Shenghui Cleanness (2521) H2 2024 earnings summary

Executive summary

• FY2024 revenue rose 6.9% YoY to RMB673.6m; net profit increased to RMB49.2m, supported in part by a RMB37.3m fair-value gain on the BTI investment.

• Adjusted for FY2023’s RMB12.0m non-recurring listing expenses, FY2023 net profit was RMB39.9m; FY2024 net profit was RMB49.2m.

• Strategy targets organic growth, expansion into new PRC markets, possible Greater Bay Area acquisitions, and opportunities in waste recycling and biodegradable materials.

Financial highlights

• Revenue was RMB673.6m, up 6.9% YoY; gross profit rose to RMB100.7m from RMB93.4m.

• Net profit was RMB49.2m vs RMB27.9m; profit before tax was RMB59.2m vs RMB32.4m, with the increase primarily reflecting the BTI fair-value gain, partly offset by higher ECL impairment.

• Cost of services increased 6.7% to RMB572.9m, broadly tracking revenue growth; administrative and other expenses rose 11.5% to RMB68.1m, mainly on higher staff costs.

• Operating cash flow was negative RMB53.1m vs positive RMB6.9m, reflecting working-capital outflows; cash and cash equivalents ended the year at RMB91.1m vs RMB148.6m.

Outlook and guidance

• Plans include organic growth and replication of the service model in PRC regions with strong demand for property cleaning and maintenance.

• Potential acquisitions or investments in Greater Bay Area service providers may broaden geographic reach and support bids for major infrastructure cleaning contracts.

• Exploring waste-material recycling for packaging and the design, manufacture and sale of biodegradable materials.