China environment protection firms enjoy sunny outlook

"Such an action plan calls for efforts to ramp up investment, and will inject strong growth impetus to companies focusing on water treatment equipment, damaged ecosystem recovery and environmental protection facility surveillance, with some sectors being newly emerging ones," said Zheng.

BOW raked in 19.5 million yuan net profits in the quarter through March, up 13.9 percent from a year earlier, attributing it to technology innovation, strong market demand and supportive industry policies. It projected huge water treatment business opportunities at several trillion yuan in the near term.

"China is at the crossroads of environmental protection and it brings unprecedented opportunities to companies. When environmental protection companies become more professional, the ecosystem recovery can become more professional thereafter," said Chang Jiwen, an expert with Development Research Center of the State Council, a government think tank.

However, environmental protection projects are time-consuming and highly reliant on investment, as a single water pollution plant might take hundreds of millions yuan to build. Against the backdrop of waning government tax revenues, effective ways have to be found to tap market resources in tackling the funding bottlenecks, experts said.

China's Ministry of Finance and the Ministry of Environmental Protection earlier this month jointly released the implementation opinions regulating the public-private-partnership (PPP) mode for water pollution prevention and control to encourage private investment in big projects.

The investment threshold for the private sector should be further lowered, while banks and other financial institutions should be encouraged to create innovative financial products to expand financing channels for companies, Chang suggested.

Professional companies' participation in those projects can not only reduce the government's financing burden, but also improve efficiency of environmental protection facilities with the shift of governments' role from a public service provider to a supervisor, analysts believed.