SIIC Environment net profit up 110% YoY

On the back of higher volume and acquisitions.

The company can expect the good times to continue, with the Chinese government’s recent introductions of several environmental policies which should benefit the industry.

According to a report by Maybank Kim Eng, SIIC’s recurring water-treatment revenue was up 15% YoY, powered by higher volume and acquisitions. Full-year revenue rose 6% YoY and net profit, 75% YoY, both beating analyst forecasts by 5%.

Analysts expect industry consolidation to continue and believe it can gain further with its good track record, strong balance sheet and access to cheap funding. Share price has underperformed since CIC’s unexpected exit last December. The whole water sector was also sold down recently after the Sound Global incident.

However, analysts remain bullish. The Chinese government recently introduced several environmental policies which should benefit the industry, such as an Environmental Protection Law, sewage treatment fee collection & administration measures and a Notice on the Assessment and Adjustment of Wastewater Discharging Rates. Maybank KE expects more policy support in 2015.