2023-04-27-港交所-强泰环保_2022年报_290页_4mb

ELL Environmental Holdings Limited 2022 Annual Report Summary

Core Information

• Company Name: ELL Environmental Holdings Limited (強泰環保控股有限公司)
• Stock Code: 1395
• Registered Office: Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands
• Headquarters in China: Rugao Hengfa Municipal and Industrial Wastewater Treatment Facility, Rugao Economic and Technological Development Zone, Jiangsu Province
• Principal Place of Business in Hong Kong: Unit 2304, 23rd Floor, Westlands Centre, 20 Westlands Road, Hong Kong
• Authorised Representatives: CHAN Kwan, TUNG Wing Yee Winnie
• Company Secretary: TUNG Wing Yee Winnie
• Cayman Islands Share Registrar: Conyers Trust Company (Cayman) Limited
• Hong Kong Share Registrar: Boardroom Share Registrars (HK) Limited
• Principal Bankers: Chiyu Banking Corporation Limited, HSBC, Bank of China (Hong Kong)
• Independent Auditor: Baker Tilly Hong Kong Limited
• Legal Advisors: Taylor Wessing (for HK law), King & Wood Mallesons (for PRC law)
• Website: www.ellhk.com
• Listing Information: Hong Kong Stock Exchange Main Board

Main Points and Key Information

Chairman's Statement

• The Group remains committed to its operational principles and proactively addresses market challenges.
• It continues to optimize the management of existing projects and aligns with national and regional policies to support sustainable development.
• The Group has expanded its overseas operations, particularly in Indonesia, with two key projects: the biofuel pellet business and the Bangka power plant project.
• The biofuel pellet business commenced operations in 2021 and is generating revenue.
• The Bangka power plant project is under construction and has signed a 25-year fixed-price power supply agreement with the Indonesian government.
• The Group is exploring the replication of the Bangka model in other Indonesian islands and other potential BOT projects.

Business Review

• The Chinese government has focused on improving water quality and environmental protection, especially for the Yangtze River and the Yellow River.
• In 2022, the water quality of the Yangtze River improved, with 86.3% of assessment sections classified as excellent (Grade I~III), an increase of 4.5% compared to 2021.
• The Group sold its interest in Haian Hengfa, which reduced its wastewater treatment capacity, and now focuses on Rugao Hengfa's wastewater treatment facilities.
• The Group increased water tariffs to RMB3.43 per tonne, contributing to a more robust revenue performance.
• The Group is actively seeking new opportunities in both domestic and international environmental sectors.

Management Discussion and Analysis

• Revenue: Increased by HK$100.5 million (97.5%) to HK$203.6 million in FY2022, driven by construction revenue from the Bangka Project and increased biofuel sales in Indonesia.
• Cost of Sales: Rose by HK$93.6 million (189.1%) to HK$143.1 million, mainly due to higher construction and biofuel costs.
• Gross Profit: Increased by HK$7.0 million (12.9%) to HK$60.6 million, but the gross profit margin dropped from 52.0% to 29.7%.
• Other Income and Net Gains: Increased slightly by HK$0.5 million (10.9%) to HK$4.9 million, mainly due to foreign exchange gains.
• Administrative Expenses: Increased by HK$3.0 million (10.9%) to HK$30.5 million, including staff costs and other operational expenses.
• Finance Costs: Increased by HK$4.9 million (110.9%) to HK$9.3 million, due to increased loan borrowing for the Bangka Project.
• Profit Before Tax: Decreased by HK$8.9 million (38.7%) to HK$14.0 million, influenced by increased costs and lower margins.
• Income Tax Expense: Increased by HK$4.8 million (42.5%) to HK$16.2 million, mainly due to withholding tax from the disposal of a subsidiary.
• Net Loss: HK$3.3 million, a decrease of HK$9.4 million (153.6%) from the profit of HK$6.1 million in FY2021, attributed to the above factors.

Outlook

• The Group aims to maintain its high-quality service level and continue its focus on environmental protection.
• It plans to strengthen its position in the Chinese wastewater treatment market and expand its global environmental business.
• The Group will remain flexible in responding to market changes and seek new opportunities for growth and diversification.
• The Group will continue to pursue sustainable development goals and align its strategies with national and regional environmental policies.

Summary of Key Financial Highlights

Conclusion

The Group has faced challenges in 2022, including the impact of the pandemic and fluctuating market conditions. However, it has remained committed to its environmental protection mission and has made strategic moves to enhance its operations and expand into international markets. The Group is actively preparing for the future, with a focus on sustainable development, operational efficiency, and diversification of its environmental businesses.