Central Plains Environment to acquire Zhengzhou reclaimed water assets for 1.45bn yuan

Central Plains Environment Protection Co., Ltd. (CPEP) plans to acquire Zhengzhou City's Third Ring Road and Fourth Ring Road reclaimed water pipeline assets from the Zhengzhou Municipal Facilities Service Center through a public delisting process. These assets are bundled for a total price of 1,457.6402 million yuan, based on a valuation as of September 30, 2025. The transaction may constitute a connected transaction, as parts of the Third Ring Road assets were previously transferred from a CPEP affiliate.

The acquisition aims to optimize resource allocation, align with policy developments in reclaimed water utilization, and solidify CPEP's market position. The company anticipates that the Third Ring Road assets, which are already constructed, will enable immediate customer development, while the Fourth Ring Road assets require an additional construction investment of an estimated 301.5980 million yuan over two years. The acquisition also grants CPEP reclaimed water operating rights within Zhengzhou's urban areas.

CPEP forecasts annual operating revenue of 272.0969 million yuan and a net profit of 111.8881 million yuan from the project once fully operational. Short-term projections indicate potential losses in the initial years due to construction and depreciation, but long-term profitability is expected, contributing an average annual net profit of 125.7657 million yuan from 2031 onwards. The transaction also involves financing, with 291.5280 million yuan from CPEP's own funds and approximately 80% from financial institutions.