24 Mar 2023
FY22 revenue increased by 21.4% YoY to HK$8.25bn, mainly due to 1) a YoY 16.3% increase in revenue from power sales and waste treatment fees to HK$3.49bn with i) power sold increased by 19% YoY to 4,532 GWh; and ii) MSW processing capacity up by 33% YoY to 13.3m tons with utilization rate down by 2.8ppt to 104.9%; 2) more projects started construction in FY22 which generated revenue of HK$4.36bn (FY21: HK$3.52bn); and 3) revenues from environmental hygiene and other services income rose by 35.8% YoY to HK$0.23bn, while finance income was up by 49.8% YoY to HK$0.17bn. Overall GPM slightly down by 0.4ppt YoY to 30.7% mainly due to 1) the lower margin construction segment, which accounted for 52.9% of total sales (FY21: 51.7%), outgrew the operation segment with YoY decline in shares of revenue by 1.8ppt to 42.3% in FY22; and 2) GPM of operating segment was down by 3.6ppt YoY to 46.3% as its new WTE projects takes time to ramp up and a general increase in RM operating costs. G&A as a % of revenue decreased by 0.6ppt YoY to 7.0% on prudent cost control. As a result, FY22 NP was up by 0.8% to HK$1,333m, which is 13% lower than our expectations due to lower GPM. Payout ratio remained flat at 20%.