【Gas News】Bishuiyuan becomes the largest shareholder of Chengyingde Gas

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Beijing Water Source Technology Co., Ltd. (hereinafter referred to as “Water Source”, stock code: 300070) recently issued a announcement stating that its wholly-owned subsidiary, Water Source ** Environmental Protection Co., Ltd. (hereinafter referred to as “Water Source **”), has acquired a 20.17% stake in **Main Board listed company Yingde Gas (stock code: 02168), becoming its largest shareholder. 　　Yingde Gas is a Red Chip company registered in the Cayman Islands and listed on the Main Board of the **HKEX, specializing in comprehensive services for industrial gases. As of June 30, 2016, the total revenue for the first half of the year was 4.14 billion yuan, the net profit for that period was 387 million yuan, and the net cash flow from operating activities was 981 million yuan; it is thus a listed company with excellent operational performance. 　　Following this investment in Yingde Gas, Bishuiyuan will become the largest shareholder of this H-share company. This move opens up access for Bishuiyuan to international capital markets, providing another pathway for domestic environmental protection companies to connect with capital markets. It will help Bishuiyuan expand its overseas business further and gain experience in carrying out overseas acquisitions. 　　As an industrial gas supplier and a professional player in the industrial infrastructure sector, Yingde Gas’ participation will enhance Bishuiyuan Company’s ability to raise funds overseas as well as its overall strength. At the same time, through this strategic investment, Bishuiyuan will enter the energy industry chain, creating opportunities for the development of energy-saving and environmental protection industries in areas such as air pollution control, thereby facilitating the expansion of Bishuiyuan’s operations in the overall energy-saving and environmental protection sector. 　　Comment: Although Bishuiyuan has always emphasized that its acquisition of Yingde Gas was aimed at accessing overseas capital markets and expanding its business scope. However, in reality, Bishuiyuan and Yingde Gas have their own capital-related needs. Bishuiyuan was established on July 29 of this year, and as of now, there are no financial figures available. Therefore, Bishuiyuan **wants to seek high-quality assets to acquire in order to generate positive profits on its income statement. 　　At the same time, although Yingde Gas is a listed company with high-quality assets, over the past two years, the ongoing downturn in industries such as steel, coal, chemicals, and non-ferrous metals has led to the suspension of some of its projects, a decline in its market share, and excessive current liabilities; as a result, it is in urgent need of additional working capital. As of June 30, Yingde Gas had short-term loans amounting to 2.786 billion yuan and accounts payable totaling 2.462 billion yuan; it was thus forced to repay bank loans and other debts by selling shares.