China Water Affairs Group Limited (CWA; 00855) and Kangda International Environmental Company Limited (Kangda; 6136) have jointly announced a material revision to the annual caps governing their continuing connected transactions for wastewater-treatment construction services.

Under the framework Construction Services Agreement, Kangda Investment (Hong Kong) Company Limited (Kangda HK), an indirect wholly-owned unit of Kangda, engages Jiangxi Silver Dragon Water Environment Construction, a non-wholly owned subsidiary of CWA, to deliver construction and related works for wastewater-treatment projects. The original annual transaction caps of RMB45.00 million for each of the years ending 31 December 2026, 2027 and 2028 are now increased to RMB70.00 million for both CWA and Kangda.

Management cited several factors behind the 55.6% uplift: 1) historical utilisation of earlier caps—RMB41.10 million in 2024, RMB54.50 million in 2025 and RMB23.60 million in 1H 2026—indicates accelerating demand; 2) the two groups’ expanded construction schedules and new wastewater projects; and 3) anticipated inflation-driven cost increases for comparable market services.

Despite higher caps, all applicable percentage ratios remain above 0.1% but below the 5% threshold stipulated in Hong Kong’s Listing Rules. Consequently, the revised caps trigger reporting, annual review and announcement requirements but remain exempt from independent shareholders’ approval for both CWA and Kangda.

Directors of each company—excluding overlapping directors and interested parties—concluded that the amended caps are fair, conducted on normal commercial terms, and align with shareholder interests.

CWA focuses on city water supply, direct drinking water pipelines and environmental protection businesses in Mainland China. Kangda specialises in investment and operation of wastewater-treatment facilities, with CWA holding a 29.67% stake in the company.