China Everbright International posts 33pc rise in 2016 profit
China Everbright International, one of the nation’s largest developers of waste to energy and water treatment projects, posted a better than expected 33 per cent rise in annual profit and raised its dividend payout.
Net profit for the 12 months to December 31 amounted to HK$2.78 billion yuan (US$358.8 million), up 33.6 per cent from 2015, the Beijing-based subsidiary of the state-backed financial-to-industrial conglomerate said in a filing to Hong Kong’s stock exchange on Tuesday.
That compares with an average estimate of HK$2.6 billion by 20 analysts polled by Thomson Reuters.
“The better than expected profit was due to aN 83 per cent surge in construction revenue, a 51 per cent jump in value-added tax refund, more than offsetting profit margin falls in most business segments,” Citi’s head of Asia utilities research, Pierre Lau, said.
Excluding HK$93 million of asset disposal gains in 2015, net profit grew 40 per cent last year, he added.
Revenue surged 64 per cent year on year to HK$14 billion, fuelled by the completion and commissioning of 23 projects last year.
Another 39 projects were under construction at the end of last year, involving 14.5 billion yuan worth of investment.
A final dividend of 13 HK cents was proposed, bringing the full year total to 20.5 cents – compared with 18.5 cents in 2015.
For its mainstay waste-to-energy business, the company said it will “seek to further consolidate its leading position in the domestic market … while exploring more development opportunities in the overseas market”.
Chief executive Chen Xiaoping said the company obtained 44 new projects worth 14.4 billion yuan last year - both historical records - which will provide the foundation for this year’s growth.
Operating profit from environmental energy projects, primarily the collection and treatment of municipal waste to generate power, increased 23.6 per cent to HK$3.3 billion.
Profit from water treatment plants grew 6 per cent to HK$844 million, while that from “greentech” projects – mainly solid and hazardous waste treatment and solar and wind energy generation – jumped 133.7 per cent to HK$1 billion.
Profit from environmental protection equipment design and manufacturing surged 144 per cent to HK$416.6 million.
China Everbright International has been actively pursuing overseas opportunities, including its US$47 million Vietnam project win and €123 million (US$130 million) takeover of Poland’s leading solid waste treatment firm Novago, both last year.
Chen told reporters in January the company was in talks to build more projects in Southeast Asia.
Overseas revenues amounted to just under 1 per cent of its total last year.
On the planned separate listing and shares offer of its “greentech” operations in Hong Kong, Chen said the firm decided to delay the timing from late last year to some time this year after the announcement of the annual results.
“This way, both existing and new shareholders will have a chance to appreciate the 2016 results and the prospect of the 2017 operations, which is fairer to all,” he said in a press conference on Monday. “We will duly instruct our advisors to push ahead with relevant work.”
China Everbright’s shares closed Tuesday 1.8 per cent higher at HK$10.06 as investors cheered the results. That beat a 0.8 per cent decline of the Hang Seng index.