CHINA-BASED waste treatment group Zheneng Jinjiang Environment reported a net profit of 411.6 million yuan (S$76.2 million) for the second half ended Dec 31, rising to more than 26 times the 15.3 million yuan it posted the prior corresponding period.

 

This translated to an earnings per share of 0.2838 yuan for the half-year period, up from 0.0105 yuan the previous year. On Friday (Feb 28), the company said that revenue for H2 FY2024 climbed 6.2 per cent to 1.9 billion yuan from 1.8 billion yuan in H2 FY2023. 

 

The company&rsquo s board proposed a final cash dividend of S$0.023 per share, up from S$0.013 per share in the year-ago period. This translates to a dividend payout ratio of 29 per cent. The dividend will be paid upon shareholders&rsquo approval at its upcoming annual general meeting on a payment date will be announced later.    

 

The company said that the Chinese government&rsquo s policy document Opinions on Accelerating the Comprehensive Green Transformation alongside expanded investments in clean energy have created &ldquo significant development opportunities&rdquo for the waste-to-energy industry.

 

Zheneng Environment executive chairman Wei Dongliang said: &ldquo With favourable national policies supporting renewable energy and the carbon peak and carbon neutrality goals, the group is well-positioned to drive long-term growth while piggybacking on China&rsquo s sustainable development agenda.&rdquo

Anticipated rise attributed mainly to the absence of significant impairment losses that were recorded as at Dec 31, 2023

 

WASTE treatment group Zheneng Jinjiang Environment : BWM -3.23% on Saturday (Feb 8) reported that it expects to record a &ldquo significant increase&rdquo in total comprehensive income for the second half of the year ended Dec 31, 2024, compared with the previous corresponding period, based on the preliminary assessment of the latest unaudited consolidated management accounts.

 

Full-year comprehensive income is likewise expected to increase significantly, compared with the total comprehensive income in the prior year.

 

The group said that this anticipated increase for H2 and the full year is mainly attributed to the absence of significant impairment losses of 271.8 million yuan (S$50.5 million) in aggregate, which were recorded as at Dec 31, 2023.

 

These impairment losses were due to &ldquo difficulties and uncertainty associated with projects in India&rdquo , which were formerly owned by the group. Zheneng Jinjiang Environment announced on Jun 1, 2024, that it had disposed of its whole stake in those projects to an unrelated third party.

 

Further details of the group&rsquo s performance will be provided when its results are released on or before Mar 1, it said.

Zheneng Jinjiang Environment : BWM +1.27%bought back 350,000 shares at an average price of S$0.40 per share. This brings the total shares repurchased to 0.34 per cent of its issued shares (excluding treasury shares) since the beginning of the current mandate.

 

The company is a leading waste-to-energy (WTE) operator in China. As at Jun 30, 2024, it managed 38 WTE facilities with a combined daily capacity of 44,405 tonnes. About 98 per cent of its revenue is derived from its core WTE operations, encompassing waste treatment and the sale of electricity and steam generated from this process.

 

Over the past five years, the group has demonstrated consistent and steady growth in its waste treatment capacity, expanding by 16.7 per cent from 38,060 tonnes in 2020. Additionally, its installed electricity power-generation capacity has grown from 718 megawatts (MW) to 921 MW during the same period, reflecting a rise of around 28.3 per cent.

 

Its business model includes both build-own-operate and build-own-transfer frameworks. For H1 FY2024 (ended Jun 30), the group reported revenue of 1.8 billion yuan (S$335 million) and a net profit of 251.9 million yuan (excluding a loss associated with foreign-currency translation differences from the disposal of its India business).

 

The group is targeting a 36 per cent increase in daily capacity to 60,605 tonnes over the next decade. This growth strategy revolves around the commissioning of new facilities both domestically and internationally, alongside dedicated technological advancements to enhance efficiency and optimise power-generation capacity in existing plants.

 

Zheneng Jinjiang Environment made meaningful strides in its overseas business recently. On Oct 18, it announced that its subsidiary, PT Indo Green Power, signed a facility agreement involving DBS Bank and PT Bank Negara Indonesia as lead arrangers, and PT Bank DBS Indonesia as global facilities agent.

 

The agreement provides for an US$85 million USD facility and a 243 billion rupiah (S$20.5 million) IDR facility. PT Indo Green Power will construct, own, and operate a WTE facility in Palembang, Indonesia, capable of processing 1,000 tonnes of waste per day.

 

Zheneng Jinjiang Environment is also employing several strategies to ensure prudent capital management. It maintains a flexible financing policy, which includes extending short-term working capital loans upon maturity and strategically pacing out capital expenditures (capex) to align with steady growth plans.

 

The company aims to keep a balanced equity-to-debt ratio of 30:70 for WTE facility capex, which helps manage financial risk and maintain a strong balance sheet. Additionally, it works closely with its largest controlling shareholder to leverage its strong credit status, thereby broadening financing channels.

 

Zheneng Jinjiang Environment is also looking to introduce strategic investors or Reits at the project level, and regularly reviews and adjusts its overseas expansion plans to ensure sustainable growth. Collectively, these measures are designed to mitigate liquidity pressures and lower project and financing costs.

ZHENENG Jinjiang Environment : BWM +54% posted a net profit of 15.3 million Chinese yuan (S$2.9 million) for the second half ended Dec 31, 2023, plummeting 93.4 per cent from 231.5 million yuan in the corresponding period the year before.

 

Earnings per share stood at 0.0105 yuan for H2 2023, also 93.4 per cent down from the 0.1592 yuan the previous year.

 

The China-based waste-to-energy (WTE) and environmental-services provider announced in a bourse filing on Wednesday (Feb 28) that its revenue for H2 2023 dropped 18.8 per cent to 1.8 billion yuan from 2.2 billion yuan in H2 2022.

 

For the financial year, the group recorded a revenue of 3.75 billion yuan, 7.9 per cent down from 4.1 billion yuan in FY 2022. Net profit shrank 13.3 per cent to 281.6 million yuan, from 325 million yuan a year ago.

 

The decrease was mainly attributed to a drop in revenue from construction services and financial income under service concession agreements, totalling 331.7 million yuan. This was the result of reduced construction services provided under build-operate-transfer (BOT) concession agreements.

 

The group said that it recorded a 271.8 million yuan impairment loss in FY2023 &ldquo due to difficulties and uncertainty in the progress of the power plant of its BOT projects in India&rdquo .

 

&ldquo Net profit attributable to the equity holders would have been higher at 560.8 million yuan without this non-recurring item and foreign exchange impact,&rdquo it added.

 

The board of directors has recommended a first and final dividend of S$0.013 per share. There was no dividend last year.

 

Subject to the approval of shareholders, the date payable will be announced later.

 

Over the near term, the group is cautious that &ldquo the economic condition in China will remain challenging&rdquo . However, it is generally optimistic about the long-term development of China&rsquo s renewables industry.

 

The group said that it expects to see more low-carbon initiatives being implemented in China, including policies on the extension of the WTE value chain.

 

Revenue from Zheneng Jinjiang&rsquo s core WTE business grew 2.7 per cent year on year to 3.4 billion yuan in FY2023. This segment contributes to 91.3 per cent of the group&rsquo s total revenue.

 

Riding on the positive outlook for the renewables sector, the group eyes diversification within the WTE ecosystem under its long-term growth strategy.

ZHENENG Jinjiang Environment Zheneng Jinjiang: BWM -2.25% has responded to the Singapore Exchange' s (SGX) query on its share price movements, saying a former senior executive had disposed of his shares and that accounted for the bulk of the trades conducted on Tuesday (Dec 7).

 

This comes after SGX issued a query to the electric services company on Tuesday morning. Shares of Zheneng Jinjiang ended the day S$0.1250 or 21.9 per cent lower at S$0.445 after half a million shares changed hands.

 

In its filing to the bourse on Wednesday (Dec 8) morning, the mainboard-listed company said the former executive had given his selling instructions to his nominee in September and it had taken some time for the shares to be transferred to the relevant account to facilitate the sale.

 

" The board had received a request from certain shareholders of the company to facilitate due diligence in connection with a potential acquisition of shares in the company," it said.

 

It added that the board is evaluating the " viability and feasibility" of the request and will keep shareholders informed of further material developments.

 

Other than those mentioned above, Zheneng Jinjiang said it is not aware of any possible explanation for the drop in its share price, and confirmed its compliance with the mainboard listing rules.

 

THE pre-conditional mandatory cash offer for Zheneng Jinjiang Environment Holding Company by Zhejiang Zheneng Electric Power has lapsed.

 

According to an exchange filing on Tuesday, certain pre-conditions had remained unsatisfied as of the long stop date on April 12, as the offeror had not received the requisite regulatory approval.

 

The sale and purchase agreement for 25.6 per cent of Zheneng Jinjiang Environment Holding Company has been terminated effective April 12. Following this, the pre-conditional offer has also lapsed, and a formal offer would not be made.

 

Zheneng Jinjiang shares closed at 57.5 Singapore cents on Monday, before a trading halt was called.

ZHENENG Jinjiang Environment has not received any request for accelerated repayments on a 2018 loan, despite the technical breaches of one of the covenants of the loan in June and December last year, the waste-to-energy firm disclosed in a bourse filing on Friday. 

 

The company was responding to a Bloomberg report published on May 22, which reported that Zheneng Jinjiang was unable to maintain a minimum interest coverage ratio on test dates in June and September 2019 for a 2018 loan, and that it is still seeking the majority lender consent required to waive the breaches. 

 

The loan in question is a syndicated term facility of an aggregate amount of US$200 million and RMB100 million (S$19.79 million). The covenant that was breached mandates that the ratio of Zheneng Jinjiang&rsquo s consolidated Ebitda for any one-year period ended June or December be not less than 3.0 times its consolidated interest expenses for the same period. 

 

Zheneng Jinjiang confirmed that this ratio had fallen below 3.0 times in June and December last year, resulting in the technical breaches. Under the facility&rsquo s terms, the breach of this covenant constitutes a default. If directed by lenders representing at least two-thirds of the commitments, the facility&rsquo s agents may demand that all of the outstanding sum would immediately fall due. 

 

However, Zheneng Jinjiang said that it has not received any notice for accelerated repayment from the agents to date. It has been further informed by the agents that none of the lenders have requested accelerated repayments.

 

Last   September, Zheneng Jinjiang wrote to the agents to request a waiver on the breaches. Lenders representing about 28 per cent of the total commitments agreed to the waiver, the company disclosed. Agents are still in negotiations with the remaining lenders. 

 

Zheneng Jinjiang said that it still expects to be able to make principal and interest payments on the facility when due. It will continue to seek support from its largest shareholder, Chinese state-owned enterprise Zhejiang Provincial Energy Group, to improve its financing channels. 

 

The company is also actively pursuing various funding proposals to refinance US$200 million in unsecured notes, which are maturing on July 27. 

https://www.businesstimes.com.sg/companies-markets/lenders-not-seeking-immediate-repayment-for-covenant-breach-zheneng-jinjiang