2015 interim results in line with expectation

The Company recorded revenue as RMB 652 million in 2015H1, up 67% yoy; and recorded profit before tax as RMB 148 million, up 174 yoy%. The profit attributable to shareholders amounted to RMB 110 million, surged 221% yoy. The significant increase in revenue and profit is mainly due to the low comparison benchmark in 2014H1 when there were less projects under construction. Earnings per share is RMB 0.11. Such business results is basically in line with our expectation.

Various business segments under steady development

The Company recorded revenue from construction service as RMB 186 million, up 44.6% yoy. The Company has four projects in progress in H1, namely Anshun, Jurong, Jixian and Huizhou. More than half of these projects have been completed and the total treatment capacity amounted to 3300 tons. Upon completion of these projects, the business of the Company would be enhanced significantly. The operating income of the Company recorded RMB399 million in H1, up 81% yoy. The Company has 7 projects in operation and all these projects are operating smoothly, except Rushan project recognized an impairment loss of RMB 10.87 million due to inadequate amount of waste, and still recorded an impairment loss of RMB 16.69 million again this year.

New projects have higher individual capacity

The Company procured two new projects this year, namely Tongzhou project and Bengbu project. The capacity of Tongzhou project is 2250 tons while Bengbu project is 1500 tons, in which 1000 tons are from phase one. The capacities of these two projects are higher and better economies of scale is expected. Investment on these two projects amounted to RMB1160 million and RMB 504 million respectively.

Valuation

The business operation of the Company in H1 is steadily stable, which is in line of expectation. The procured new projects have higher capacity and more new projects would be procured before the year end. We maintain the target price of HKD5.44, and upgrade to the rating of “Buy”. (Closing price as at 22 Oct 2015)

Financials

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