25 Aug 2023
1H23 revenue down by 28% YoY to HK$2.98bn, mainly due to i) 53.8% decline in construction revenue to HK$997.2m on fewer projects in the pipeline; while ii) revenue from power sales and waste treatment was down by 1.8% YoY to HK$1,768.4m, but if in terms of Rmb then would be up 6% YoY on the back of power sold up 9.3% and MSW processed up 9.9% for its consolidated projects; and iii) a 52.6% YoY increase in revenue from environmental hygiene and other services (“EH”) to HK$151.1m. Overall GPM was up 7.7ppt YoY to 38.0% mainly due to i) sales mix change, as the higher margin operation segment (1H23 – GPM: 46.7%/58% of sales, 1H22 – GPM: 45.9%/43% of sales) outgrew construction segment (1H23 – GPM: 16.7%/34% of sales, 1H22 – GPM: 14.9%/53% of sales); and ii) GPM of the EH segment was up by 11.7ppt YoY to 39.5% due to increasing mix in higher GPM landfill projects. SG&A increased by 5.6% YoY to HK$264m amid more WTE projects under operation and also higher R&D. Interests expenses was up 13.9% YoY to HK$311m, as 30% of its loans are in HKD and the rates jumped from 3% to 7%. As a result, 1H23 NP was down by 21.2% to HK$610m, but if we exclude the impact of interest rate hike and FX impact, NP was only slightly down by 1.6% YoY. Payout ratio remained flat at 20%.