China Water Affairs 1HFY22 Results: Net Profit Up 24.6% Y-O-Y

 

(29 November 2021, Hong Kong) China Water Affairs Group Limited (“China Water Affairs” or the “Company”, stock code: 00855.HK), a leader of integrated water operation in China, announced today its interim results of the Company and its subsidiaries (the “Group”) for the six months ended 30 September 2021(the “Reporting Period”).

 

During the Reporting Period, the Company recorded a best half-year revenue of HK$6.473 billion, representing a significant increase of 26.1% Y-O-Y. Net profit during the Reporting Period reached HK$1.579 billion, an increase of 24.6% Y-O-Y. Profit attributable to shareholders was HK$1.020 billion, an increase of 23.4% Y-O-Y. Basic earnings per share during the Reporting Period was HK63.61 cents, up by 23.1% Y-O-Y. In consideration of the satisfactory results and to reward the shareholders’ long-term support to the Group, the board of directors has proposed to pay the equity shareholders of the Company the interim dividend of HK16 cents per share, representing a steady increase of 6.7% as compared with the last corresponding period.

 

The Group continued its strategy to focus on core business. During the Reporting Period, the revenue from city water supply operation and construction segment increased by 21.4% to HK$5.146 billion, accounting for approximately 79.5% of the total revenue. The revenue contribution from water supply operation services and water supply connection income amounted to HK$2.756 billion, representing a rise of 21.6% Y-O-Y. Revenue contribution from water supply construction services amounted to HK$2.297 billion, up by 19.4% Y-O-Y. The water supply segment profit amounted to HK$1.927 billion, up by 18.5% Y-O-Y.

 

Alongside with the development of the national economy and the improvement of

people’s living standard, there is an increasing demand for high quality and healthy drinking water. At the same time, with governments at all levels issuing a number of policies to regulate and support the market, the prospects of pipeline  direct drinking water business are considered strong and in line with the new concept of low-carbon green development. Therefore, having been deploying the business strategy since six years ago, the Group has promoted the pipeline direct drinking water business to one of the core businesses of the Company. As one of the strategies to facilitate pipeline direct drinking water business in China, the Group has successively incorporated Changsha Aquacup and Nanjing Aquacup through acquisitions, which have more than 20 years of research and development experience. Together with the national brand of Aquacup and over 130 patented technologies earlier owned by Chinese Academy of Sciences, the Group now owns the existing customer base of Nanjing Aquacup and Changsha Aquacup and the independent technology and brand recognition required for future development. The Group has also cooperated with international partners including ORIX and Toray in the world's latest membrane technology and patented equipment, taking advantageous position as market pioneer and establishing a high-technology entry barrier standard for the industry. During the Reporting Period, the pipeline direct drinking water business generated a revenue of HK$239 million, a significant leap of 362.1% as compared with the last corresponding period. The Group will invest substantially in pipeline direct drinking water business across different regions to establish new profit growth points on the basis of the strong foundation of tap water businesses.

 

During the Reporting Period, driven by the supply-drainage integration, the revenue from environmental protection segment amounted to HK$596 million, representing an increase of 19.2% Y-O-Y. The environmental protection segment profit reached HK$189 million, representing a significant increase of 42.0% Y-O-Y. Revenue contribution from sewage treatment and water environmental renovation construction services amounted to HK$374 million, representing a significant increase of 28.0% Y-O-Y.

 

The Group has maintained its financial strength during the Reporting Period. As at 30 September 2021, the total assets of the Group were HK$52.324 billion and cash and structured deposits amounted to HK$5.848 billion, increasing by 11.2% and 20.7% respectively as compared with 31 March 2021. The EBITDA to finance cost coverage rose by 7.1% to 13.6 times from 12.7 times as the end of March 2021. The ratio of net debt to total equity remains at a healthy and manageable level of 78.2%, down by 4.5 percentage points from last year.

 

In terms of policy environment, in August 2021, the National Development and Reform Commission and Ministry of Housing and Urban-Rural Development jointly issued the “Measures for the Administration of Urban Water Supply Prices” and the “Measures for the Supervision of Urban Water Supply Pricing and Cost”, which had been revised to establish an incentive and restrictive mechanism to encourage cost reduction and efficiency enhancement of water supply businesses through a transparent system. New water pricing policies are more incentivizing for the Group to boost its investment, enhance its management efficiency and generate reasonable income. The policies provide strong and sustainable assurances for the healthy development of the Group’s water supply businesses.

 

Looking forward, with those favorable policies, the Group will grasp the market opportunities as well as adhere to the business model and deepen its cooperation with local governments to expand its dual core businesses of water supply and pipeline direct drinking water, with an aim to provide users with a full range of professional water services. The Group will enhance its service standards and core competitiveness to create higher returns for shareholders, ultimately contributing to the national economic development and improvement of quality of life.

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About China Water Affairs Group Limited

A leading market-oriented, professional, international, and cross region water supply operator in China and the only Hong Kong listed water company focusing on tap water. Headquartered in Hong Kong. Operation management centers in Beijing and Shenzhen. The main business of the Group (including associated companies) is to operate urban water supply, pipeline direct drinking water, sewage treatment and drainage and other related value-added services in the Mainland of China. Covering around 30 million people in over 100 cities in 20 provinces and 3 municipal cities. Total daily capacity: over 20 million m³, and the Group has established a leading position in the overall business operation mode in China’s water affairs market. Management comprises of veteran experts in the water industry with insight into government policies. Included in the first batch of Shenzhen-Hong Kong Stock Connect by HKEX in 2016. Included in the FTSE Environmental Opportunities Asia Pacific Index since 2009.

 

This press release is issued by PRChina Limited on behalf of China Water Affairs Group Limited.

 

 

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