Canvest Environmental Protection Group Company (1381) H1 2024 earnings summary

Executive summary

• Maintained operational resilience despite macroeconomic slowdown and intensified competition in the WTE sector, with a strategic shift to high-quality operations, automation, and refined management of existing projects.

• Leading WTE and urban environmental protection provider in China, with 33 operating projects and a strong presence in Guangdong Province.

• Processed 8.7 million tonnes of MSW, generated 3.23 billion kWh of green electricity, and offset 4.79 million tonnes of CO2 in H1 2024.

• No new construction projects in H1 2024, resulting in zero construction revenue and overall revenue decline.

• Significant recognition in ESG ratings and industry awards, including MSCI ESG Rating A and Top 50 Environmental Enterprises ranking.

Financial highlights

• Revenue for H1 2024 was HK$2,130.4 million, down 28.5% year-over-year due to the absence of construction income.

• Net profit attributable to equity holders fell 27.1%–29.4% year-over-year to HK$445.0–452.2 million, mainly due to lack of construction income and project impairments.

• Gross profit reached HK$1,033.8 million, down 8.8% year-over-year, with gross margin rising to 48.5% (+10.5p.p.).

• EBITDA margin rose to 62.0% from 48.5% year-over-year.

• Operating cash flow increased 59.3% to HK$613.1 million.

Outlook and guidance

• Plans to strengthen management of existing projects, reduce costs, and improve efficiency, with a focus on technological innovation, digital transformation, and expansion into new regions and markets.

• Will expand steam sales and coordinated treatment of industrial and kitchen waste to drive new revenue streams.

• National policy supports county-level WTE projects, but new capacity additions are small and face operational challenges.