Under normal circumstances, the normal profit rate of the water treatment industry should be around 30%. However, due to various domestic factors, most companies are in a different situation. Jinggong Fan has provided nearly 50,000 Roots blowers, rotary blowers, centrifugal fans and other aeration equipment to thousands of sewage treatment plants around the world. It can be said that it is a "brick" player in the industry, so today Jinggong is known as everyone Let me break down the true profit situation of the sewage treatment industry in plain language that you can understand.
Operation model of sewage treatment projects
Domestic sewage treatment plants imply the attributes of public utilities, and in theory should be constructed, operated and maintained at the government's expense. But in fact, whether due to financial constraints or lack of operational experience, we have seen that early governments were always stingy in investing in the construction of new plants or that the operational efficiency of treatment plants that were already in operation was extremely low. Under this situation, a large number of private enterprises began to enter, obtain franchise rights from the government (generally operating period is 25-30 years), and paid the first amount of money for the government to build the plant, and after the treatment plant was completed and put into operation Responsible for operation and maintenance, and all investment and income are recovered during the operating period by regularly charging treatment fees to the government. This is the current profit model of sewage treatment plants.
To summarize, domestic sewage treatment projects are basically divided into three models: 1. Self-invested, self-constructed and self-operated by the government, and the income is public fund income; 2. Franchise model, social capital Purchase the franchise right of the sewage treatment project and obtain the property rights of the sewage treatment plant. Upon expiration of the franchise period, it will be transferred back to the government implementation agency or government-designated agency; 3. PPP model. The more typical model is the construction of sewage treatment project with social capital, and Implement operation, receive user payments during the period, recover construction investment and obtain revenue.
The implementation process of the sewage treatment project
From civil construction to operation is basically as follows: the government provides three connections and one leveling, provides the water and electricity necessary for the project; possesses the land certificate, project construction permit and other necessary requirements to start the construction. Preparation procedures; entry of humans, machines and materials, supervision and issuance of construction permits, construction starts, implementation of construction, sewage pipe network is generally constructed by the government; procurement and installation of sewage treatment equipment, application for government to provide sewage, and operation; implementation of completion acceptance; start of operation, A processing fee applies.
If you go one step further, you can see what factors will affect the profitability of sewage plants?
The first is water prices. The treatment fee will vary greatly depending on factors such as water quality composition, drainage standards, region, etc. For example, the water price of the first phase sewage treatment plant in Shandong Gaomi, a customer of Jingong Fan, was only 0.7 yuan/m3 at the earliest, while the water price of the second phase treatment plant was as high as 2.17 yuan. /square, the difference between the two is more than 3 times.
The second is the financial cost. Due to the large investment scale of a treatment plant, the company generally uses 30% of its own funds and 70% of loans to lock in funding sources. For example, in the case of a sewage treatment plant that is a client of Jinggong, the company needs to make a one-time investment of 230 million * 30% = 69 million, which is generally unaffordable for small-scale private enterprises. Secondly, the leverage part also requires costs. The bank will give the loan cost based on the scale and efficiency of the enterprise. This directly affects the profitability of the water plant. Of course, the lower the loan interest rate, the better the efficiency of the water plant. For example, the general private enterprise loan interest rate is one year from the bank. Loan interest rates are even going to rise, and state-owned enterprises like Everbright and Beijing Enterprises can take advantage of low-cost overseas loans with interest rates of less than 4%.
In short, sewage treatment costs mainly include energy consumption costs, chemical consumption costs, overhaul costs, maintenance costs, sludge disposal costs, effluent disinfection costs, personnel costs, management costs, fixed asset depreciation, and financial financing costs. and other costs. The situations faced by sewage treatment plants in various places are different, and sewage treatment costs need to be estimated based on the company's treatment scale, sewage, and sludge treatment processes. See related reading for details: How much does it cost to treat one ton of sewage.
How profitable is the sewage treatment plant industry?
The financial status of domestic sewage treatment companies above designated size is generally not ideal, at least not up to the expectations in the project feasibility study report (even if they have reached production). Domestic sewage treatment leaders such as BiWater and Sander Engineering are large but not strong, and they have all fallen victim to the government's "burden-shedding" and transfer of fiscal expenditure pressure. As the leading companies in domestic sewage treatment, the development trajectories of the two companies are very similar. The development of the two companies has generally gone through "vigorous development - industry leadership - debt scale is too high - capital chain depletion - debt default -' The evolution of the national team’s ‘take action – the founder loses control of the business’.
Bishuiyuan and Sander Engineering mainly conduct business in EPC and PPP models. Since the two companies appear as controlling shareholders in local project companies (SPV), as the number of projects undertaken increases, the debts consolidated into the financial statements of the two companies also increase (usually, in the SPV company's In the financing structure, the capital ratio of PPP projects is less than 30%. The capital is jointly financed by government capital and social capital. The investment ratio of government capital and social capital is generally 2:8 - popular in the financial circle in the early years. Through the "mezzanine capital" business, commercial banks are mainly the actual investors, relying on trusts, securities companies, private equity and other channels to solve the problem of insufficient capital through "clear shares and real debt"; project funds other than capital are mainly through banks raised by borrowing money or issuing bonds).
As we all know, PPP projects have long cycles, slow returns, and strong customers. The more projects a company undertakes, the bigger the cash flow hole will be, and the higher the risk of being unable to make ends meet. Currently, both companies have been nationalized.
The profit situation of the leading company in the sewage treatment plant is still like this. You can imagine the same for other small plants. Let everyone make up their own minds.
In addition to large sewage plants, the sewage treatment industry can also provide sewage treatment projects, sewage treatment equipment, sewage treatment chemicals, sewage environmental protection companies, etc. Let’s take a look at the profits of these sub-industries separately?
Sewage treatment projects are very profitable, but it is difficult to get orders. Good projects require strong interpersonal relationships. Nowadays, if you have connections, you can get projects that you don’t know how to do yourself, or you can find professional companies to subcontract them. The key to profit depends on business capabilities.
In the water treatment industry with promising market prospects, due to the low technical threshold, a large number of small and medium-sized enterprises have been involved in the vortex of price wars, and the profit rate level has dropped significantly compared with previous years. Nowadays, the water treatment industry is an industry with full market competition. If it is not a first-hand project, and the financial cost is removed, if the net profit can reach 15%, it is already quite good. The same project, if it is transferred to a larger enterprise, , the profit margin may not reach 10%.
The profits of civil construction projects are now very transparent, especially for civil construction in other places. Some local forces are often involved, which is not easy to do. The most important thing is relationships. After all, the wool comes from the sheep. The profits of environmental protection projects generally come from the purchase of equipment. Usually the gross profit is 30%-50%. Especially for non-standard equipment, the profit is considerable, so the profit difference in the choice of manufacturers is huge. There are many manufacturers of environmental protection equipment, competition is very strong, and prices are relatively transparent. Manufacturing companies generally seek sales volume rather than single profits. The comprehensive gross profit of most machinery and equipment is about 10%. In order to attract some high-quality customers, even Jinggong, like us, sometimes Some projects for supplying equipment are done at breakeven or even at a loss. This is a very favorable condition for those doing sewage projects.
Sewage treatment chemicals, such as polyacrylamide (PAM), polyaluminum chloride (PAC), and activated carbon, are in great demand. The prices of PAM and PAC are above 15,000 per ton, which is very marketable, but there are many competitors, especially polyacrylamide and polyaluminum chloride manufacturers. There are too many, but they can stably supply some sewage. The profits of factories or environmental protection companies are also considerable.
In addition, in recent years, with the advancement of urbanization, rural sewage treatment has become an important part of new rural construction, and the construction of rural sewage treatment facilities has just begun. Don’t look down on these small projects. Although the target of a village is not big, such projects are usually carried out county by county. Each target is not big, and it is fat if it is bundled into a big package. It is very suitable for small and medium-sized enterprises. They are not interested in doing projects, especially projects in mountainous areas. In fact, within the range that the mountainous environment can bear, there is no need to consider sewage plants, and pollution can be removed by relying on the self-purification effect of the environment. The country has these policies to improve infrastructure, and of course the following will spare no effort to build it. After construction, there were few sources of sewage and it was difficult to operate the sewage treatment plant. In fact, a series of things are money.
The country’s starting point is very good, but the actual situation is not very good. The environmental protection inspector only saw that the plant was not operating and that the water effluent was not up to standard, and did not make any rectifications. He has no control over these things in between, and he can't control them. For example, whether it needs to be built, whether it can be built, how it should be built, whether it can achieve the effect, etc., a series of issues will generate various interests, you know.
I believe that through this article, you should have a general understanding of the profit situation of the sewage treatment industry. Jingong has been manufacturing fans for more than 20 years, and has been dealing with customers in the environmental protection industry for more than 10 years. Fans often have discussions with people in the sewage industry, so we have accumulated a lot of experience in the sewage industry, but after all We are in the manufacturing industry and have a different perspective. The above content is for reference only. If there are any omissions, please feel free to add them.