CITIC Envirotech Ltd - DBS Research 2016-04-29: Progressing well

CITIC Envirotech Ltd - DBS Research 2016-04-29: Progressing well 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. 


  • 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 | http://www.dbsvickers.com/ 2016-04-29
DBS Vickers SGX Stock Analyst Report HOLD Maintain HOLD 1.55 Same 1.55