CDT Environmental Technology Investment Holdings Ltd (NASDAQ: CDTG)

CDT Environmental Technology Investment Holdings Ltd, also known as CDT Cayman, operates in the environmental technology industry, specifically focusing on waste treatment. The company is a holding company based in the Cayman Islands, with no substantive operations other than holding all the outstanding equity of its subsidiaries. Shenzhen CDT Environmental Technology Co., Ltd. and its other subsidiaries fall under this category.

CDT Cayman operates in two main business lines: sewage treatment systems and sewage treatment services. For sewage treatment systems, the company sells and installs its proprietary rural sewage treatment systems and provides ongoing operation and maintenance services to its customers. The rural sewage treatment systems use advanced quick separation technology, which is a biochemical process for economically and sufficiently treating rural sewage. The system produces high-quality outflowing water, with high degrees of automation, efficient construction and start-up, and low operational costs.

For sewage treatment services, CDT Cayman offers on-site treatment services with its mobile and fixed septic tank treatment systems. The mobile system uses automated equipment assembled on a vehicle to allow for transport between dispersed septic tanks in both urban and rural areas. The system treats the waste at each site and extracts such waste from the septic tank through a narrow opening, reducing odor and noise as well as spillage and safety issues that occur during traditional methods of pumping and transporting septic tank sewage.

CDT Cayman has a strong presence in the rural sewage treatment market in China, with over 60 rural sewage treatment plants completed in Fujian, Jiangxi, and Liaoning provinces. The company has established long-term relationships with its customers through its operation and maintenance services. CDT Cayman also has a significant market share in the septic tank treatment market in China, with its mobile and fixed septic tank treatment systems used by local governments and residential and business property management companies.

The company's competitive advantages include its proprietary technology, experience, and expertise in waste treatment services, particularly in rural sewage treatment and septic tank treatment. CDT Cayman has a strong research and development capability, with a team of engineers and technicians working to upgrade its technology and develop new products and services.

CDT Cayman's customers include local governments, state-owned construction companies, and residential and business property management companies. The company's products and services are used in both urban and rural areas, with its rural sewage treatment systems used in over 60 rural sewage treatment plants in Fujian, Jiangxi, and Liaoning provinces.

CDT Cayman's rural sewage treatment systems feature decentralized treatment with a capacity of treating 5 to 500 tons of sewage per day, which is suitable for villages and towns in China. The company offers turn-key solutions to its customers, including construction of sewage treatment plants, installation of its proprietary equipment, and operation and maintenance of such plants with its technical expertise and proprietary technology.

The company's quick separation technology is a newly emerged biochemical process for sewage treatment in the last 5 to 10 years. The primary filtration and treatment process occurs inside quick separation balls, which are numerous porous ceramic balls hosting microorganisms collected in a spherical plastic frame. Quick separation technology requires no additional pressure. As the blowing apparatus forces sewage through the quick separation balls, the flow rate on the surface of the porous ceramic balls is lowered and the suspended solids in the fluid accumulate inside the balls. An aerobic process that decomposes organic matter occurs near the surface of ceramic balls and an anaerobic process that decreases phosphorus and nitrogen occurs near the core.

The company's mobile septic tank treatment system is composed of an integrated waste treatment system assembled on a vehicle to allow for transport to septic tanks in all areas. The system is modular in design for flexibility and is composed of a pump, a compactor, a multi-dish screw dehydrator, and a small pipeline dredger. The mobile system is able to manage septic tank waste treatment through the processes of waste extraction, separation of solid waste from liquid sewage, dehydration of solid waste, residue filtration, and bale pressing. This treatment process reduces the odor and noise of traditional treatments, and reduces spillage during transportation.

The company's fixed septic tank treatment system is an integrated and stand-alone waste treatment system designed for public toilets in cities. It adopts the company's quick separation technology and has a compact structure, only requiring twelve square meters for a system capable of treating twenty tons of sewage per day. Due to the company's advanced quick separation technology, the fixed system is able to decompose solid waste and treat sewage to meet the Sewage Quality Standards for Discharge to Municipal Sewers (GB/T 31962-2015).

In terms of its position within the industry, CDT Cayman is a leading player in the rural sewage treatment market in China, with a strong presence in the provinces of Fujian, Jiangxi, and Liaoning. The company is well-positioned to benefit from the growing demand for rural sewage treatment services in China, driven by government policies and regulations aimed at improving the quality of rural sewage treatment.

CDT Cayman's key competitors in the rural sewage treatment market in China include other domestic companies that offer similar products and services. However, the company's proprietary technology and expertise in waste treatment services give it a competitive advantage in the market.

The company's business is affected by seasonality. Construction of its treatment systems is typically slow during winter seasons due to inclement weather and around Chinese holidays due to government and other closures. The company's employees and human capital are critical to its success, and it believes that it offers its employees competitive compensation packages and an environment that encourages self-development and, as a result, has generally been able to attract and retain qualified personnel and maintain a stable core management team.

The company is not currently a party to any legal proceedings that in the opinion of its management would have a material adverse effect on its business. However, from time to time, the company may be involved in legal proceedings or may be subject to claims arising in the ordinary course of its business. The company believes that the final outcome of ordinary course matters will not have a material adverse effect on its business, operating results, financial condition, or cash flows.

The company faces risks related to natural disasters, health pandemics, and other outbreaks, particularly the coronavirus, which could significantly disrupt its operations. The company is also subject to regulations and national policies relating to the water treatment equipment manufacturing industry, including the Catalogue of Encouraged Industries for Foreign Investment, the Environmental Protection Law, and the Water Pollution Prevention and Control Action Plan.

CDT Cayman's intellectual property rights include 2 invention patents, 35 utility model patents, 3 trademarks, and 2 computer software copyrights. The company believes that its patents and other intellectual property rights serve to distinguish and protect its products from infringement and contribute to its competitive advantages.