Everbright Environment Announces 2024 Interim Results

26 August 2024, Hong Kong – China Everbright Environment Group Limited (“Everbright Environment” or the “Company”) (257.HK) announces its unaudited interim results of the Company and its subsidiaries (collectively the “Group”) for the six months ended 30 June 2024 (“1H2024” or the “period under review”).

In terms of operating results, during the period under review, major businesses and responsibilities of the Group progressed with stability, diversified its asset-light and asset-heavy businesses, and steadily expanded new businesses and models, enhancing its efforts to develop the “One Body and Two Wings” development path (focusing on domestic business with an emphasis on operation as one body, and exploring overseas business and pursuing development that is driven by innovation as two engines). With various measures being adopted to control costs, increase revenue, and enhance quality and efficiency, and a stable momentum for the financial and business indicators, the Group’s operational development quality was further improved. As the relevant management systems continued to optimise, ongoing efforts were made to tackle accounts receivable recovery, and safety measures were constantly enhanced, the Group’s management efficiency was accelerated. With the technology research and development (“R&D”) empowering the development of all business sectors, as well as the acceleration of the digitalisation of management, the commercialisation of the technology research results continued to make progress. Additionally, the Group was invited to attend a dialogue between the Prime Minister of Vietnam and Chinese companies that run business in Vietnam, the 2024 Annual Meeting of Beautiful China Forum 100 and the Green Development Forum of Shanghai Cooperation Organisation Countries, leading to an ongoing expansion of its industry influence.

During the period under review, the Group recorded a total revenue of approximately HK$15.612 billion, a decrease of 4% from the first half of 2023 (“1H2023”); gross profit amounted to approximately HK$6.046 billion, a decrease of 16% from 1H2023; earnings before interest, taxes, depreciation and amortisation (“EBITDA”) amounted to approximately HK$6.550 billion, a decrease of 11% from 1H2023; profit attributable to equity holders of the Company amounted to HK$2.454 billion, a decrease of 12% from 1H2023; and basic earnings per share amounted to HK39.95 cents, a decrease of 12% from 1H2023.

In terms of market expansion, during the period under review, with a focus on the three major areas of solid waste, water-related business and clean energy, the Group solidified its advantages in core business areas, enhanced industrial chain extension, proactively expanded synergistic businesses, and nurtured the balanced development of asset-light and asset-heavy businesses. In 1H2024, the Group invested in and secured a total of 8 new projects, with a total investment of approximately RMB1.611 billion. These new projects involve waste water treatment, biomass integrated utilisation, construction of zero-carbon industrial parks and energy storage, among others. The Group also signed various new asset-light businesses, with a total contract value of approximately RMB392 million.

The major designed treatment and supply capacities of the new projects secured in 1H2024 are summarised as below:

In respect to expansion highlights, during the period under review, the Group entered the markets in Anyang, Henan Province, and Guangzhou, Guangdong Province, securing a municipal waste water treatment project and the Group’s first energy storage project, respectively, continuing to solidify its business deployment in China’s major strategic regions like the Yellow River Basin and the Guangdong-Hong Kong-Macau Greater Bay Area. Leveraging its existing experience in developing zero-carbon industrial parks, the Group signed 3 new projects for the construction of zero-carbon industrial parks. The expansion of asset-light businesses across all business sectors of the Group progressed smoothly, with new businesses covering environmental remediation, technical consulting, engineering consulting, equipment supply, battery recycling and reuse and other categories. In active pursuit of opportunities in country markets along the “Belt and Road” route, the Group won the bids for asset-light projects relating to equipment supply in Malaysia and India.

As at 30 June 2024, the Group had a business presence in 227 cities, counties and districts across 26 provinces, municipalities, autonomous regions and special administrative region in China, with overseas business markets in Germany, Poland, Vietnam and Mauritius. The Group invested in and secured a total of 600 environmental protection projects, with an aggregate investment of approximately RMB162.272 billion. It also undertook various asset-light projects and services. The Group had a total of 191 waste-to-energy projects (including operation and management (“O&M”) projects) under its environmental energy and greentech sectors, with a designed daily household waste processing capacity of 158,900 tonnes.

During the period under review, the Group continued to carry out works related to “Cost Control and Efficiency Enhancement”. In terms of financial management, the Group actively took advantage of the favourable window of opportunity in China’s bond market, where interest rates were relatively low, to complete several bond issuances, thereby further reducing its capital costs. It also replaced high-interest loans abroad and adopted other means to save interest expenses. In terms of tendering and procurement management, the Group further moderately promoted the centralised management of tendering and procurement to leverage centralised procurement advantages. As a result, the procurement costs were constantly reduced. In terms of information technology management, the Group continued to develop its intelligent management platform to strengthen the digitalisation level of financial, capital and document management platforms. This enhanced data collaboration and integration within the Group, leading to greater overall management efficiency.

In terms of operations management, during the period under review, the Group established a dedicated task force for operational efficiency enhancement with a focus on the goal of “Enhancing Operational Efficiency, Controlling Cost and Boosting Revenue”, and tailored work targets, plans and specific measures based on project conditions. As a result, the operation and management of such projects were enhanced and the potential for increasing revenue and reducing expenses across these projects were further unveiled. In particular, the environmental energy sector focused on increasing waste intake and improving the efficiency of slag management to enhance operational efficiency and revenue. The environmental water sector strengthened the cleaning and maintenance of critical operating equipment at waste water treatment projects, resulting in improved treatment efficiency and reduced operating costs. The greentech sector enhanced the management and control of the front-end collection and transportation systems for biomass, and hazardous and solid waste projects, ensuring robust and positive operational data.

In terms of project construction, during the period under review, the Group adhered to a refined and dynamic management model, focusing on strengthening the comprehensive monitoring and control of safety risk factors to ensure the safe and orderly progress of all project construction works. Notably, the Group, as a party participating in construction, was invited to attend the launching ceremony of the Boao near-zero carbon demonstration zone in Hainan Province, and the Prime Minister of Vietnam attended the completion ceremony of the Group’s Hue Waste-to-energy Project in Vietnam, demonstrating the local government’s full acknowledgement to the Group’s capability in project engineering construction. In 1H2024, 17 projects completed construction and commenced operation, and 1 project completed construction. 3 environmental remediation services were completed and delivered. Additionally, 12 projects commenced construction and 2 environmental remediation services began execution.

In terms of innovation empowering, during the period under review, the Group actively pursued technology R&D and promoted the commercialisation of technology research results; focused on the cultivation of new businesses and technologies to empower all business development; and advanced internal system construction to accelerate the management digitalisation process. In particular, the Group achieved commercialisation of 13 technology research results. It also launched the unmanned decarbonising machine product into the market and provided decarbonising services to internal and external clients for more than 20 times. Additionally, the Group carried out the R&D and pilot trials on several major topics, such as fly ash utilisation, flue gas purification and intelligent and precise control systems for waste water treatment plants, aiming to address limitations and challenges encountered in actual production. In respect to patents, as of 30 June 2024, the Group held more than 1,800 patents in total.

In terms of environmental contributions, in 1H2024, the Group generated green electricity of approximately 13.6 billion kWh through processing household waste, hazardous and solid waste, and agricultural and forestry waste. This output is equivalent to saving more than 5.4 million tonnes of standard coal, while reducing carbon dioxide (CO₂) emissions by more than 14 million tonnes. At the same time, through waste water treatment and waste-to-energy plants’ leachate treatment, the Group reduced chemical oxygen demand (COD) discharge of nearly 420,000 tonnes.

The Group remains dedicated to sharing development and operation returns with the shareholders of the Company (the “Shareholders”). To reward the Shareholders for their support and take consideration of the Group’s business development and strategic planning, the board of directors of the Company has declared to pay an interim dividend of HK14.0 cents per share for the six months ended 30 June 2024 to the Shareholders. The dividend payout ratio was 35%, an increase of 4 percentage points as compared with 1H2023.

Mr. Luan Zusheng, Executive Director and Chief Executive Officer of Everbright Environment, said, “In 1H2024, Everbright Environment focused on its major businesses and responsibilities to advance high-quality development with solid efforts. As a result, the Group realised stable operating results, continuously solidifying its industry-leading position. Next, the Group will enhance efforts to control cost and enhance efficiency, by boosting project operation proficiency and efficiency and enhancing financial management and control. It will diversify expansion, by leveraging on the advantages and experience of its core businesses, tapping into potential of the traditional markets, accelerating the transformation and promotion of new businesses, and expanding overseas business. The Group will boost technological innovation empowerment, by advancing the commercialisation of technology research results and the marketisation of technological innovation products. In order to strengthen management effectiveness, the Group will improve investment management practices, address challenges relating to accounts receivable recovery, and uphold the basic standards for safety production. In order to guarantee talent cultivation, the Group will develop a pool of talents with a global vision, an innovative mindset and a comprehensive set of skillset. By doing so, the Group will unwaveringly pursue high-quality development, creating sustainable and excellent returns for the Shareholders and the society.”

Mr. Huang Haiqing, Executive Director and Chairman of the Board of Everbright Environment, said, “The Third Plenary Session of the 20th Central Committee of the Communist Party of China emphasised the importance of building a beautiful China by accelerating the comprehensive green transformation of economic and social development. This includes prioritising eco-environmental protection, promoting resource conservation and efficient utilisation, advancing green and low-carbon development, and fostering a harmonious coexistence between humans and nature. As a supporter and practitioner of ecological and environmental protection, and low carbon and sustainable development, the Group will adhere to the corporate mission of ‘Devoted to Ecology and Environment for a Beautiful China’ and the goal, ‘To become a World-Class Integrated Environmental Service Provider with Chinese Characteristics’. It will adhere to the general working principle of ‘Making Progress with Stability’ and uphold a pragmatic work style. With a focus on value creation, the Group will build momentum and accumulate energy, work hard together, and tackle challenges and difficulties, to relentlessly drive high-quality development, contributing to the construction of a beautiful China.”

Business Review by Sectors

ENVIRONMENTAL ENERGY

In 1H2024, environmental energy undertook several new asset-light businesses, covering waste sorting, environmental sanitation integration, heat and steam supply, which command a total contract value of approximately RMB268 million. As of 30 June 2024, environmental energy had invested in and held 281 projects, with a total investment of approximately RMB98.324 billion, and undertook 2 O&M projects, 2 engineering design, procurement, construction and operation (“EPCO”) projects, and other types of asset-light businesses.

In terms of operations management, during the period under review, environmental energy further tapped into the potential of its operating projects. By carrying out tasks such as enhancing waste storage pit management, boosting slag utilisation efficiency, expanding biogas purification and refining business, and conducting operation-related researches, environmental energy strived to boost the operating efficiency and proficiency of its projects. In particular, the ash cleaning robots were put in trial run for further optimisation at the Group’s waste-to-energy projects in Nanjing and Suqian, Jiangsu Province, effectively controlling related operating risks and improving work efficiency. In 1H2024, the waste processing volume increased by approximately 9% as compared with 1H2023, with 2 waste-to-energy projects being approved to increase waste treatment fees.

In terms of project construction, in 1H2024, 5 projects commenced construction, with a total designed daily household waste processing capacity of 1,000 tonnes, and a designed daily food waste processing capacity of 375 tonnes. 11 projects completed construction and commenced operation, with a total designed daily household waste processing capacity of 3,700 tonnes, and a designed daily food and kitchen waste processing capacity of 425 tonnes.

ENVIRONMENTAL WATER

As of 30 June 2024, the Group held a 72.87% stake in China Everbright Water Limited (“Everbright Water”).

In 1H2024, Everbright Water invested in and secured 3 new projects, with a total investment of approximately RMB1.371 billion, and newly undertook various asset-light businesses, with a total contract value of approximately RMB30.25 million. The newly-secured projects are designed to have a daily waste water treatment capacity of 200,000 m³. As of 30 June 2024, Everbright Water had invested in and held 169 projects, with a total investment of approximately RMB32.151 billion. It also undertook 7 O&M projects, 3 EPCO projects and other types of asset-light businesses.

In terms of operations management, during the period under review, Everbright Water carried out cleaning work on key operating equipment, namely aerators, across its waste water treatment projects. This resulted in reduced failure rates, leading to savings in operating costs like energy consumption and maintenance expenses, and improved waste water treatment efficiency. Additionally, it searched for carbon source alternatives and implemented precise dosing and precise aeration control systems in multiple projects. Since the “In-plant Solar Power” project was initiated in 2021, as of 30 June 2024, the in-plant solar power facilities at 6 projects were put into operation, which have a total installed capacity of 10.76 MWp and are able to generate approximately 12 million kWh green electricity per annum. In 1H2024, 2 waste water treatment plants received regulatory approval for tariff hikes,

In terms of project construction, during the period under review, 3 projects commenced construction, with a designed daily reusable water supply of 9,000 m³ and a designed daily livestock and poultry manure treatment capacity of 300 tonnes, 1 project completed construction; and 2 projects completed construction and commenced operation, with a designed daily water treatment capacity of 25,000 m³.

Greentech

As of 30 June 2024, the Group held a 69.70% stake in China Everbright Greentech Limited (“Everbright Greentech”).

In 1H2024, Everbright Greentech secured 5 new projects, with a total investment of approximately RMB240 million. It also newly undertook 2 environmental remediation services, with a total contract value of approximately RMB33 million. The new projects are designed to have an annual biomass raw material processing capacity of 70,000 tonnes and a solar power and energy storage installed capacity of 39.66 MW. As of 30 June 2024, Everbright Greentech had invested in and held 145 projects, with a total investment of approximately RMB31.176 billion. It also undertook 17 environmental remediation services (excluding services that had been completed and delivered).

In terms of operations management, during the period under review, Everbright Greentech tailored solutions to help selected projects to reduce losses. By further exploring local biomass resources, controlling costs through refined management measures and exploring heat supply business, the integrated biomass utilisation projects in operation managed to control costs and boost efficiency. As for hazardous and solid waste treatment business, Everbright Greentech refined its management in terms of pre-treatment and process control, which increased treatment volume and heat supply volume.

With respect to project construction, during the period under review, 4 projects commenced construction, with a solar power installed capacity of 60.19 MWp and an energy storage installed capacity of 2.20 MWp. 2 environmental remediation services started their respective remediation work in succession. 4 projects completed construction and commenced operation, contributing a designed annual biomass raw material processing capacity of 146,000 tonnes, with a solar power installed capacity of 9.59 MWp. 3 environmental remediation services were completed and delivered.

EQUIPMENT MANUFACTURING

In 1H2024, equipment manufacturing insisted on integrating its professional advantages with market demand, actively participated in domestic and international industry exchanges and discussions, deployed market opportunities at home and abroad, and followed up on multiple projects with good progress. Equipment manufacturing also made orderly progress in the commercialisation of various research results, among which, the sector implemented a demonstration project for waste battery recycling, and developed the “Equipment Cloud Service” intelligent maintenance service platform, expanding digital services for the entire lifecycle of environmental protection equipment.

During the period under review, equipment manufacturing signed 7 external sales contracts and sold 7 sets of equipment to external market. The total value of contracts relating to the external sales of complete sets of equipment amounted to RMB60.98 million. With respect to the equipment supply and after-sales services, equipment manufacturing commenced 159 service items, provided 10 sets of grate furnaces to projects of the Group and external clients, and provided 60 sets of equipment for incinerator and membrane system. The sector also signed 69 contracts in relation to external after-sales services, with a total contract value of approximately RMB47.72 million. In 1H2024, the sector provided 79 after-sales service projects.

ENVIROTECH

In 1H2024, envirotech took the “Establishment of New Mechanisms, Identification of New Directions and Development of New Platforms “as leverage to continue innovation as a driving force for development, actively implementing technology empowerment for the Group’s major business sectors, fostering core technology advancements, and promoting the commercialisation, replication and application of technology research results.

Guided by China’s goals of “Peaking Carbon Emission and Achieving Carbon Neutrality”, during the period under review, envirotech collaborated with environmental energy to complete the registration of the Verified Carbon Standard (“VCS”) program for the Group’s Wuwei Waste-to-energy Project in Gansu Province, making it the Group’s first waste-to-energy project that was recognised by the VCS program. This has provided valuable experience to better assess and evaluate the carbon reduction and carbon assets of the Group’s projects in the future.

In 1H2024, the Group was granted 64 patents (including 36 utility model patents, 22 invention patents, and 6 software patents).

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