China Everbright Water (U9E) H1 2024 earnings summary

Executive summary

• H1 revenue rose 9% YoY to HK$3,352.6m, while EBITDA fell 7% to HK$1,196.5m and attributable profit declined 8% to HK$581.1m.

• Higher construction activity lifted revenue, but its larger revenue share and weaker operating income weighed on gross margin and profit.

• The portfolio comprised 179 projects with 7.668m m³/day of designed treatment or supply capacity; 169 projects were invested in.

Financial highlights

• Gross profit fell 10% to HK$1,269.2m; profit before tax declined 7% to HK$815.3m and profit for the period fell 7% to HK$627.6m.

• Construction service revenue rose 64% to HK$1,355.4m; operating income fell 16% to HK$1,301.3m, partly reflecting a one-off retrospective tariff adjustment in H1 2023.

• Direct costs and operating expenses rose 25% to HK$2,083.4m, largely due to a 79% increase in construction service costs to HK$1,105.5m.

• Net finance costs declined to HK$269.1m from HK$287.1m as lower average lending rates outweighed higher average borrowings.

Outlook and guidance

• Priorities include the “One Body and Two Wings” growth model, stronger water-related capabilities, and green, low-carbon, high-quality growth; no numerical FY2024 guidance was stated.

• Development will continue across traditional and new areas, including asset-light services, industrial wastewater solutions and Southeast Asian opportunities.

• Projects in preparatory and construction stages are expected to gradually contribute operation income upon completion and commencement of operations.