Beijing Enterprises (392) H1 2024 earnings summary

Executive summary

• Revenue for the first half of 2024 was RMB 42.32 billion, down 0.6% year-over-year; profit attributable to shareholders was RMB 3.15 billion, reflecting an 8.1% decrease excluding one-off events from last year.

• Interim dividend declared at HKD 0.85 per share, payable on 1 November 2024, with payout ratio rising to 30.9%.

• Gross profit increased 2.9% to RMB 6,487 million, and gross profit margin improved to 15.7% from 14.8% year-over-year.

• The business environment was marked by global economic recovery but persistent uncertainties, with a focus on cost reduction and efficiency across all segments.

• Key segments include gas, water, environmental, and beer businesses, each showing mixed performance.

Financial highlights

• Basic and diluted EPS dropped to RMB 2.50, down from RMB 3.25 year-over-year.

• Cost of sales decreased by 1.6% to RMB 35.68 billion; selling and distribution expenses rose 19.3%, mainly from the brewery segment.

• Effective income tax rate increased to 33.3% from 20.4% last year.

• Free cash flow and operating cash flow in China Gas reached record highs.

• Cash and bank deposits at RMB 33.78 billion, up RMB 4.92 billion from end-2023; total borrowings at RMB 82.31 billion.

Outlook and guidance

• Focus on cost control, efficiency, and market expansion in gas and environmental segments, with digitalization and green economy initiatives across all segments.

• Beijing Gas aims to expand outside Beijing and enhance LNG business; China Gas will promote cost pass-through and integrated energy; BE Water will focus on cash flow and asset efficiency; environmental and brewery segments will pursue cost reduction and innovation.

• Macro policies on tax and utility pricing reforms are expected to support profitability and reduce financing costs.

• Dividend policy targets at least 35% payout of recurring EPS and not less than HKD 1.6 per share for 2024-2026.

• Overseas business to expand solid waste resource channels and control labor costs.