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Public company info - ELL Environmental Holdings Limited , 01395.HK
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ELL Environmental Holdings Limited, 01395.HK - Company Profile
Chairman Chau On Ta Yuen
Share Issued (share) 1,107,000,000
Par Currency Hong Kong Dollar
Par Value 1.0E-4
Industry Water Supply
Corporate Profile Business Summary: The activities of the group are the provision of wastewater treatment services in Jiangsu Province, the People’s Republic of China and the generation of electricity by biomass power plants in Jambi, the Republic of Indonesia. Performance for the year: The group's total revenue decreased by HK$1.6 million or 2.0% to HK$77.5 million for FY2019 as compared to HK$79.1 million for the year ended 31 December 2018 (“FY2018”) . The group's gross profit increased by HK$23.2 million or 217.6% from HK$10.7 million for FY2018 to HK$33.9 million for FY2019 . The group recorded a profit attributable to owners of the Company of HK$1.0 million for FY2019 as compared to a loss attributable to owners of the Company of HK$139.7 million for FY2018 . Business Review In 2019, uncertainties such as Sino-US trade war imposed downward risk on global economy. However, under the support of the Chinese government’s fiscal policies and the modification of macroeconomic policies, China’s economy prevented itself from suffering a sharp decline in its growth in the second half of 2019, with China’s gross domestic product (GDP) for FY2019 reaching approximately RMB99,100 billion. In the “Report on Achievements in Economic and Social Development in the 70 years since the Founding of the PRC” (新中國成立七十週年經濟社會發展成就系列報告) published by China’s National Bureau of Statistics in 2019, it was mentioned that China had put much focus on environmental protection, and had effectively improved the long-standing issue of deteriorating water quality. The “11th Five-Year Plan” outline proposed to accelerate the construction of municipal wastewater treatment plants, and implement effective measures such as wastewater treatment charges, thus water pollution treatment work has achieved good results. In terms of investment in environmental infrastructure, the contribution in drainage investments was RMB172.8 billion2 in 2017, representing a 6.1-time growth compared to that of 2001, and is expected that China’s environmental protection industry will enjoy sustainable growth driven by national policies in the coming years. Although the environmental protection industry was able to have continuous development under the support of the Chinese government by allocating substantial resources, the intensifying competition in the industry still brought forth various challenges to the Group. Currently, the Group owns two wastewater treatment facilities in Jiangsu Province, China, respectively operated by Haian Hengfa and Rugao Hengfa. For Haian Hengfa, as disclosed in the 2019 Interim Report, we have reached an agreement with the relevant authorities to increase water tariffs during FY2019 from RMB0.91 per tonne to RMB1.14 per tonne. For Rugao Hengfa, the Group is still in active negotiations with the authorities with the aim of adjusting the water tariffs to an optimal level. Looking forward, the Group expects that upon gradual adjustment of tariffs, its revenue and gross profit will be further increased. ELL Environmental is an environmental protection industry services provider which offers a one-stop approach to the provision of wastewater treatment services using the “Build-Operate-Transfer” or “BOT” mode. The group's services range from the design of wastewater treatment facilities, through the procurement of suitable equipment and materials to the supervision of construction as well as the ongoing operation and maintenance of the facilities throughout long-term concession periods. ELL Environmental has actively adhered to the national policies, flexibly responding to market changes and making use of development opportunities in both China and overseas, to stably operate the Group’s wastewater treatment business. However, as competition in the industry has become increasingly intense, wastewater treatment projects may not be as profitable as in the past. In October 2016, the Group acquired Weal Union Limited and its subsidiary in Indonesia, RPSL (collectively as “weal union Group”). RPSL is engaged in the biomass power generation business in Jambi, Indonesia. Since the completion of the acquisition, the Group has actively invested in upgrade works of the power generation facilities in order to improve the efficiency of the power plants and lower the cost of sales. However, due to factors such as the relatively low market consumption of electricity in the region during the Year and the intensifying competitions, the Group’s Biomass power plants have yet to reach their expected utilisation rate for the sale of electricity. As disclosed in the 2019 Interim Report, the Group reduced the operation level of the Biomass power plants in the first half of FY2019. Due to the continuing unfavourable conditions in the market, the Group has yet to reach an agreement with the local customer on the sale price of electricity. As a result, the operations of the Biomass power plants had not resumed as expected by the end of FY2019. Meanwhile, the Group has continued to invest in biofuel pellet production business which allows the self-consumption of The group's electricity, and thus the ability to increase the utilisation of the power plants. Management is confident that the biofuel pellet business will provide growth momentum to the Group and will enable the Group to achieve diversified development and expansion of its environmental protection business in the long run. Prospects: Despite the volatility in the market and business environment, the Group will continue adhering to the principles of stability and prudence and cautiously develop its business with risk-oriented approach, thus allowing sustainable business development under appropriate risk control. Meanwhile, we shall also continue to solidify our strong foundation in China’s wastewater treatment market and provide high-quality services to customers. Moreover, we shall leverage our extensive experience and expertise to develop environmental protection-related industrial chain projects and actively implement potential new environmental protection projects. On the other hand, we shall promote more comprehensive decision management and internal control, thus laying a solid foundation of achieving sustainable development for the Company in the coming few decades.

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