Credit Suisse China Environment conference and trip. Our recent China
Environment conference  and  trip  included  12  corporates  and six industry
experts/government  entities/waste  treatment  companies,  covering  waste
water,  municipal  solid  waste,  industrial waste,  EPC and  equipment,  as  well
as government policy and regulators.
■  Refining regulations lead to higher demand and higher standards. We
believe that  2014-15  would  be  a  period  where  policy  is  moving  into  a
refinement stage,  with  detailed  regulatory  and financial  frameworks being
worked  out  for  both  the  waste  generators  and  treatment  suppliers. Our
recent  visits  to  waste  treatment  plants  suggest  continued  growth  in
municipal  waste  treatment  demand, and a surge  in  small  industrial  waste
customers. At  the  same  time, higher  discharge/emission  standards  lead  to
higher capex and  operating  costs for  waste  treatment  operators, although
most incremental  costs  can  be  passed  through, in  our  view.  On a relative
basis, the  big operators  should  benefit  on  lower  cost  pressure,  while
competition remains modest at this stage, partly due to the 'local monopoly'
nature of the sector.
■ Launch of the CS China environment basket and top picks. We remain
positive  on  the secular  uptrend  of  the sector. Investors can  get  exposure
from  the  newly  launched  Credit  Suisse  China  environment  basket
(Bloomberg ticker CSAPCHEN). Our top picks are BEW, CEI and Dongjiang.