SIIC Environment Holdings: A Financial Analysis

Net Profit Decline of 14.4%

Date of Report and Financial Period

The report is dated 12 November 2024 and covers the financial period for the nine months ended 30 September 2024.

Business Description

SIIC Environment Holdings Ltd. is a leading environmental protection company incorporated in Singapore and listed on both the Singapore and Hong Kong stock exchanges. The company’s core business operations include the construction, management, and operation of water and sludge treatment infrastructure, water supply infrastructure, and waste incineration infrastructure.

• Water and Sludge Treatment: Construction and operation of related infrastructure under service concession arrangements.
• Water Supply: Construction and operation of water supply infrastructure under service concession arrangements.
• Waste Incineration: Construction and operation of waste incineration infrastructure under service concession arrangements.

The company primarily operates in the People’s Republic of China (PRC).

Industry Position

SIIC Environment Holdings is a prominent player in China’s water and environmental protection industry. The company benefits from supportive government policies aimed at promoting green and low-carbon economic development. Its main competitors include other large environmental protection firms operating in the PRC.

Revenue Streams

• Construction Revenue: Derived from construction activities related to service concession arrangements.
• Operating and Maintenance Income: Income from operating and maintaining water and sludge treatment facilities.
• Financial Income: Income from financial aspects of service concession arrangements.
• Service Income: Income from services provided under non-service concession arrangements.
• Other Revenue: Income from ad-hoc installation works and other sources.

Financial Statement Analysis

Income Statement

The Group’s revenue for the nine months ended 30 September 2024 was RMB 5,272.6 million, representing a decrease of 17.05.5% year-on-year for the same period, mainly due to the completion of major construction projects in FY2023 and commencement of new projects in 2H2024 [[37]].

Gross Profit and Margin

The gross profit (GP) was RMB 711.4 million in Q3FY2024, representing a decrease of 8.4% compared to the same period in 2023. For the nine months ended 30 September 2024, GP was RMB 1,988.8 million, a decrease of 10.2% compared to the same period in 2023. However, the Gross Profit Margin (GPM) improved to 36.5% in Q3FY2024 from 33.3% in Q3FY2023, primarily due to a lower proportion of construction revenue and higher average prices in water treatment and supply [[37]].

Other Income

Other income decreased by 11.2% year-on-year to RMB 80.9 million for the nine months ended 30 September 2024, primarily due to a reduction in non-core business activities [[38]].

Other Gains and Losses

For the nine months ended 30 September 2024, other gains and losses amounted to a net loss of RMB 35.6 million compared to a net gain of RMB 14.6 million for the same period in 2023, mainly due to unrealized foreign exchange differences [[38]].

Selling and Distribution Costs

Selling and distribution costs decreased by 1.4% year-on-year to RMB 56.0 million for the nine months ended 30 September 2024, mainly due to improved repair and maintenance costs [[38]].Q3 2024 Unaudited Financial Results and Dividend Announcement