June 24 (Bloomberg) -- Beijing Enterprises Water Group Ltd., the biggest publicly traded water-treatment systems developer in China, plans to increase capacity by almost a fifth, enough to serve a city the size of the capital.
The Hong Kong-listed company is expanding daily capacity by 3 million metric tons this year, benefiting from the government’s increased focus on water issues by adding new distribution, sewage treatment and reclaimed water, Chief Operating Officer Zhou Min said in an interview in Beijing. That’s without considering acquisitions and possible overseas investments in the U.K., France and Germany.
The group is targeting an annual revenue increase of 40 percent to 50 percent for its water fee-based business, the executive said. The capacity increase may be “the most among the industry this year,” Zhou also said.
Beijing Enterprises’s addition of 59 percent more water capacity through the end of last year boosted its total daily capacity to 16.7 million tons, it said in March.
Most of its projects concentrate on Chinese coastal areas with strong economies such as Shandong and Guangdong provinces though the company is seeking development elsewhere, Zhou said. It may secure a 550,000-ton water-treatment plant soon in the Tongzhou district of Beijing, a former “weak link,” Zhou said.
“Given favorable policies, we’ll continue acquisitions,” Zhou said. The targets should have an internal rate of return of at least 10 percent, he said.
When selecting new projects, the company considers the local economy and sewage-treatment fees as well as whether big water plants are near, Zhou said.
The company started cleaning Liangshui River in Beijing and Luohe River waters in Luoyang this year. Beijing Enterprises will spend three or four years to complete the 3.5 billion-yuan ($562 million) Liangshui project, Zhou said.
It will complete a 10th of the spending in 2014 for the 5 billion-yuan Luohe waterway cleanup works, he said.
The company is planning on three overseas projects this year to expand, Zhou said. Current investments are in Malaysia, Portugal and Indonesia.
The Hong Kong-based company is interested in the U.K., France, Germany and Singapore, Zhou said. This month it opened headquarters in Singapore for investments outside China, which are estimated at as much as S$2 billion ($1.6 billion).
Beijing Enterprises Water in April said it will construct a 200 million-yuan water-supply project in Medan, Indonesia.
To contact Bloomberg News staff for this story: Feifei Shen in Beijing at firstname.lastname@example.org