SIIC Environment (BHK) Q2 2023 earnings summary

Executive summary

• 1HFY2023 revenue rose 9.0% YoY to RMB4,018.8m; gross profit increased 15.5% to RMB1,437.7m, while profit attributable to owners grew 3.1% to RMB377.4m.

• Growth was supported by higher service-concession income, water treatment volumes and tariffs, and the start of Baoshan operations.

Financial highlights

• 2QFY2023 revenue was RMB2,100.1m, up 10.4% YoY; 1HF revenue was RMB4,018.8m, up 9.0%.

• 1HF construction revenue rose 1.6% to RMB1,287.0m; service-concession operating and maintenance income increased 14.9% to RMB1,859.0m and financial income grew 4.6% to RMB642.2m.

• 1HF service income increased 21.6% to RMB95.1m; other revenue rose 23.0% to RMB135.6m, mainly from ad hoc installation works.

• 1HF profit for the period rose 8.4% to RMB593.6m; EPS was RMB14.65 cents, up 3.1% YoY.

• Gross margin was 35.8% in 1HFY2023 versus 33.8% a year earlier; 2Q gross margin was 36.3% versus 35.0%.

Segment performance

• Service-concession operating and maintenance plus financial income reached RMB2,501.2m in 1HF, up 12.1% YoY, supported by Baoshan operations and higher water volumes and average prices.

• Wastewater treatment volume increased 2.7% YoY to 1,239.585m tonnes and water supply volume rose 2.7% to 155.761m tonnes; average tariffs rose 4.5% to RMB1.80/tonne and 1.1% to RMB2.50/tonne, respectively.

• Baoshan began operations early in 2023; two wet-waste biogas units connected to the grid in 2Q, with daily project capacity of 3,800 tonnes.

• Two Mudanjiang wastewater projects began commercial operation; Macau Taipa and Macau International Airport wastewater plants were taken over for operation and management in 1H.