CITIC ENVIROTECH LTD
U19.SI
CITIC Envirotech Ltd - Progressing well
- Robust growth of 61% in 1QFY16 net profit.
- Decent deal flow in WWT.
- Embark in sludge treatment market.
- Maintain HOLD rating with TP S$1.55.
WHAT'S NEW
- CITIC Envirotech (CEL SP) reported a 63% y-o-y increase in total revenue in 1QFY16 to S$99.5m, on the back of 100% jump in engineering turnover and robust growth of 86% and 26% in membrane sales and treatment revenue respectively.
- Net profit increased 61% to S$12.1m.
- Net debt-equity ratio was healthy at < 30% by end of March 16.
- YTD, CEL had decent deal flow with the addition of 220,000 tons/day of treatment capacity in industrial waste water treatment (WWT) and 190,000 tons/day in municipal WWT.
- In addition, it has secured its first sludge treatment project in Weifang, Shandong with a treatment capacity of 700 tons/day.
- 1Q results accounted for c.20% of our full year forecasts.
- We keep our earnings forecast unchanged for now as Q1 is usually a low season for industrial WWT. We remain optimistic for its growth outlook if the current deal flow momentum can be maintained.
- Our TP of S$1.55 remains intact and is based on 12x, 25x and 25x 12-month rolling PE (adjusted for construction revenue) for 3rd party EPC, treatment revenue and membrane operation respectively.
- Given the limited < 10% upside, we maintain our HOLD rating.
Patricia YEUNG
DBS Vickers
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http://www.dbsvickers.com/
2016-04-29
DBS Vickers
SGX Stock
Analyst Report
1.55
Same
1.55
