Elevator Pitch
I assign a Neutral rating to Hong Kong-listed Chinese water utilities company China Water Affairs Group Limited (CWAFF) [855:HK].
China Water Affairs' recent increased investment in its 29.52%-owned associate company, Kangda International Environmental Company Limited via exchangeable bonds is in the spotlight, and I am divided with respect to the merits of this deal. On one hand, China Water Affairs' initial acquisition of Kangda International's shares seem expensive, and the company is now burdened by Kangda International's high net debt-to-equity ratio of 193% as of December 31, 2019. On the other