ozner plans to offer lump-sum products targeting households.

Strengths: 1) focus on the RO (Reverse Osmosis) method water purifiers with smart solutions and good control of wastewater rate; 2) a professional brand image built with installations in office buildings and commercial premises. Weaknesses: 1) cash flow is the key growth constraint due to the leasing model; 2) weaker capabilities of mass distribution and production compared with home appliance companies.

Explosive growth of China’s water purification market. 1) China’s retail water purification market grew ~69% YoY to Rmb16bn in 2014 and its growth rate will likely remain >40% in the next six years. 2) RO purifiers are the future trend. 3) Market concentration remains low due to various new entrants.

Water purifier installations will produce steady annual filter replacement needs. 1) The company's profit model is to charge continuous service fees. 2) A total of 657k sets were installed by end-2014. This number is expected to reach 2.84mn by end-2018. The installations are expected to contribute profit of ~Rmb1,576/set within the user life cycle (after discount).

Financials

1) A 10-year depreciation policy is used for leased products (we provide a sensitivity analysis under different depreciation periods). 2) No profit is generated during the first year for lump-sum products. Profit comes from future filter replacement services. 3) The company will be in a user expansion period over the next six years. Cumulative annual growth rate of its user base will be over 40%. During this period, neither net profit nor cash flow is suitable to measure the value of the company. 2015/16 EPS is estimated at Rmb0.086/0.112, up 21%/30% YoY.

Valuation and recommendation

Initiate with BUY and set TP at HK$3.21 using DCF model, implying the value of 2.84mn users by end-2018 and 15.0x/11.4x 2015/16e P/E. Risks: Water purification service renewal risk; cash flow risk.

Ticker 02014.HK

CICC investment rating * BUY

Last close HK$1.62

CICC target HK$3.21

52wk price range HK$4.70~1.43

Market cap (bn) HK$3

Daily value (mn) HK$10.72

Shares outstanding (mn) 1,744

Free float (%) 50

Daily volume (mn sh) 4.47

Business sector Home Appliances & Electronics

(Rmb mn) 2013A 2014A 2015E 2016E

Revenue 402 512 763 1,017

(+/-) 38.6% 27.4% 48.9% 33.4%

Net profit 153 124 150 196

(+/-) 50.0% -19.0% 21.3% 30.0%

EPS 0.09 0.07 0.09 0.11

BPS 0.19 1.09 1.17 1.29

DPS 0.00 0.00 0.00 0.00

CPS 0.18 0.22 0.21 0.29

P/E 14.4 18.2 15.0 11.4

P/B 6.6 1.2 1.1 1.0

EV/EBITDA 8.9 7.3 5.4 4.0

Dividend yield 0.0% 0.0% 0.0% 0.0%

ROAA 14.1% 6.6% 5.5% 5.9%

ROAE 59.4% 11.1% 7.6% 9.1%

Source: Bloomberg, company data, CICC Research

Wei HE Haiyan GUO

[email protected]

SAC Reg. No.: S0080512010001

SFC CE Ref: BBH812

[email protected]

SAC Reg. No.: S0080511080006

SFC CE Ref: AIQ935

46

73

100

127

154

181

Jul-2014 Oct-2014 Jan-2015 Apr-2015 Jul-2015

Rela

tive V

alu

e (

%)

02014.HK HSCEI

CICC Research: July 9, 2015


2

Financial summary Financial statement (Rmb mn) 2013A 2014A 2015E 2016E

Income statement

Revenue 402 512 763 1,017

COGS -130 -177 -274 -416

Selling expenses -57 -93 -165 -222

Administrative expenses -45 -99 -142 -136

Other ops income (expense) -7 -14 0 0

Operating profit 185 163 187 248

Finance costs -2 -1 8 6

Other income (expense) 0 0 0 0

Profit before income tax 184 161 195 254

Income tax -31 -37 -45 -58

Minority interest 0 0 0 0

Net profit 153 124 150 196

EBITDA 254 269 375 515

Recurrent net income 153 118 150 196

Balance sheet

Cash and bank balances 154 294 245 178

Trade and bill receivables 100 100 140 143

Inventories 37 90 62 169

Other current assets 67 317 333 351

Total current assets 358 801 781 841

Fixed assets and CIP 817 1,415 1,980 2,528

Intangible assets and others 134 234 229 223

Total non-current assets 951 1,649 2,209 2,751

Total assets 1,310 2,450 2,989 3,592

Short-term borrowings 213 0 0 0

Trade and bill payables 58 129 176 287

Other current liabilities 699 419 761 1,056

Total current liabilities 970 548 936 1,343

Long-term borrowings 0 0 0 0

Total non-current liabilities 7 6 6 6

Total liabilities 976 554 942 1,349

Share capital 0 14 14 14

Retained profit 334 1,882 2,032 2,228

Equity 334 1,896 2,046 2,242

Total liabilities & equity 1,310 2,450 2,989 3,591

Cash flow statement

Pretax profit 153 124 150 196

Depreciation & amortization 69 106 188 267

Change in working capital 70 93 36 38

Others 14 61 0 0

Cash flow from operations 306 384 374 500

Capital expenditure -447 -769 -747 -809

Others -67 -302 324 241

Cash flow from investing -514 -1,071 -423 -568

Equity financing 0 989 0 0

Bank borrowings 197 -215 0 0

Others -4 59 0 0

Cash flow from financing 193 833 0 0

Foreign exchange gain (loss) 0 -6 0 0

Net changes in cash -15 139 -49 -67

Financial ratios 2013A 2014A 2015E 2016E

Growth ability

Revenue 38.6% 27.4% 48.9% 33.4%

Operating profit 50.4% -11.9% 14.8% 32.3%

EBITDA 62.8% 5.9% 39.4% 37.2%

Net profit 50.0% -19.0% 21.3% 30.0%

Profitability

Gross margin 67.7% 65.4% 64.0% 59.1%

Operating margin 46.0% 31.8% 24.5% 24.3%

EBITDA margin 63.2% 52.5% 49.2% 50.6%

Net margin 38.1% 24.2% 19.7% 19.2%

Liquidity

Current ratio 0.37 1.46 0.83 0.63

Quick ratio 0.33 1.30 0.77 0.50

Cash ratio 0.16 0.54 0.26 0.13

Liabilities / assets 74.5% 22.6% 31.5% 37.6%

Net debt / equity 17.7% net cash net cash net cash

Return

RoA 14.1% 6.6% 5.5% 5.9%

RoE 59.4% 11.1% 7.6% 9.1%

Per-share data

EPS (Rmb) 0.09 0.07 0.09 0.11

BPS (Rmb) 0.19 1.09 1.17 1.29

DPS (Rmb) 0.00 0.00 0.00 0.00

Cash flow per share (Rmb) 0.18 0.22 0.21 0.29

Valuation

P/E 14.4 18.2 15.0 11.4

P/B 6.6 1.2 1.1 1.0

EV/EBITDA 8.9 7.3 5.4 4.0

Dividend yield 0.0% 0.0% 0.0% 0.0%

Source: Company data, CICC Research

Company description Ozner Water is a leading company that provides commercial water purification services under a unique leasing model (which is

different from the traditional equipment sales model).The company has competitive advantages both in smart solutions and the

effluent rate, and its lease renewal rate is very high (>97%). Ozner is headquartered in Shanghai Pudong.



3

Contents

Company profile ................................................................................................................. 5

Products and services ....................................................................................................... 5

Business structure ............................................................................................................ 7

Household water purification business strategies .................................................................. 8

Ozner’s history and shareholders ........................................................................................ 9

Explosive market growth with the proliferation of new brands ........................................ 10

China’s drinking water situation ........................................................................................ 10

Explosive growth of China’s water purifier market ............................................................... 11

Proliferation of new brands limits the short-term increase of market concentration .................. 12

RO products are the trend for the market .......................................................................... 13

The leasing model for water purifiers ............................................................................... 14

Unique features of water purifiers ..................................................................................... 14

Introduction of the leasing model for water purifiers ............................................................ 14

Competitive strengths of the leasing model ........................................................................ 16

The leasing model constrains the company’s growth rate ..................................................... 17

Sensitivity analysis of Ozner’s earning assets to the depreciation policy ................................. 18

Comparative analysis of Coway, Korea ............................................................................. 19

Company profile ............................................................................................................. 19

Coway’s water purifier leasing business ............................................................................. 20

Financial analysis ............................................................................................................. 22

Revenue breakdown ....................................................................................................... 22

Financial statement analysis ............................................................................................ 24

Valuation by reference to comparable companies ............................................................ 27

DCF model…… ................................................................................................................ 27

User value analysis ......................................................................................................... 28

Comparable valuation ..................................................................................................... 29

Figures

Figure 1: Top 10 companies in China’s water purifier market by sales value to end users ................ 5 Figure 2: Top 10 companies in the commercial water purifier market by sales value to end users..... 5 Figure 3: Ozner’s water purifiers ............................................................................................ 6 Figure 4: Ozner’s water purifiers in airports’ VIP rooms ............................................................. 6 Figure 5: Ozner’s service station ............................................................................................ 6 Figure 6: Quality certifications obtained by Ozner ..................................................................... 7 Figure 7: Ozner’s business structure, 2014 .............................................................................. 7 Figure 8: Revenue structure of water purification business (Rmb mn) .......................................... 7 Figure 9: APP of Ozner’s intelligent cups .................................................................................. 8 Figure 10: Ozner’s intelligent water cups ................................................................................. 8 Figure 11: Ozner smart water purity tester APP ........................................................................ 9 Figure 12: Ozner smart water purity tester .............................................................................. 9 Figure 13: Ozner’s five major shareholders as of December 31, 2014 .......................................... 9 Figure 14: Commercial drinking water consumption structure ................................................... 10



4

Figure 15: Household drinking water consumption structure ..................................................... 10 Figure 16: Forecasted growth of China’s household water purifier market (2014~2020) ............... 11 Figure 17: China’s water purifier market structure (by end user) in 2012 ................................... 11 Figure 18: China’s water purifier market structure (by business model), 2012 ............................. 11 Figure 19: Mainstream brands in the water purification market ................................................. 12 Figure 20: Retail sales performance of major water purifier brands in 1Q15 ................................ 12 Figure 21: Water purifier retail sales structure (by channel) in 2014 .......................................... 13 Figure 22: Water purifier retail sales structure (by product), 2014 ............................................. 13 Figure 23: Water purifier rental fees under the leasing model (Retail) (Rmb) .............................. 14 Figure 24: Cash flow structure of Ozner’s first-generation water purifier (EXW) (Rmb) ................. 15 Figure 25: Comparison of costs and services among major competitors ..................................... 16 Figure 26: Number of terminal products (thousand units) ........................................................ 17 Figure 27: Filter replacement’s contribution to water purification business revenue ...................... 17 Figure 28: Estimates for earning assets ................................................................................. 17 Figure 29: Sensitivity analysis of earning assets to the depreciation policy ................................. 18 Figure 30: Coway’s revenue and net profit (US$ mn) .............................................................. 19 Figure 31: Coway’s trend of gross profit margin and net profit margin ....................................... 19 Figure 32: Coway’s revenue structure in 2014 ........................................................................ 19 Figure 33: Korea’s water purifier market landscape in 2013 ...................................................... 19 Figure 34: Coway’s rental revenue from water purifiers (US$ mn) ............................................. 20 Figure 35: The number of Coway’s lessees (thousand) ............................................................ 20 Figure 36: Coway’s renewal rate in 2014 ............................................................................... 20 Figure 37: Coway’s retained customer structure in 2014 .......................................................... 20 Figure 38: CPSI-370N water purifier ..................................................................................... 21 Figure 39: Rental prices of Coway’s CPSI-370N ...................................................................... 21 Figure 40: Revenue breakdown ............................................................................................ 22 Figure 41: Water purification revenue breakdown ................................................................... 22 Figure 42: Air sanitization revenue breakdown ....................................................................... 23 Figure 43: Income statement ............................................................................................... 24 Figure 44: Balance sheet ..................................................................................................... 25 Figure 45: Cash flow statement ............................................................................................ 26 Figure 46: FCFF forecast ..................................................................................................... 27 Figure 47: DCF key assumptions .......................................................................................... 27 Figure 48: DCF analysis ...................................................................................................... 27 Figure 49: User value analysis ............................................................................................. 28 Figure 50: Comparison to comparable companies (2015.07.08) ................................................ 29 Figure 51: Historical P/E and P/B bands ................................................................................. 29



5

Company profile

Products and services

Ozner is China’s top water purifier supplier with a share of 5.4% in commercial water purifier market, despite its limited influence in the household market. It also provides a minority of air purification services. Currently, Ozner owns manufacturing bases in Shangyu, Zhejiang Province and Xianyang, Shaanxi Province, producing 370,000 purifiers per year. The Xianyang Phase II project is expected to start production in 4Q15 with designed capacity of 200,000 purifiers per year.

Figure 1: Top 10 companies in China’s water purifier market by sales value to end users

Source: IPO prospectus, Frost & Sullivan report, CICC Research

Figure 2: Top 10 companies in the commercial water purifier market by sales value to end users

Source: IPO prospectus, Frost & Sullivan report, CICC Research

Ranking CompanySales value in 2012

(Rmb mn)

Sales market

share in 2012Business model

1 Midea 935 2% Equipment sales

2 Qingyuan 700 2% Equipment sales

3 Ozner 460 1% Leasing & service

4 Litree 395 1% Equipment sales

5 Angel 375 1% Equipment sales

6 Gemei 320 1% Equipment sales

7 Pentair Ltd 275 1% Equipment sales

8 Ecowater systems Ltd 265 1% Equipment sales

9 A.O.Smith 260 1% Equipment sales

10 Canature 240 1% Equipment sales

Others 38,226 90%

Total 42,451 100%

Ranking CompanySales value in 2012

(Rmb mn)

Sales market

share in 2012Business model

1 Ozner 402 5% Leasing & service

2 Midea 140 2% Equipment sales

3 Qingyuan 105 1% Equipment sales

4 Juxing 100 1% Leasing & service

5 Angel 78 1% Equipment sales

6 Gemei 65 1% Equipment sales

7 Litree 59 1% Equipment sales

8 Aquacup 43 1% Equipment sales

9 Pentair Ltd 41 1% Equipment sales

10 Ecowater systems Ltd 40 1% Equipment sales

Top 10 total 1,073 15%

Others 6,310 85%

Total 7,393 100%



6

Ozner’s products are widely used in various commercial premises like airports (such as Shanghai Hongqiao Airport, Pudong Airport, Qingdao Airport and Xi’an Xianyang Airport), railway stations (such as Changsha railway station), retail outlets (Beijing Wangfujing department store, Suning and E-mart), banks (such as BOC, BCM and ABC) and schools. Ozner is one of the drinking water providers for the 2010 World Expo and 2011 World University Games. Ozner also provides drinking water to JSLC (Jiuquan Satellite Launch Center) and purified air to the assembly workshop of “The Moon” aerospace project.

Figure 3: Ozner’s water purifiers


Figure 4: Ozner’s water purifiers in airports’ VIP

rooms

Figure 5: Ozner’s service station

Source: Baidu.com, CICC Research Source: Baidu.com, CICC Research

Household water purifier

installed above the kitchen sink

Household water purifier

installed under the

kitchen sink

Corporate water purifierCorporate water purifiers

(group version)



7

Ozner’s products have been recognized by domestic and foreign certification authorities.

Figure 6: Quality certifications obtained by Ozner


Business structure

Ozner operates its water purification business under the leasing model. In 2014, second-time service fees as a percentage of the total fees increased to 47.8%.

Figure 7: Ozner’s business structure, 2014

Figure 8: Revenue structure of water purification

business (Rmb mn)

Source: Company data, CICC Research Source: Company data, CICC Research

Switzerland SGS

Water business licence by

Chinese Ministry of Health

CB Certification

CE Certification (EU) RoHS Certification (EU)

USA NSF

80%

20%

Water purification

Air purification 195 305 391

602 783

4

2 8

20

52

116

0

200

400

600

800

1,000

2011A 2012A 2013 A 2014A 2015E 2016E

Filter replacement Others



8

Household water purification business strategies

Ozner will take more positive measures to broaden the household market: 1) building its brand image as a professional water purification company by distributing its products in commercial premises to capture consumers’ attention; 2) enriching its smart product offerings such as intelligent water cups and water purity testers to draw more attention; 3) promoting lump-sum water purifiers. First-time sales will have low GPM, with future revenue coming from filter replacement.

Figure 9: APP of Ozner’s intelligent cups Figure 10: Ozner’s intelligent water cups


Intelligent cup APP



9

Figure 11: Ozner smart water purity tester APP Figure 12: Ozner smart water purity tester


Ozner’s history and shareholders

The company was found in 2010 and went public on HKEx in June 2014.

Figure 13: Ozner’s five major shareholders as of December 31, 2014


Shareholders Shares Brief introductions Time Cost/share (HK$)

Baida Holdings Limited 20%

Lion Rise Holdings Limited 3%

Glorious Shine Holdings Limited 3%

SAIF Partners IV L.P. 19% Financial investor, Round A 2010.12 0.36

Ares FW Holdings L.P. 13% Financial investor, Round B 2011.10 1.20

Watercube Holdings L.L.C. (Goldman) 8% Financial investor, Round C 2012.11 1.43

Och-Ziff Capital Management Group L.L.C. 7% IPO conterstone 2014.6 2.70

Total 73%

Founder's trust



10

Explosive market growth with the proliferation of new brands

China’s drinking water situation

In China, commercial and household water mainly comprises plain water and bottled water. The penetration of purified drinking water has been increasing quickly to 6.8% in the commercial market and 12.2% in the household market in 2012. The ratios are expected to rise to 28% and 32% in 2017, respectively.

Figure 14: Commercial drinking water consumption structure

Source: IPO prospectus, Frost & Sullivan, CICC Research

Figure 15: Household drinking water consumption structure


70% 67% 63%58%

52%47%

41%

25%27%

28%30%

31%32%

31%

5% 7% 9% 13% 17%22%

28%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012 2013e 2014e 2015e 2016e 2017e

Plain boiled water Barreled drinking water Purified drinking water

63% 61% 59% 56% 53% 49% 45%

12% 14% 15% 16%18%

18%19%

10% 12% 15% 18% 22% 27% 32%

15% 13% 11% 9% 7% 6% 4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012 2013e 2014e 2015e 2016e 2017e

Plain boiled water Barreled drinking water

Purified drinking water Others



11

Explosive growth of China’s water purifier market

CMM data show the China’s retail water purifier market grew ~69% YoY to Rmb16bn in 2014 and its growth rate will likely remain over 40% in the next six years. Currently, RO is the safest method compared to other water purification technologies like ultrafiltration and softening. Ozner maintains a wastewater rate of 5%, compared to a common rate of ~70% in the industry.

Figure 16: Forecasted growth of China’s household water purifier market

(2014~2020)

Source: CMM, CICC Research

According to Frost & Sullivan, commercial purified water accounted for 17% of China’s water purification market in 2012 and household purified water had a share of 83%. By business model, the leasing and maintenance service model takes up 8%, vs. a share of 92% for lump-sum sales.

Figure 17: China’s water purifier market

structure (by end user) in 2012

Figure 18: China’s water purifier market

structure (by business model), 2012

Source: IPO prospectus, Frost & Sullivan, CICC Research Source: IPO prospectus, Frost & Sullivan, CICC Research

33 54 95

160 240

344

1,280

0

200

400

600

800

1,000

1,200

1,400

2011 2012 2013 2014 2015E 2016E 2020

Sales (Rmb100mn)

17%

83%

Commercial model

Household model

8%

92%

Leasing & service

Equipment sales



12

Proliferation of new brands limits the short-term increase of market

concentration

The water purification market is seeing a proliferation of new brands with various companies entering the market. Currently there are over 3,000 water purifier providers in the market. As a result, the market concentration is unlikely to increase in the short term.

Various players have their own strengths. For example, the leasing model has advantages in the commercial water purification market and Ozner now ranks first with a 5.4% market share.

Figure 19: Mainstream brands in the water purification market


CMM data show that Midea, Qinyuan, Angel and A.O.Smith are the top four most influential brands in the home appliance chain stores.

Figure 20: Retail sales performance of major water purifier brands in

1Q15


Membrane manufactruing/

water treatment companies• Qinyuan/Angel/Origin Water/

Canature/Litree

Domestic companies

• Integrated companiesMidea/Haier/Gree

• Solar energy companiesSolareast(Micoe/Sunrain)/Sangle/Himin

Water purifiers

providers

Home appliance

companies

Direct sales companiesAmway/Perfect/Infinitus

Other

models

International companies• A.O.Smith/3M/Pentail/

Ecowater/Unilever

Service companiesOzner/DNC/Coway

Sales market

share

Sales vol.

market share

Midea 25% 26%

Qingyuan 21% 25%

Angel 15% 15%

A.O.Smith 19% 11%

Litree 4% 5%

3M 4% 4%

Haier 2% 3%

Ecowater 2% 2%

Whirlpool 1% 1%

Everpure 1% 1%



13

RO products are the trend for the market

Water purifiers are of mixed quality. In July~November 2014, the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) inspected the products of 33 water purifier manufacturers in Shanghai, Jiangsu, Zhejiang, Guangdong, Fujian and other areas. The results show that 40% of the inspected companies failed to meet the criteria. In March 2015, the AQSIQ branch in Jiangsu Province initiated a random inspection on 60 batches of water purifiers and it turned out that 60% of the products were substandard, with only 16% of the online products meeting the criteria. Online sales of water purifiers accounted for 15% of total sales with the rest being offline sales in 2014.

Water purifiers can be divided into different types: RO purifiers, ultrafiltration purifiers and activated carbon purifiers. 1) The RO technology has the greatest filter capacity. Because its aperture can be narrowed to 0.1nm, a RO purifier can filter all kinds of harmful materials. Meanwhile RO has its shortcomings as it needs electricity and storage buckets, and generates waste water. 2) Ultrafiltration purifiers have 10~100nm broad apertures, so they can filter most harmful materials while retaining mineral substances. This method needs no electricity and generates no wastewater. 3) Activated carbon purifiers can absorb all kinds of materials other than heavy metals.

Although RO purifiers do not have advantages in pricing and user friendliness, their market share continues to grow because of its unique safety feature. RO purifiers now take up 55% of the whole market and their market share will continue to increase, driving up their market prices. The unit price of water purifiers was Rmb2,847 in 1Q15, up 62.6% from Rmb1,751 in 2010. Among all types of purifiers, RO water purifiers are the most expensive with a unit price of Rmb3,293.

Figure 21: Water purifier retail sales structure

(by channel) in 2014

Figure 22: Water purifier retail sales structure

(by product), 2014

Source: AVC, CICC Research Source: AVC, CICC Research

85%

15%

Online

Offline 55%

22%

23%

Reverseosmosis

Ultrafiltration

Activatedcarbon



14

The leasing model for water purifiers

Unique features of water purifiers

Unlike other electric appliances, water purifiers can generate service need and service revenue in the future because they need regular replacement of filter elements.

This determines that: 1) high-end brands will become the major beneficiaries in the future; 2) retaining customers with better services will bring long-term profit, making the leasing of water purifiers a feasible business model; 3) Ozner has its competitive advantages in influencing customers’ choice and gaining their trust gradually.

Introduction of the leasing model for water purifiers

Ozner has an advantageous leasing model in the whole market, under which the rental fees are the highest in the first year and start to drop from the second year. The accumulated rental revenue in the first two years can cover the cash cost of the leased purifiers.

In addition, Ozner adopts a “distributors + direct sales” model:

1) Distributors are responsible for client relationship maintenance, which is adaptive to China’s complicated business environment.

2) Ozner’s after-sales customer service team is responsible for purifier installation and regular replacement of filter elements. The service team has over 1,000 employees and covers 150 cities.

The below figure shows the range of water purifier rental fees:

Figure 23: Water purifier rental fees under the leasing model (Retail) (Rmb)

Source: IPO prospectus, CICC Research

First year Subsequent years First year Subsequent years

Corporate models

Center models 5,180 2,880 6,280~7,880 3,680~4,680

Other corporate models 1,010~2,380 400~1,090 1,160~3,280 1,160~1,480

Household models 1,010~1,280 400~580 1,260~1,750 860~1,380

Sales price for distributor Retailing price



15

According to the prices set by Ozner, the first year’s rental revenue can cover most of its cash cost and in the third year, the accumulated revenue will surpass its cash expenditure. The figure below shows Ozner’s cash flow structure taking its first-generation water purifier as an example.

Figure 24: Cash flow structure of Ozner’s first-generation water purifier (EXW) (Rmb)


-1,660

1,145

450 450 450 450 450 450 450 450 450

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

Manufacturing

cost

Yr.1 Yr.2 Yr.3 Yr.4 Yr.5 Yr.6 Yr.7 Yr.8 Yr.9 Yr.10



16

Competitive strengths of the leasing model

The leasing model has advantages in the commercial water purifier market: 1) cost advantage: its comprehensive cost is lower than the lump-sum sales model of bottled water or water purifiers; 2) easier buying decision to make: the leasing model makes it easier for first-line managers to make buying decisions.

The first-year rental fees for Ozner’s household water purifiers range between Rmb1,260~1,750, very attractive compared with the average retail price of Rmb3,293 for RO water purifiers in 1Q15. According to Frost & Sullivan, Ozner’s leasing service model has advantages over its competitors’ sales business model.

Figure 25: Comparison of costs and services among major competitors


Rmb Ozner Manufacturer A Manufacturer B Manufacturer C

Initial costs

Corporate models 2,500 10,000 5,500 6,988

Household models 1,680 2,996 2,200 3,588

Subsequent costs

Corporate models 2,300 620 2,750 3,200

Household models 680 600 1,000 1,200

Total costs in 5 years



Total costs in 10 years



Home repair costs No additional feesService charge after one

year warranty period

Service charge after the

warranty period (filter's

warranty period of three

months, the major parts

of 2 years)

Service charge after

one year warranty

period

Periodic inspections Yes No No No

Maintenance response time <24h No promise No promise No promise

Water purification technology

Multiple purification and

reverse osmosis

technology

Multiple purification and

reverse osmosis

technology

Activated carbon

composite technology

Multiple purification

and reverse osmosis

technology



17

The leasing model constrains the company’s growth rate

The leasing model tends to limit Ozner’s cash flow, keeping the company from achieving a higher growth rate than the industry level. In the long run, however, a much stronger growth trend could be established after enough customers are acquired to improve cash flow.

Figure 26: Number of terminal products

(thousand units)

Figure 27: Filter replacement’s contribution to

water purification business revenue


Ozner recognizes its leased water purifiers as earning assets in the accounting system. The leasing model will lead to substantial growth in earning assets in the accounting system.

Figure 28: Estimates for earning assets

Source: IPO prospectus, CICC Research

107

309

463

657

937

1,368

0

200

400

600

800

1,000

1,200

1,400

1,600

2011 2012 2013 2014 2015E 2016E

0%

17%

42%48%

40%43%

0%

10%

20%

30%

40%

50%

60%

2011A 2012A 2013 A 2014A 2015E 2016E

Filter replacement fees YoY

(Rmb mn) 2011A 2012A 2013 A 2014A 2015E 2016E

Oringinal book value 154 416 672 1,113 1,620

Earning assets 154 206 256 441 507 659

Losses from disposal of earning assets 0 0

Acquisition of subsidiaries 57

Incremental depreciation 6 26 54 85 134 194

Cumulative depreciation 6 32 86 171 306 500

Balance of book value 148 384 585 942 1,314 1,779



18

Sensitivity analysis of Ozner’s earning assets to the depreciation

policy

Ozner uses a 10-year depreciation & amortization policy for earning assets. Based on an conservative sensitivity analysis, if the depreciation period is shortened to 9/8/7/6 years, its 2015e EPS will fall 6%/16%/29%/46% respectively.

Discussion on depreciation policy: 1) Water purifiers need to be installed, so their transfer cost is high and a large portion of customers tend to renew their leases upon expiry. Historically, more than 97% of Ozner’s customers, which mainly consist of commercial accounts, renewed their leases, but the long-term trend is yet to be validated. 2) If customers decide not to renew their leases, distributors are responsible for finding the next lessees for the taken-back products. This effectively mitigates the financial risk Ozner faces when the renewal rate declines. 3) Coway, a similar water purifier provider in Korea, adopts a 5-year depreciation policy for its water purifiers. According to Coway’s experience, the renewal rate after five years is about 76%. 4) Chaoyue Group Limited (“CGL”) (0147.HK) also operates under a similar leasing model in 2009~2012 and the company changed the service life of its purifiers from nine years to five years in 2010 after an assessment.

If the company provides quality services, it will be able to establish a long-term relationship with users: 1) Water purifier is a necessity in the future. Users tend to select companies with the best services. 2) Ozner offers free transfer services for its leased products, which enables continuous services even in case of a change of address.

We think it is reasonable to give leased water purifiers a depreciation period of 6~10 years. The table below shows our sensitivity analysis of how different depreciation policies affect profit.

Figure 29: Sensitivity analysis of earning assets to the depreciation policy

Source: CICC Research

2011A 2012A 2013 A 2014A 2015E 2016E

9-year depreciation policy 2 1 3 8 8 10




9-year depreciation policy 9% 1% 2% 7% 6% 5%




Profit decline

(Rmb mn)

Profit decline

(%)



19

Comparative analysis of Coway, Korea

Coway is the No. 1 brand in water purifier leasing in the Korean market, which proves the leasing mode of water purifiers is very likely to be successfully promoted in the Chinese market.

Company profile

Coway (021240.KS) is the top brand in Korea’s environmental household appliance market. In 2014, Coway recorded revenue of US$2,053mn and net profit of US$237mn.

Figure 30: Coway’s revenue and net profit

(US$ mn)

Figure 31: Coway’s trend of gross profit margin

and net profit margin


Coway operates ~92% of its business in Korea. Its core business is to offer leasing services of water purifiers and air purifiers, with a minority of direct sales business. About 1/3 of the Korea population are using Coway’s water purifiers and 1/4 are using its air purifiers. In 2013, Coway took up 45% of Korea’s water purifier market, far ahead of other players. Although Coway has entered China’s market, its influence is not strong enough to support the adoption of the leasing model.

Figure 32: Coway’s revenue structure in 2014

Figure 33: Korea’s water purifier market landscape

in 2013


1,648 1,770

1,936 2,053

151 84 224 237

0

500

1,000

1,500

2,000

2,500

2011 2012 2013 2014

Revenue Net profit

0%

20%

40%

60%

80%

2011 2012 2013 2014

NPM GPM

43%

11%

23%

19%

4% Rentals－

Water purifiers

Rentals－Air

purifiers

Rentals－

Others

Direct sales

Other revenue

45%

11%

8%

36%

Coway

Chungho Nais

DongyangMagic

Others



20

Coway’s water purifier leasing business

In 2013, Coway generated revenue of US$819mn from its leasing business. The number of its customers was 3.02mn.

Figure 34: Coway’s rental revenue from water

purifiers (US$ mn)

Figure 35: The number of Coway’s lessees

(thousand)


Coway’s total fees consist of rental fees and management fees (which cover the services of machine cleaning and regular replacement of filter elements). The contract generally lasts 3~5 years. After five years of leasing, the machine’s ownership will be transferred to the customer, but the customer still need to pay management fees for regular maintenance. Coway adopts a 5-year depreciation policy. During the contract period, costumers need to pay a deposit ranging from zero to KRW100,000. The amount of deposit will influence the later rental fees. If the customer terminates the contract before its expiry, it will cost him or her 10% of the deposit as the penalty.

Figure 36: Coway’s renewal rate in 2014

Figure 37: Coway’s retained customer structure in

2014


754 771

819

885

650

700

750

800

850

900

2011 2012 2013 2014

Rental revenue: water purifying machines

2,911

2,986

3,018

2850

2900

2950

3000

3050

2011 2012 2013

Number of lessees

76%

24%

Contract

extension

Contracttermination

39%

37%

24%Contract

renewal

Membership

Ownership

transfer



21

Figure 38: CPSI-370N water purifier Figure 39: Rental prices of Coway’s CPSI-370N

Source: Baidu.com, CICC Research Source: Company data, CICC Research

KRW Rmb KRW Rmb

0 0 56,000 311

50,000 278 54,500 303

100,000 556 53,000 294

KRW Rmb

26,900 149

32,500 181

38,500 214121 months and beyond

Deposits Rental fees/month

Management fees/month

Months after installation

0~96 months

97~120 months



22

Financial analysis

Revenue breakdown

Figure 40: Revenue breakdown


Figure 41: Water purification revenue breakdown

Note: We assume the original renewal rate is 98%, and then add both leased and lump-sum water purifiers. Source: Company data, CICC Research

(Rmb mn) Ref. 2011A 2012A 2013 A 2014A 2015E 2016E

Revenue 102 290 402 512 763 1,017

Water purification business A 57 198 314 411 655 899

Air sanitisation business B 45 93 88 100 108 118

Revenue YoY 185% 38% 27% 49% 33%

Water purification business YoY 247% 59% 31% 59% 37%

Air sanitisation business YoY 106% -5% 14% 7% 9%

Cost 44 103 130 177 274 416

Water purification business 10 39 67 107 198 333

Air sanitisation business 34 64 63 70 77 84

Gross profit margin 57.0% 64.4% 67.7% 65.4% 64.0% 59.1%

Water purification business 82.5% 80.3% 78.7% 74.1% 69.8% 63.0%

Air sanitisation business 24.7% 30.5% 28.9% 29.9% 29.0% 29.0%

(Rmb mn) Ref. 2011A 2012A 2013 A 2014A 2015E 2016E

Revenue from water purification

businessA 57 198 314 411 655 899

Training service income 3 1 8 19 19 19

Purifiers income 1 1 0 1 1 1

Rental income C 53 195 305 391 602 783

Lump-sum income D 32 96

Contractual selling in the current FY 125 244 342 475 605 831

Rental income confirmed next FY -72 -120 -157 -241 -244 -292

Rental income confirmed in the current FY 53 124 185 234 361 539

Rental income last FY 0 72 120 157 241 244

Rental income in current FY C 53 195 305 391 602 783

Number of newly added rental

equipment (sets)107,000 139,000 154,000 195,000 253,500 329,550

Number of newly added equipment YoY 30% 11% 27% 30% 30%

ASP for new products (Rmb/set) 1,437 1,481 1,660 2,262 2,000 2,000

Number of newly added lump-sum

equipment (sets)40,000 120,000

Number of newly added equipment YoY 200%

ASP (Rmb/set) 800 800

Revenue (Rmb mn) D 32 96

Cumulative end machines in the end of

period (sets)107,000 309,000 463,000 657,000 937,360 1,368,163

ASPf or filters (Rmb/set) 329 333 350 367

Contractual selling in the current FY

(Rmb mn)125 244 342 475 605 831



23

Figure 42: Air sanitization revenue breakdown


(Rmb mn) Ref. 2011A 2012A 2013 A 2014A 2015E 2016E

Revenue form air sanitisation business B 45 93 88 101 108 118

Total revenue confirmed this FY 37 81 80 93 100 110

Revenue confirmed from EPC contract

Contractual selling signed in the current FY 67 88 92 96 106 116

Revenue confirmed in the next FY -30 -38 -50 -53 -58 -64

Revenue confirmed by contracts signed in the current FY 37 51 42 43 48 52

Revenue confirmed by contracts signed last FY 0 30 38 50 53 58

Equipment selling 8 8 6 2 2 2

Consulting income 0 4 2 5 5 5



24

Financial statement analysis

Figure 43: Income statement


(Rmb mn) 2011A 2012A 2013A 2014A 2015E 2016E 1H2013 2H2013 1H2014 2H2014

Revenue 102 290 402 512 763 1,017 179 223 232 280

Cost of Sales -44 -103 -130 -177 -274 -416 -58 -72 -74 -103

Gross Profit 58 187 273 335 488 601 121 152 158 177

Other Income 5 2 21 34 5 5 10 11 7 27

Research and development costs - -

Selling and distribution costs -19 -38 -57 -93 -165 -222 -27 -30 -33 -60

Administrative expenses -13 -21 -45 -99 -142 -136 -14 -31 -44 -55

Other Operation expenses -2 -7 -7 -14 -3 -4 -5 -9

Share of results of jointly controlled entities - -

Operating Profit 29 123 185 163 187 248 87 98 83 80

Finance costs - -2 -1 8 6 -2 -1 -

Profit Before Taxation 29 124 184 161 195 254 86 98 82 79

Taxation -6 -22 -31 -37 -45 -58 -12 -19 -15 -22

Porfit from a discontinued operation - -

Profit for the year 23 102 153 124 150 196 74 79 67 57

Minority Interest - - - -

Equity holders of the parent 23 102 153 124 150 196 74 79 67 57

Recurrent Net Profit 23 102 153 118 150 196 74 79 67 51

RevenueYoY 184.3% 38.6% 27.4% 48.9% 33.4% 29.6% 25.6%

Gross Profit YoY 222.4% 46.0% 22.7% 45.8% 23.1% 30.6% 16.4%

Gross Margin 56.9% 64.5% 67.9% 65.4% 64.0% 59.1% 67.6% 68.2% 68.1% 63.2%

S&D YoY 100.0% 50.0% 63.2% 76.9% 35.1% 22.2% 100.0%

S&D % of Turnover 18.6% 13.1% 14.2% 18.2% 21.6% 21.9% 15.1% 13.5% 14.2% 21.4%

G&A YoY 61.5% 114.3% 120.0% 43.1% -4.0% 214.3% 77.4%

G&A Y% of Turnover 12.7% 7.2% 11.2% 19.3% 18.6% 13.4% 7.8% 13.9% 19.0% 19.6%

Operating Profit YoY 324.1% 50.4% -11.9% 14.8% 32.3% -4.6% -18.4%

Operating Margin 28.4% 42.4% 46.0% 31.8% 24.5% 24.3% 48.6% 43.9% 35.8% 28.6%

Finance costs% of Turnover 0.0% 0.0% 0.5% 0.2% -1.1% -0.6% 0.0% 0.9% 0.4% 0.0%

Profit Before Taxation YoY 327.6% 48.4% -12.5% 21.3% 30.0% -4.7% -19.4%

EBT Margin 28.4% 42.8% 45.8% 31.4% 25.6% 25.0% 48.0% 43.9% 35.3% 28.2%

Effective Tax Rate 20.7% 17.7% 16.8% 23.0% 23.0% 23.0% 14.0% 19.4% 18.3% 27.8%

Minority Interest % of profit for the year 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Equity holders of the parent YoY 343.5% 50.0% -19.0% 21.3% 30.0% -9.5% -27.8%

Net Margin 22.5% 35.2% 38.1% 24.2% 19.7% 19.2% 41.3% 35.4% 28.9% 20.4%



25

Figure 44: Balance sheet


(Rmb mn) 2011A 2012A 2013 A 2014A 2015E 2016E

Cash and cash equivalents 170 169 154 294 245 178

Held for trading financial assets 300 300 300

Total receivables 77 88 100 100 140 143

Account and bills receivables 11 38 51 44 83 86

Other receivables 67 51 49 57 57 57

Inventories 30 39 37 90 62 169

Other current asset 67 16 33 51

Total current asset 277 296 358 801 781 841

Net fixed asset 172 471 817 1,415 1,980 2,528

Earning assets concerned 148 384 585 942 1,314 1,779

Common assets concerned 24 87 232 473 666 749

Equity investment 0 0

Available for sale investment 0 0

Goodwill and intangible asset 1 70 95 94 89 85

Goodwill 1 26 26 26

Land 76 74 73

Other non-current asset 10 25 39 65 65 65

Total non-current asset 183 566 951 1,649 2,209 2,751

Total asset 460 863 1,310 2,450 2,989 3,592

Account and bills payables 43 37 58 129 176 287

Tax payables 10 34 64 102 121 175

Short term borrowing 213 0 0

Other current liabilities 384 604 635 316 640 881

Total current liabilities 437 675 970 548 936 1,343

Long term borrowing 0

Other non-current liabilities 7 7 6 6 6

Total non-current liabilities 7 7 6 6 6

Total liabilities 437 682 976 554 942 1,349

Prefered shares

Ordinary shares 14 14 14

Reserves 23 181 334 1,888 2,038 2,234

Other comprehensive income -6 -6 -6

Common equity 23 181 334 1,896 2,046 2,242

Equity attributable to parent company shareholdes 23 181 334 1,896 2,046 2,242

Minority equity 0 0

Total equity 23 181 334 1,896 2,046 2,242

Total liabilities and equity 460 863 1,310 2,450 2,989 3,591



26

Figure 45: Cash flow statement


(Rmb mn) 2011A 2012A 2013 A 2014A 2015E 2016E

Net income 23 102 153 124 150 196

Depreciation and amortization 7 33 69 106 188 267

Earning assets concerned 6 26 54 85 134 194


Change of working capital 42 -6 70 93 36 38

Other non cash adjustment -4 22 15 61 0 0

Net cash flow from operating activities 68 150 306 384 374 500

Capex 185 284 447 769 747 809

Earning assets concerned 153 201 245 420 507 659


Cash received from sales of fixed asset 0

Addition of investment

Decrease of investment

Other cash flows from investment activities -5 1 -67 -302 324 241

Net cash flow from investment activities -190 -284 -514 -1,071 -423 -568

Addition of debt 280 192 215 0 0

Decrease of debt 60 18 215

Addition of common shares 989 0 0

Decrease of common shares

Dividends paid 0 0

Other cash flows from financing activities 0 -4 59 0 0

Net cash flows from financing activities 280 132 193 833 0 0

Impact of exchange rate change 0 0 0 -6

Other adjustment

Net cash change 159 -1 -15 139 -49 -67

Cash at the beginning 12 170 169 154 294 245

Cash at the end 170 169 154 294 245 178



27

Valuation by reference to comparable companies

According to the DCF model, we set TP at HK$3.21, implying the value of 2.84mn users by end-2018 and 15.0x/11.4x 2015/16e P/E.

Because the leasing model of water purifiers is not easy to understand, Ozner was shorted by Glaucus Research in March 2015. The doubt came from the difficulty to understand the leasing model, the lack of online sales records and the unreasonable depreciation policy adopted for earning assets. Later, Ozner disclosed more information to address this doubt.

DCF model

The company will be in an expansion period over the next six years; cumulative annual growth rate of the user base will be over 40%. During this period, neither net income nor cash flow is suitable to measure its value.

Figure 46: FCFF forecast


Figure 47: DCF key assumptions Figure 48: DCF analysis

Source: CICC Research Source: CICC Research

Free cashflow forecast （Rmb mn) 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E

Net Revenue 763 1,017 1,395 1,939 2,695 3,663 4,859 6,131 7,596 9,254

YoY 48.9% 33.4% 37.2% 39.0% 39.0% 35.9% 32.6% 26.2% 23.9% 21.8%

EBIT 195 254 375 550 758 1,081 1,535 2,004 2,561 3,244

YoY 48.9% 30.0% 47.6% 46.9% 37.7% 42.6% 42.0% 30.5% 27.8% 26.7%

EBIT Margin 25.6% 25.0% 26.9% 28.4% 28.1% 29.5% 31.6% 32.7% 33.7% 35.1%

+ Depreciation and Amortization 188 267 349 447 567 708 871 1,058 1,235 1,421

EBITDA 383 521 723 998 1,325 1,789 2,406 3,062 3,796 4,665

- Change in working capital 36 38 98 73 125 92 133 105 118 75

- Capex 747 809 971 1,165 1,398 1,621 1,879 2,180 2,529 2,936

- Tax 45 58 94 138 190 270 384 501 640 811

Free Cash Flows -445 -384 -440 -378 -388 -194 10 276 508 843

YoY -13.5% 14.4% -14.0% 2.6% -50.0% -105.1% 2671.4% 84.5% 65.9%

DCF assumptions

Tax rate 25.0%

Debt ratio 31.5%

Beta 1.30

Risk free rate 2.5%

Risk premium 6.5%

Equity cost 11.0%

Debt cost 6.0%

Debt cost (After tax) 4.5%

WACC 8.9%

Perpetual Growth 2.0%

DCF Analysis

PV of FCF -1,058

Terminal value 12,436

PV of terminal value 5,293

Enterprise Value 4,236

Net Cash/(Debt), Minority interests 245

Equity Value 4,480

Equity value per share (HK$) 3.21



28

User value analysis

Assuming the profit contributed per user within a life cycle of 10 years is ~Rmb1,576/set (after an annual discount of 5%), our TP (HK$3.21) implies the value of 2.84mn users by end-2018.

Figure 49: User value analysis


Rmb/set Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10

EXW prices 1,145 450 450 450 450 450 450 450 450 450

Average manufacturing cost 1,660

Period cost 300

Filter cost 50 50 50 50 50 50 50 50 50

Labor cost (filter change) 20 20 20 20 20 20 20 20 20

Net cash inflow -815 380 380 380 380 380 380 380 380 380

Net cash inflow (after discount) -815 361 343 326 310 294 279 265 252 239

After-tax profit 1,576

2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E

Accumulated users (k units) 937 1,368 1,976 2,843 4,047 5,589 7,399 9,432 11,819 14,539

User Value (Rmb mn） 1,478 2,157 3,115 4,482 6,380 8,810 11,664 14,868 18,631 22,919



29

Comparable valuation

Due to its different sales model and financial treatment, the company does not have a strong comparability to other water purification companies; still, we make a list of similar businesses just for reference purposes.

Figure 50: Comparison to comparable companies (2015.07.08)

Source: Bloomberg, CICC Research

1) Companies with strong comparability: Coway is the most comparable company with the most similar water purifier leasing model.

2) Companies with mediocre comparability: Canature (300272.SZ) sells and exports whole house water treatment products, a different business model from the one adopted by Ozner. Originwater (300070.SZ) provides water purifiers but its main business is sewage disposal. Sunrain Solar (603366.SH) and A.O.Smith mainly provide water heaters and have diversified their business into water purifiers.

3) Companies with little comparability: Gree (000651.SZ) and Media (000333.SZ) are leading players in the water purifier market, but generate only a small portion of their revenue from this business. Haier (0348.HK) will focus on the development of its own water purifiers and baby appliance business. The trend has not been reflected in its current financial statements.

Figure 51: Historical P/E and P/B bands

Source: Bloomberg, CICC Research

P/S P/B

2014A 2015E 2016E 2014A 2014A

021240.KS CowayMost

comparable62 25.9 22.1 19.6 3.3 6.8

603366.SH Sunrain Solar 12 21.4 22.1 18.0 2.5 2.1

300272.SZ Canature 8 56.4 61.3 50.4 12.5 6.1

300070.SZ Originwater 63 34.9 25.2 18.2 11.6 6.1

AOS US A.O Smith 63 28.8 25.0 21.7 2.7 4.5

000333.SZ Midea Group 213 12.6 10.3 8.6 0.9 4.0

000651.SZ Gree Electrics 190 8.4 7.0 5.8 0.9 2.6

348.HK Haier Healthwise 3 N.A. N.A. N.A. 28.6 9.8

Weighted average 26.9 24.7 20.3 7.9 5.2

2014.HK Ozner Water 4 18.2 15.0 11.4 5.5 1.2

P/ETickers Companies

Revelance &

terms

Market Cap.

(US$100mn)

Revelant

Little

comparability

0.0

1.0

2.0

3.0

4.0

5.0

6.0

14/0

7

14/0

8

14/0

9

14/1

0

14/1

1

14/1

2

15/0

1

15/0

2

15/0

3

15/0

4

15/0

5

15/0

6

15/0

7

PE BandOzner Water 10x 15x 20x 25x

Rmb

01122334455

14/0

7

14/0

8

14/0

9

14/1

0

14/1

1

14/1

2

15/0

1

15/0

2

15/0

3

15/0

4

15/0

5

15/0

6

15/0

7

PB BandOzner Water 1x 1.5x 2x 2.5x

Rmb

CICC Research

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299-1 Defeng Road, Fengxian District


Tel: (86-21) 5879-6226

Fax: (86-21) 6887-5123

Room 201, Annex Building

Shenzhen Duty Free Commercial Tower

6 Fuhua 1st Road, Futian District

Shenzhen 518048, P.R. China

Tel: (86-755) 8832-2388

Fax: (86-755) 8254-8243

1st Floor, Euro American Center

18 Jiaogong Road

Hangzhou 310012, P.R. China

Tel: (86-571) 8849-8000

Fax: (86-571) 8735-7743

Nanjing Hanzhong Road Branch Guangzhou Tianhe Road Branch Chengdu Binjiang Road (East) Branch

Section C, 30th Floor, Asia Pacific Tower

2 Hanzhong Road, Gulou District

Nanjing 210005, P.R. China

Tel: (86-25) 8316-8988

Fax: (86-25) 8316-8397

40th Floor, Teemtower

208 Tianhe Road

Guangzhou 510620, P.R. China

Tel: (86-20) 8396-3968

Fax: (86-20) 8516-8198

1st & 16th Floors, Shangri-La Center

Block 9B, Binjiang Road (East)

Chengdu 610021, P.R. China

Tel: (86-28) 8612-8188

Fax: (86-28) 8444-7010

Xiamen Lianyue Road Branch Wuhan Zhongnan Road Branch Qingdao Middle Hongkong Road Branch

4th Floor, Office Building, Paragon Center

1 Lianyue Road, Siming District

Xiamen 361012, P.R. China

Tel: (86-592) 515-7000

Fax: (86-592) 511-5527

4301-B, Poly Plaza

99 Zhongnan Road, Wuchang District

Wuhan 430070, P.R. China

Tel: (86-27) 8334-3099

Fax: (86-27) 8359-0535

11th Floor, Shangri-La Center

Block 9, Hongkong Road (M), South District

Qingdao 266071, P.R. China

Tel: (86-532) 6670-6789

Fax: (86-532) 6887-7018

Chongqing Honghu Road (West) Branch Tianjin Nanjing Road Branch Dalian Gangxing Road Branch

1st & 10th Floors, Ourui Lanjue Center

Block 9, Honghu Road (W), New North District

Chongqing 401120, P.R. China

Tel: (86-23) 6307-7088

Fax: (86-23) 6739-6636

10th Floor, Tianjin Global Trading Center

219 Nanjing Road, Heping District

Tianjin 300051, P.R. China

Tel: (86-22) 2317-6188

Fax: (86-22) 2321-5079

16th Floor, Wanda Center

6 Gangxing Road, Zhongshan District

Dalian 116001, P.R. China

Tel: (86-411) 8237-2388

Fax: (86-411) 8814-2933

Foshan Jihua 5th Road Branch Yunfu Xinxing Dongdi North Road Branch Changsha Chezhan Road (North) Branch

12th Floor, Trend International Business Building

2 Jihua 5th Road, Chancheng District

Foshan 528000, P.R. China

Tel: (86-757) 8290-3588

Fax: (86-757) 8303-6299

2nd Floor, Service Building C1, Wens Science &

Technology Garden, Dongdi North Road

Xincheng Town, Xinxing County

Yunfu 527499, P.R. China

Tel: (86-766) 2985-088

Fax: (86-766) 2985-018

3rd Floor, Annex Building, Securities Tower

459 Chezhan Road (North), Furong District

Changsha 410001, P.R. China

Tel: (86-731) 8878-7088

Fax: (86-731) 8446-2455

Ningbo Yangfan Road Branch Fuzhou Wusi Road Branch

11th Floor, Building Five, 999 Yangfan Road

Hi-tech Industrial Development Zone

Ningbo 315103, P.R. China

Tel: (86-574) 8907-7288

Fax: (86-574) 8907-7328

38th Floor, Henglicheng Office Building

No.128 Wusi Road, Gulou District

Fuzhou 350001, P.R. China

Tel: (86-591) 8625 3088

Fax: (86-591) 8625 3050

Beijing Shanghai Hong Kong China International Capital

Corporation Limited

28th Floor, China World Office 2

1 Jianguomenwai Avenue


Tel: (86-10) 6505-1166

Fax: (86-10) 6505-1156

China International Capital

Corporation Limited – Shanghai Branch

32nd Floor Azia Center

1233 Lujiazui Ring Road


Tel: (86-21) 5879-6226

Fax: (86-21) 5888-8976


Corporation (Hong Kong) Limited

29th Floor, One International Finance Centre

1 Harbour View Street

Central, Hong Kong

Tel: (852) 2872-2000

Fax: (852) 2872-2100

Singapore United Kingdom China International Capital

Corporation (Singapore) Pte. Limited

#39-04, 6 Battery Road

Singapore 049909

Tel: (65) 6572-1999

Fax: (65) 6327-1278


Corporation (UK) Limited

Level 25, 125 Old Broad Street

London EC2N 1AR, United Kingdom

Tel: (44-20) 7367-5718

Fax: (44-20) 7367-5719

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