일반산업
Water Business: Industry Outlook and Business Opportunities
2011-07-27AHN, Hye-Young
목차
요약
With growing awareness of water as a limited resource, the water industry draws attention as a promising growth engine.
● Increasingly severe water shortage and growing involvement of private sector in the water industry since the privatization boosted the industry to be a potential growth driver, and more business opportunities are explored in the market as the industry is more specifically divided than before.
● In the Korean market as well, ongoing privatization of water supply and waste water treatment is expected to further expand the market for sewage water heat and sewage sludge that can be turned into energy sources.
Water Supply Market: more private sector participation expected with rising revenue water ratio and water supply service integration by region
● Despite water supply market saturation, private companies are expected to be more involved in the business owing to efforts to raise revenue water ratio and integrate the services by region.
● Their participation may take the form of local government-invested entity, managing region-wide water treatment plant commissioned by local governments or holding some stakes in the regional integration project of water supply services.
● A private market amounting to KRW 400 to 500 billion will be created after 2015 when regional integration is completed.
Sewage Treatment Market: full-blown market to be built after 2020 when demand arises for facility replacement
● As more than half of facilities for which additional construction is scheduled by 2015 were built on a BTO(Built to Order) basis, more private participation is expected, but being mostly small-scale facilities, they will not present high profitability.
● Assuming that around a half of treatment plants are commissioned to private companies, a private market as large as KRW 150 to 200 billion will be created by 2020 when demand arises for facility replacement.
● However, deep-rooted oligopoly poses a high entry barrier for new entrants with construction business-affiliated companies taking up for 80% of the market.
Industrial Wastewater Treatment Market: high growth expected in industrial wastewater treatment outsourcing business where technologies and expertise are required
● In the market, businesses in need of outsourcing amount to approximately KRW 600 billion, but only some industries such as electricity/electronics and oil refinery rely on outsourcing which accounts for a mere 13%.
● Owing to growing size of industrial plants and rising treatment cost per ton, advanced techniques are required for filtering, which indicates that outsourcing demand for specialized service providers will soar.
Sewage Water Heat Market: new market kicked off in 2011 and expected to grow to KRW 300 billion by 2020
● The Seoul Metropolitan Government has been carrying out a 100% private investment project to lower initial cost and take advantage of heat pump technology in pursuing its pilot project of regional heating and cooling service using sewage heat.
● When the industrial sewage heat project goes as scheduled, a private market amounting to KRW 300 billion will be built by 2020 in heat pump, facility establishment/operation, sewage heat trading etc.
Sewage Sludge Treatment Market: with ocean dumping banned, sewage sludge recycling market to grow to KRW 270 billion by 2015
● With more sewage sludges recycled owing to the ban on ocean dumping of sewage sludge from 2012, a private market for dehydration facility establishment and operation is expected to grow to KRW 270 billion by 2015.
● With the recycling market expanding, not only construction companies already engaged in the business, but also small and medium-sized companies specialized in dehydration and deodorization are expected to emerge as active players.
The growing water market will present business opportunities for financial groups as well.
● Growing investment in facilities and technologies in response to the market expansion would mean higher loan demand for financial groups.
● They may also take advantage of potential M&A opportunities between established construction companies and SMEs specialized in key component technologies.
It is recommended for financial institutions to develop water funds and other related financial tools and offer corporate financing services in a long-term perspective.
● With the water industry being still in a nascent stage, they need to come up with products that can induce private investment by aggressively identifying less risky and less volatile businesses.
● In addition, given the long investment/recovery period for the market in an early stage, corporate financing should be designed to offer services necessary for each growth stage in a phased manner.