SIIC Environment 1HFY2014 profit up 61%
MAYBANK KIM ENG has maintained its ‘Buy’ call on SIIC Environment after it posted a 60.9% year-on-year (yoy) increase in its net profit attributable to shareholders to Rmb 129.6 million for 1HFY2014.
Analyst Wei Bin has a target price of 20 cents for the stock, based on a PE of 30x FY15E.
He said: “SIIC’s future growth will depend on more acquisitions, in our view.
"We believe there are sufficient targets in its pipeline.
"With its recent Rmb 700 million (S$141.4 million) share placement and strongest balance sheet among peers, it should have sufficient muscle to execute its acquisition plan.”
Group revenue for 1HFY2014 increased by 41.3% to Rmb 679.6 million, driven by the following:
1) 121.1% yoy increase in revenue from the construction business segment to Rmb 278.5 million.
2) 15.6% yoy increase in revenue from the water treatment and water supply business segment to Rmb 369.8 million
3) Maiden contribution of RMB12.5 million from the waste incineration business segment.
Group revenue was boosted due to contribution from its newly acquired subsidiaries - Shanghai Qingpu (wastewater treatment), Shanghai Pucheng (waste to energy) and Dazhou Jiajing (waste to energy).
Net profit margin improved by 0.6 percentage points to 24.6% year-on-year.
The Group has also forayed into Northeastern China by acquiring 25% in Longjiang Environmental Protection Group, one of the leading water players there.
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