Financial Analysis of SIIC Environment Holdings Ltd. – Q3 2024 Report

Business Description

SIIC Environment Holdings Ltd. is a public company registered in the Republic of Singapore and dual-listed on the Singapore Exchange (SGX) and the Hong Kong Stock Exchange (HKEX). The company and its subsidiaries operate primarily in the water and environmental industry in China.

The company’s core business operations are divided into three main segments:

• Water and Sludge Treatment: Construction, management, and operation of water and sludge-related infrastructure under service concession arrangements.
• Water Supply: Construction, management, and operation of water supply-related infrastructure under service concession arrangements.
• Solid Waste-to-Energy: Construction, management, and operation of solid waste-to-energy-related infrastructure under service concession arrangements.

The company’s registered office and principal place of business is located at One Temasek Avenue, #37-02 Millenia Tower, Singapore 039192.

Industry Position

SIIC Environment Holdings Ltd. is a leading player in the water and environmental sector in China. The company benefits from supportive government policies promoting green and low-carbon economic and social development. Key competitors in the industry include other major environmental and water management companies operating in China.

Revenue Streams and Customer Base

The company generates revenue primarily through service concession arrangements and the construction, management, and operation of water and waste treatment infrastructure. Its customer base includes municipal governments and industrial clients requiring water and waste management services.

The company’s supply chain involves the procurement of materials and technology necessary for infrastructure projects, with a competitive advantage driven by expertise in managing large-scale environmental projects and strong government relationships.

Financial Statement Analysis

Income Statement

For the nine months ended September 30, 2024, the company’s total revenue was RMB 52.726 billion, representing a decrease of 17.0% from RMB 63.490 billion in the same period in 2023. The net profit attributable to shareholders was RMB 4.996 billion, a decline of 14.4% from RMB 5.834 billion in the same period in 2023 [[5]].

Balance Sheet

As of September 30, 2024, the company’s total assets amounted to RMB 43.743 billion, up from RMB 42.608 billion as of December 31, 2023. Total liabilities stood at RMB 27.782 billion, compared to RMB 27.317 billion at the end of 2023 [[6]].

Cash Flow Statement

The company’s cash and cash equivalents decreased to RMB 2.772 billion as of September 30, 2024, from RMB 2.886 billion as of December 31, 2023. Net cash used in operating activities was RMB 0.267 billion, primarily due to higher working capital requirements. Net cash used in investing activities was RMB 8.089 billion, mainly for capital expenditures on property, plant, and equipment as well as intangible assets. Net cash generated from financing activities was RMB 7.214 billion, driven by net proceeds from borrowings [[7]].

Important Information for Investors

• Revenue Decline: Revenue decreased by 17.0% year-over-year for the first nine months of 2024.
• Net Profit Decline: Net profit attributable to shareholders decreased by 14.4% year-over-year.
• Dividend: No dividend was declared for the period.
• Debt Structure: The company has optimized its debt structure by replacing higher interest non-RMB loans with lower interest RMB loans, reducing financial expenses.
• Government Policy Support: The company benefits from supportive government policies aimed at promoting green and low-carbon development.

Summary of Key Findings

SIIC Environment Holdings Ltd. shows a strong position in its industry with a solid asset base and supportive government policies. However, the company faces challenges with declining revenue and net profit. The optimization of debt structure and continued focus on environmental projects present potential for future growth.

Recommendations

For Current Investors

Hold: Given the company’s strong industry position and supportive government policies, current investors should consider holding their shares despite the recent decline in revenue and net profit.

For Potential Investors

Buy: Potential investors may consider buying, given the company’s strategic initiatives to optimize debt and leverage government policy support for environmental projects. However, they should be cautious of the short-term financial performance decline.

Date of Report

The report is dated November 12, 2024, and covers the financial performance for the third quarter and the nine months ended September 30, 2024.

Disclaimer

This analysis is based on the financial report provided and is intended for informational purposes only. Investors should conduct their own due diligence and consult with a financial advisor before making any investment decisions.