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Public company info - Kangda International Environmental Co. Ltd. , 06136.HK
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Kangda International Environmental Co. Ltd., 06136.HK - Company Profile
Chairman Zhao Junxian, Li Zhong
Share Issued (share) 2,140,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Water Supply
Corporate Profile Business Summary: The principal businesses of the Group include design, construction,operation and maintenance of waste water treatment plants (the “WTPs”), reclaimed water treatment plants (the “RWTPs”), water distribution plants (the “WDPs”), sludge treatment plants (the “STPs”) and other municipal infrastructure. Performance for the year: For the year ended 31 December 2019, the Group recorded a revenue of RMB2,815.2 million, representing a decrease of approximately 7% as compared to the previous corresponding period of RMB3,021.3 million. For the year ended 31 December 2019, gross profit margin was approximately 41%, representing an increase of 5 percentage points as compared to the previous corresponding period of approximately 36%. Business Review： In the year of 2019, a wholly-owned subsidiary of China Water acquired approximately 29.52% of the entire issued share capital of the Company from Kangda Holdings Company Limited, and subsequently China Water became the single largest shareholder of the Group. The adjustment of the single largest shareholder also brought new opportunities and development to the Group. The Group integrated the resources and combined the divisions to maintain its focus on the development of environmental protection business in the future. During the year ended 31 December 2019 (the “Reporting Period”), our principal business activities remained focusing on the Urban Water Treatment, followed by the Water Environment Comprehensive Remediation and the Rural Water Improvement. The scope of Urban Water Treatment includes the design, construction, upgrade and operation of wastewater treatment plants, reclaimed water treatment plants, sludge treatment plants, water distribution plants, and in the operation and maintenance of wastewater treatment facilities entrusted by governments (the “O&M”). The Group’s business has covered the overall industry chain in Urban Water Treatment industry by executing contracts of BuildOperate-Transfer (the “BOT”), Transfer-Operate-Transfer (the”TOT”), Public-Private-Partnership (the “PPP”), BuildOwn-Operate (the “BOO”), EPC and O&M. The scope of Water Environment Comprehensive Remediation includes river harnessing and improvement, foul water body treatment, sponge city construction, pipeline network projects and construction of urban comprehensive pipe tunnel. The Group engages in Water Environment Comprehensive Remediation by executing previously signed contracts of PPP and EPC. The scope of Rural Water Improvement includes the construction and operation related to “the Construction of Beautiful Village” such as: wastewater treatment, pipeline construction for collecting wastewater and rural living environment improvement. The Group started to carry out this business in 2016 by executing the contracts of PPP. In the future, the Group will continuously focus on the business of Urban Water Treatment to get steady cash flows for pursuing more high-quality market opportunities by investing in new projects. The Group is very confident about the Group’s prospects and future profitability. And we will dedicate more efforts to enhancing the profitability and effectiveness of the Group. 1.1Urban Water Treatment As at 31 December 2019, the Group had entered into a total of 109 service concession arrangements projects, including 102 wastewater treatment plants, 2 water distribution plants, 3 sludge treatment plants and 2 reclaimed water treatment plant. The Group will further expand its Urban Water Treatment chain in the future, in order to improve its profitability and competitiveness. 1.1.1Operation Services As at 31 December 2019, the Group had 86 wastewater treatment projects, 1 reclaimed water treatment project, and 3 sludge treatment projects in operation in Mainland China. Total daily treatment capacity of wastewater treatment plants, reclaimed water treatment plant, and sludge treatment plants in operation for the year ended 31 December 2019 reached 3,461,500 tonnes (2018: 3,116,500 tonnes), 40,000 tonnes (2018: 40,000 tonnes), and 550 tonnes (2018: 400 tonnes), respectively. For the year ended 31 December 2019, the annualized utilization rate for wastewater and reclaimed water treatment plants in operation was approximately 83% (2018: 85%). The actual average water treatment tariff for the year ended 31 December 2019 was approximately RMB1.47 per tonne (2018: approximately RMB1.39 per tonne).The actual aggregate processing volume for the year ended 31 December 2019 was 1,027.5 million tonnes, representing a slight increase of 2% with that for the same period last year (2018: 1,004.9 million tonnes). Total operation revenue of the Group’s Urban Water Treatment services recorded for the year ended 31 December 2019 was RMB894.0 million, representing an increase of approximately 9% (2018: RMB819.7 million). The corresponding increase was primarily due to the commencement of operation of new water treatment projects through construction. 1.1.2 Construction Services The Group entered into a number of service concession arrangements under BOT, BOO and PPP contracts in relation to its Urban Water Treatment business. Under the International Financial Reporting Interpretation Committee 12 Service Concession Arrangements, the Group recognises the construction revenue with reference to the fair value of the construction service delivered in the building phase. The fair value of such service is estimated on a cost-plus basis with reference to a prevailing market rate of gross margin at the inception date of service concession agreement. Construction revenue from BOT, BOO, PPP and EPC projects is recognised by using the percentage-of-completion method. For the year ended 31 December 2019, construction revenue was recognised for 28 projects, including 23 wastewater treatment plants, 2 water distribution plants, and 3 sludge treatment plants, which were mainly located in Henan, Shandong, Shanxi, Heilongjiang and Guangdong provinces in Mainland China. Total construction revenue of those projects for the year ended 31 December 2019 was RMB1,040.4 million, representing a year-on-year decrease of approximately 5% (2018: RMB1,098.9 million). The corresponding decrease was primarily due to a slight decrease in the number of projects during the main construction period. As at 31 December 2019, the total daily treatment capacity of the service concession arrangements plants, which was still in the construction stage, was 565,000 tonnes, including 360,000 tonnes of wastewater treatment plants, 180,000 tonnes of water distribution plants and 25,000 tonnes of reclaimed water treatment plant. 1.2 Water Environment Comprehensive Remediation In the year of 2019, the Group combined the divisions and continued to devote efforts to implementing the existing projects of Water Environment Comprehensive Remediation. As at 31 December 2019, the Group had entered into 2 PPP projects and 13 EPC projects in Henan, Guangxi, Jiangxi, Shandong and other provinces in Mainland China. Though the amount of signed PPP contracts reached a remarkable amount, the Group devoted efforts to lower the risk and enhance the reasonable profit. The Group will integrate resources to execute the Water Environment Comprehensive Remediation projects under the contracts of EPC and O&M. The Group had 14 Water Environment Comprehensive Remediation projects under construction during the year ended 31 December 2019. The projects were mainly located in Henan, Guangxi, Jiangxi, Shandong and other provinces in Mainland China. For the year ended 31 December 2019, total revenue of those projects was RMB203.9 million, representing a year-on-year decrease of approximately 55% (2018: RMB457.3 million). The corresponding decrease was primarily due to the partial completion of the Group’s EPC projects. 1.2Rural Water Improvement In the year of 2019, the Group implemented 3 projects of Rural Water Improvement which were located in Guangdong and Guizhou provinces in Mainland China. For the year ended 31 December 2019, total revenue of those projects was RMB74.7 million, representing a year-on-year decrease of approximately 26% (2018: RMB101.6 million). The corresponding decrease was primarily because a large portion of the project executed from 2016 approached completion. Prospects: As we entered into the year 2020, novel coronavirus epidemic continuously spread in PRC and even the world, which has caused considerable impact on the public’s life. Commercial activities in certain regions have almost completely stopped. Given the epidemic, as a pioneer safeguarding environment, hygiene and safety, the Group immediately adopted numerous measures, including “enclosed-style” management to limit the mobility of staff and stricter hygiene standard, to guarantee the normal operation and the safety of staff working in wastewater treatment facilities. Thanks to the dedicated efforts by its staff, the Group’s wastewater treatment facilities never suspend operation due to the epidemic and no infected case of the staff working in wastewater treatment facilities and their family member was reported, making a positive contribution to the maintenance of public hygiene. Looking forward, we will continue to focus on the development of our main business, namely urban wastewater treatment industry, to explore opportunities for upgrading and expansion in order to increase income through uplifting water treatment tariff and the waste water treatment volume. Besides, we will also extend our industrial chain by studying the feasibility of reclaimed water recycle and operation and maintenance of urban water pipe networks. The Group will keep on increasing operation efficiency, reducing operational cost and management charge to improve profitability. In terms of financial resources, the Group will develop domestic and foreign financing channels, increase the middle to long term debt ratio and look for a more efficient financing method to gradually reduce financing cost.

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