China has a population of 1.3 billion. Its economy grew at a rapid annual rate of over 9%, and its urbanization growth increased by 10% in 2004. However, according to the Bank of China International ("BOCI"), and various government officials, more than 400 cities and 13 provinces and regions in China currently face a water shortage problem.The water crisis in China has provided an excellent opportunity for investors to invest in a waterworks company that can provide solutions that address this issue.

Company management aims to become a US public company and a reporting issuer by the fourth quarter of 2007. NCVL will benefit from increased brand awareness as a listed company, access to expansion capital, and an opportunity to attract knowledgeable shareholders with experience and investment interest in the China water industry.
Investments in Chinese water utilities infrastructure
After NCVL has become a reporting US public corporation and has completed a registered offering in the USA, the Company will have 35 million shares outstanding. Going forward, in the next 18 to 24 months, the Company plans to raise approximately $100 million in equity financing and roughly $150 million in debt financing to achieve its strategic vision of reaching $1.0 billion dollars in annual revenues. The required financing will be raised in several rounds on an as needed basis to reduce dilution to existing shareholders.
Investments in Chinese water utilities.

NCVL is organized into two distinct operating segments: the water equity division and the water consultancy division.
Investments in Chinese water utilities.

The Water Equity Division will participate in various Build-Own-Operate ("BOO") arrangements in partnership with government agencies. These are usually in the form of a 30-year concession rights giving the Company the right to collect water tariff according to the set rates and volumes. The Chinese government has mandated that a reasonable return for water supply companies should be 8% - 12% Return on Equity ("ROE").
Investments in Chinese water utilities.
As the project ROE in the water sector is set at 12%, the Company will finance their project investments (which are booked as equity in the project companies) with debt instruments (including bank loans, convertible bonds and short-term financing notes) to increase profits by earning a return spread. Assuming a pre-tax interest rate of 5.58% per annum. (i.e. People's Bank of China one-year benchmark lending rate) and a conservative project ROE of 8%, the Company can reasonably earn a post-tax return spread of 4.3% with bank borrowings. In addition, the Company will derive additional profits from value added services related to the water business, which are not subject to any limits on profits. As such, NCVL can in fact achieve a ROE of higher than 12% on a consolidated basis, while project ROE on that portion for the water tariff business will still be within the range of governmental guidance (i.e. 8%-12%).
Investments in Chinese water utilities.
Company management has identified five potential acquisitions in China. The Company is currently in confidential negotiation stages with various government officials and expects to be able to secure the majority of these projects over the next 24 months.
Investments in Chinese water utilities.
In addition to water supply, Company management also intends to introduce the water meter installation service that will be a steady recurring income stream for each water project. This includes new meter installation and the renewal of old meters. Previously, it was not necessary that each household have its own meter, and many households were sharing meters. On average, the percentage of homes that have individual water meters is less than 50%. With the current water crisis, and the government mandate for the conservation of water, the Chinese government is making it a national policy for every household to have their own meter. As such, local governments have been given a mandate to install water meters in their cities and regions and NCVL is well poised as a local water supply company to perform and installation and maintenance. NCVL management expects to be charging RMB 500 to 1,500 per meter installation, with a gross margin that can be as high as 70%.
Investments in Chinese water utilities.
In addition, the local water company will also have a construction team for building and maintaining the last mile network, reservoirs and other related facilities. NCVL can derive revenues and profits from the construction of water infrastructure projects.

The Company has entered into an agreement to acquire an industry leading consultancy firm (i.e., CGW) that can directly participate in the growing water industry without any limits on return. With the acquired expertise, NCVL can begin launching value-added services, such as system design, project engineering, management consulting, equipment procurement, pipeline inspection and maintenance, as well as meter reading and tariff collection, in markets in which it has set up a water project company and has monopoly rights to the region to enhance profitability. The charges for these services will be booked as operating costs for specific plants or projects.
Investments in Chinese water utilities.

China has a population of 1.3 billion. Its economy grew at a rapid annual rate of over 9%, and its urbanization growth increased by 10% in 2004. However, according to the Bank of China International ("BOCI"), and various government officials, more than 400 cities and 13 provinces and regions in China currently face a water shortage problem. Compared to the power or other utilities, the Chinese water sector has several unique characteristics. Investments China water infrastructure industry

As water operation is typically attached to a pipeline operation, water operators usually control pipelines to enhance their regional monopoly status, especially in negotiating tariffs with the government. These are 30 year monopoly concession that permit use to collect revenues on water tariffs, install new residential and commercial water meters, and earn profits on water infrastructure projects. There has been an increasing evidence of a single water operator dominating one city's water business with more vertical business integration. Investments in Chinese water utilities.

Unlike electricity or gas, there are no other alternatives to substitute water. As such, water has low price elasticity and the government regulates the water tariffs. The government typically levies water resource fees, which are one component of end-user tap water tariffs, to fine-tune water demand and promote water conservation. Investments China water infrastructure industry

In its report published on the Chinese water sector, BOCI identified several major listed companies that have participation in the water and sewage industry in addition to other investments. Accordingly, a portion of their business is in the similar markets as NCVL.
Investments in Chinese water utilities.
These companies are publicly listed in China, Hong Kong, and Singapore and their statistics can provide a fairly accurate forecast for the potential of NCVL. The tables below illustrate the expected earnings growth for these five companies, as well as their historical return on equity ("ROE") and return on assets ("ROA").
The water utilities sector has relatively outperformed the market. This is positive for NCVL as the Company will be publicly listed in the U.S. and will be seeking several tranches of equity financing in the U.S.A.

The management of the Company believes that the competitive advantages of the Company are attributable to the following factors:
Investments in Chinese water utilities.
A top management team, which consists of former high ranking executives in the Chinese Ministry of Water, with vast experience in water projects in China
Investments in Chinese water utilities infrastructure
An experienced expert consultancy team with an optimized organizational and management structure
Investments in Chinese water utilities.
Comprehensive market development capacity, especially with the niche strategy of targeting emerging cities and regions within China
Investments in Chinese water utilities.
A logical business model of evaluating and modernizing undervalued, inefficiently operated assets and applying a western, private enterprise management to dramatically increase the value of the assets
Investments in Chinese water utilities infrastructure
A end-to-end water solution that allows the local government to address the water crisis in China

The Company has already identified several water companies in China that are potential acquisition targets. Acquiring such companies will allow the Company to have access to a steady stream of revenue from supplying water as monopoly rights to the water system in the region. NCVL can then move into other value-adding services such as water meter installation and tariff collection system to generate additional return.