SIIC Environment Holdings - RHB Invest 2017-04-26: 1Q17 Results Flash Note ~ Earnings Supported By Newly Acquired Entities

SIIC Environment Holdings - RHB Invest 2017-04-26: 1Q17 Results Flash Note ~ Earnings Supported By Newly Acquired Entities SIIC ENVIRONMENT HOLDINGS LTD. BHK.SI

SIIC Environment Holdings - 1Q17 Results Flash Note ~ Earnings Supported By Newly Acquired Entities

  • 1Q17 result was in line with our expectation. 
  • 1Q17 PATMI of CNY120m met 20% of our full-year estimate.
  • BUY, TP:0.96 SGD



Key takeaways:


A boost from previous acquisitions. 

  • 1Q17 revenue surges 78% to CNY1000m mainly due to contribution from newly acquired entities like Longjiang Group and Ranhill water. 
  • Moving into 2017, most of the new constructions would come from projects previously won by Longjiang group.

Net gearing surged to 1.4x. 

  • Longjiang group's high gearing ratio resulted in higher financing cost for SIIC. 
  • According to management, they have refinanced CNY3.5b of Longjiang debt with a lower interest cost of ~5% (previous: ~6%). SIIC will continue to refinance the remaining high-interest loans at lower interest rates.

Hong-Kong listing is still on the cards. 

  • SIIC would transfer some shares from Singapore Exchange to Hong Kong exchange for the dual-listing. 
  • It may also issue a small amount of introductory shares to facilitate liquidity. This should not result in a major dilution.




Juliana Cai CFA RHB Invest | http://www.rhbinvest.com.sg/ 2017-04-26
RHB Invest SGX Stock Analyst Report BUY Maintain BUY 0.960 Same 0.960



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