SIIC Environment Holdings: Net Profit Decline of 14.4% in 2024 Financial Report

Company Overview

SIIC Environment Holdings Ltd. (SIIC Environment) is a leading integrated water and environmental company in China, involved in wastewater treatment, water supply, sludge treatment, waste-to-energy incineration, and other environmental services. The company is headquartered in Singapore and listed on both the Singapore Exchange (SGX) and Hong Kong Stock Exchange (HKEX). Its core operations span 20 provinces, municipalities, autonomous regions, and special administrative regions in China.

Industry Position and Market Share

SIIC Environment is a prominent player in the Chinese water and environmental sector, competing with other major companies in the industry. The company has a significant market share, bolstered by its strategic positioning and extensive project portfolio, which includes nearly 250 wastewater and water supply projects, 5 waste-to-energy projects, and 14 sludge treatment projects.

Revenue Streams and Customer Base

The company generates revenue primarily from construction and operation services under concession arrangements. The revenue for the first nine months of 2024 was RMB 52.73 billion, a decrease of 17.0% year-on-year. The operating income, which includes service concession arrangement financial income, grew by 5.8% to RMB 42.52 billion. The customer base includes municipalities and industrial clients across China.

Financial Statement Analysis

Income Statement

For the first nine months of 2024, SIIC Environment reported a total revenue decrease of 17.0% compared to the same period in 2023. The net profit attributable to shareholders declined by 14.4% to RMB 5.00 billion. The company’s gross profit margin improved by 2.8 percentage points to 37.7%, indicating better cost management and higher-margin operations.

Balance Sheet

The report does not provide detailed balance sheet data. However, it notes a significant reduction in finance costs due to refinancing high-interest loans with lower interest RMB loans, improving the financial structure and reducing costs by 6.7%.

Cash Flow Statement

Detailed cash flow information is not provided in the report. Key highlights include optimized financing structures that have reduced financial expenses and supported operational expansions.

Key Financial Information

• Total revenue for the first nine months of 2024: RMB 52.73 billion (down 17.0% year-on-year)
• Gross profit margin: 37.7% (up 2.8 percentage points year-on-year)
• Net profit attributable to shareholders: RMB 5.00 billion (down 14.4% year-on-year)
• Net profit margin: 14.8% (up 0.2 percentage points year-on-year)
• Earnings per share: RMB 19.40 cents (down 14.3% year-on-year)

Date of Report

This financial report was released on November 12, 2024, covering the first nine months of 2024.

Strategic Actions and Business Development

SIIC Environment is actively expanding its project portfolio, with new projects in Hubei, Shandong, and Guangxi provinces. The company has also completed expansions and upgrades for existing projects, enhancing its operational capacity. Strategic refinancing has reduced financial costs, supporting profitability improvement.

Investment Recommendations

If Currently Holding the Stock

Investors holding SIIC Environment stock should consider maintaining their position. The company’s strategic initiatives to reduce costs and expand operations, coupled with improved gross profit margins, suggest potential for long-term growth despite the current decline in net profit.

If Currently Not Holding the Stock

Investors not currently holding the stock may consider a cautious approach. The decline in revenue and net profit warrants careful monitoring. However, the company’s strategic actions and industry position offer potential for future growth, making it a viable option for long-term investment after further due diligence.

Disclaimer

This analysis is based on the financial report provided and is intended for informational purposes only. It does not constitute financial advice. Investors should conduct their own research and consult with a financial advisor before making investment decisions.