Dongjiang Environmental Company (895) H1 2024 earnings summary

Executive summary

• Operating revenue for H1 2024 was RMB1.55 billion, down 22.58% year-over-year, mainly due to restructuring in rare and precious metals recovery and a market downturn in harmless waste treatment.

• Net loss attributable to shareholders widened to RMB257 million, a 29.38% increase in loss year-over-year, impacted by lower disposal prices, higher costs, and increased depreciation and finance expenses from new projects.

• Management implemented reforms focused on cost reduction, efficiency, and transformation, resulting in positive operating cash flow and a downward trend in monthly losses, with cash flow up by RMB154 million year-over-year.

• The company is accelerating transformation toward high-end products and environmental services, aligning with national green policies and exploring new business models and partnerships.

Financial highlights

• Gross profit margin was 5.00%, down from 5.76% in H1 2023.

• Selling expenses rose to RMB38.3 million (2.47% of revenue), while administrative expenses fell to RMB187.3 million (12.06% of revenue).

• Finance costs increased to RMB93.9 million (6.04% of revenue) due to higher expensed interest and lower capitalized interest.

• Net current assets turned negative at RMB-680 million (vs. RMB385 million at end-2023); cash and equivalents were RMB897 million.

• Gearing ratio increased to 59.67% from 58.54% at end-2023.

Outlook and guidance

• Plans to develop high value-added products, expand overseas sales, and pursue new growth drivers.

• Continued focus on cost reduction, efficiency, and management reform to improve profitability.

• The company plans to deepen reforms in procurement, production cost control, and organizational structure to drive future growth.