The Beijing Olympics are drawing international attention to China’s chronic pollution problem.

Environmental damage costs China more than $200 billion a year, or roughly 10 percent of its GDP. The country recently pledged to spend up to $125 billion on a massive cleanup, including the construction of over 10,000 wastewater treatment plants.

This makes Singapore’s water treatment companies well worth a look, according International Strategist editor Tom Dyson in DailyWealth.

The Singapore water industry is my favorite way to profit from China’s drive to clean up its water. Singapore’s water companies all derive the bulk of their revenues and profits from China.

Take Hyflux (SIN:600) for example.

Hyflux is the biggest name in the Singapore water industry. It makes water treatment systems that turn sewage and seawater into drinking water. Hyflux has built Asia’s largest desalination plant. It has won billions of dollars worth of contracts to build wastewater treatment systems in China, Southeast Asia, the Middle East, and Africa. And it makes consumer products like home water filters.

Hyflux derives 81% of its revenues from China.

Hyflux stock recently got a boost after Hyflux Water Trust Management (SIN:D7TU) - a recent Hyflux spin-off - posted better-than-expected 2Q results due to lower expenses.

Last Wednesday, Hyflux stock surged to a high of S$2.54 with over one million shares changing hands.

Moreover, Credit Suisse recently upgraded Hyflux, which currently trades at S$2.62, to “outperform” and raised its target price to S$3.60.

Apart from Hyflux, Tom says there are half a dozen other Singapore water companies worth a look. Most of them are fairly cheap due to the fall of Asian stock markets this year. 

Source: How You Can Profit From China’s Water Cleanup