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SIHL Profit Increases 25% in the First Half Illustrating Business Elasticity

Greater Profit is Expected from Big Health Business in the Future

HONG KONG, Aug. 30, 2023 /PRNewswire/ -- Shanghai Industrial Holdings Limited ("SIHL" or the "Company", together with its subsidiaries collectively referred to the "Group"; HKSE stock code: 363) has announced its unaudited interim results ending on 30 June 2023. Revenue amounted to HK$12.791 billion. Profit attributable to owners of the Company amounted to HK$1.376 billion, representing an increase of 24.6% year-on-year. The Board of Directors has recommended an interim dividend of HK42 cents per share as gratitude for shareholders' long-term support.

2023 Interim Results Highlights


For six months ended 30 June

(Unaudited)


2023

2022

Change

Revenue (HK$ million)

12,791

15,220

-16.0 %

Profit attributable to owners of the Company (HK$ million)

1,376

1,104

+24.6 %

Earnings per share - Basic (HK$)

1.265

1.015

+24.6 %

Interim dividend per share (HK cents)

42

42


Payout ratio

33.2 %

41.4 %



As at 30 June

 (Unaudited)

As at 31 December

 (Audited)



2023

2022

Change

Total assets (HK$ million)

178,339

193,934

-8.0 %

Equity attributable to owners of the Company (HK$ million)

44,548

45,524

-2.1 %

Cash and cash equivalents (HK$ million)

28,623

28,870

-7.3 %

Revenue and Profit Contributions by Business:


For the six months ended 30 June

(Unaudited)

Segment Revenue (HK$ million) 

2023

2022

Change

Infrastructure and Environmental Protection

5,550

5,010

+10.8 %

Real Estate

5,926

8,546

-30.7 %

Consumer Products

1,315

1,664

-20.9 %

Total

12,791

15,220

-16.0 %

Segment Net Profit (HK$ million)

2023

2022

Change

Infrastructure and Environmental Protection

1,195

984

+21.4 %

Big Health

69

-

N/A

Real Estate

102

40

+155.6 %

Consumer Products

128

236

-45.7 %

Total

1,494

1,260

+18.5 %

In the first half of 2023, the international geopolitical situation remained tense. Some major currency interest rates had been continuously rapidly increased, causing exchange rate fluctuations that posed challenges for the operation of the Group. The Group seized opportunities brought by post-pandemic economic recovery and made a decisive shift towards embracing ESG (Environmental, Social, and Governance) values while implementing comprehensive transformation and upgrades. This resulted in stable operation and development of core businesses and preferable profit performance.

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For the six months ended 30 June 2023, the unaudited revenue of the Group was HK$12.791 billion, representing a 16.0% decrease from the same period last year. Profit attributable to shareholders was HK$1.376 billion, representing a 24.6% increase year-on-year. The increase was primarily attributed to the substantial rebound in tariff revenue and traffic flow of the toll road business, as well as significant contribution from Big Health business newly acquired. The Board recommended an interim dividend of HK42 cents per share, with a dividend payout ratio of 33.2%, to reward shareholders' continuous support.

The Infrastructure and Environmental Protection Division recorded a profit of HK$1,195 million, representing an increase of 21.4% year-on-year and accounting for approximately 80.0% of the Group's overall profit. The increase in profits was mainly driven by a significant rise in traffic volume and toll revenue of toll road business. During the period, the Group accelerated the development and construction of benchmark solid waste projects in the Yangtze River Delta region. The key solid waste project, two sets of waste biogas generating units connected to the power-generating grid in Shanghai Baoshan Renewable Energy Utilization Center was completed in the second quarter, and the daily treatment capacity of the Baoshan project amounted to 3,800 tonnes. When fully put into use, it will play a leading role in the industry and effectively solve the garbage disposal issues in the service area. It will have a significant impact on improving the harmless treatment and resource utilization rate of garbage in Shanghai.

The Big Health business achieved a profit of HK$69 million, representing 4.6% of the Group's net profit. In November of last year, the Group completed the acquisition of 40% equity interests of Shanghai Pharmaceuticals Group through a joint venture with 50% stakes. This strategic investment will continue to generate new contributions for the Group in the future.

In the first half of 2023, the Group's real estate business recorded a profit of HK$102 million, representing a year-on-year growth of 155.6% and accounting for approximately 6.8% of the Group's net profit. The increase was mainly due to strategic adjustment and continuous promotion of existing project works and the recovery of capital.

The consumer products business made a profit contribution of HK$128 million to the Group, representing a decrease of 45.7% over the corresponding period last year and accounting for approximately 8.6% of the Group's net profit. Nanyang Brothers Tobacco Company Limited ("Nanyang Tobacco") primarily focused on reducing inventory in overseas markets and gradually boosting sales across various channels. Due to weakened market demand and intensifying competition after the pandemic, there was an obvious year-on-year decline in the Wing Fat Printing business for tobacco and alcohol packaging, as well as the molded-fiber business.

Business Highlights:

Infrastructure and Environmental Protection

  • Benefiting from the rapid decline in the impact of the pandemic since the beginning of year, the public's willingness to travel surged. The overall traffic volume of our three toll roads and Hangzhou Bay Bridge increased by 86.9% compared to the same period last year, driving a respective rise of 89.2% and 47.5% in toll revenue and profit, reaching HK$2.175 billion and HK$686 million, far exceeding expectations.

  • SIIC Environment (BHK SGX, 807 HKSE) recorded a revenue of RMB4.019 billion during the period, representing a year-on-year increase of 9.0%, with the profit attributable to shareholders increasing by 3.1% year-on-year to RMB377 million. SIIC Environment's gross profit margin also increased by 2.0% to 35.8% due to the higher gross profit contribution from Shanghai Baoshan Renewable Energy Utilization Center, a key solid waste treatment project that commenced operation in early 2023. Furthermore, during the period, SIIC Environment acquired 3 sewage treatment projects in Macao for the first time.

  • In the first half of the year, the volume of sewage treated by SIIC Environment grew by 2.7% year-on-year to 1.240 billion tonnes. The average sewage treatment tariff increased by 4.5% year-on-year to RMB1.80 per tonne, and the average water supply tariff increased by 1.1% year-on-year to RMB2.50 per tonne.

  • General Water of China recorded a turnover of HK$1.065 billion for the period, representing a year-on-year decrease of 6.9%. Net profit amounted to HK$178 million, decreasing by 2.3% year-on-year. Furthermore, General Water of China was awarded as the "Top 10 Most Influential Enterprises in China's Water Industry" for the 20th consecutive year, and remained in the top three for the 5th consecutive year.

  • SIHL has a 19.48% equity stake in Canvest Environmental Protection Group Company Limited ("Canvest"), which recorded a revenue of HK$2.981 billion in the first half of the year, with a net profit of HK$641 million. Canvest currently operates 36 projects, covering 12 provinces and 26 cities. The combined daily processing capacity of these projects reached 54,540 tonnes, with the operational capacity amounting to 42,690 tonnes per day. During the period, the volume of harmlessly treated solid waste was 8.083 million tonnes, and electricity generation reached 3.08 billion kWh.

  • SUS Environment, with 28.34% of its equity held by a joint venture of which the Group has a 50% stake, achieved a revenue of RMB3.984 billion during the period, representing an increase of 10.06% year-on-year. The net profit amounted to RMB633 million, while the cumulative total capacity of waste incineration projects reached 36,300 tonnes per day during the period. The amount of household waste entering the plants for the period was 6.095 million tonnes, representing a year-on-year increase of 15.0%. The amount of on-grid electricity sold was 24.6 billion kWh, representing a year-on-year increase of 12.0%. In addition, 21 projects were put forward during the period and 5 BOT projects were confirmed.

  • With respect to new business arena, the photovoltaic assets capacity of Shanghai Galaxy and its subsidiary, SIIC Aerospace Galaxy Energy, reached 740 MW as of 30 June 2023. The total amount of on-grid electricity sold during the period from the 15 photovoltaic power stations was approximately 556 million kWh. Due to severe sandstorms affecting radiation levels, the electricity supplied to the grid decreased by 5.9% compared to the same period last year.

Big Health

  • In October 2022, Shanghai S.I. Yangtze River Delta Ecological Development Co., Ltd., of which the Company indirectly holds a 50% equity stake, successfully acquired a 40% equity stake in Shanghai Pharmaceutical Group.  Currently, Shanghai Pharmaceutical Group holds 19.38% of A shares of Shanghai Pharmaceuticals (601607 SSE, 2607 HKSE), a company listed both in Shanghai and Hong Kong, which makes it the single largest shareholder of its A shares. During the period, Shanghai Pharmaceutical Group achieved revenue of RMB129.13 billion and net profit of RMB490 million.

Real Estate

  • SI Development (600748 SSE) recorded revenue of RMB3.449 billion, representing a growth of 149.6% year-on-year. The net profit amounted to RMB397 million, turning from a loss to a profit, primarily driven by non-recurring income. During this period, the total contract amount reached RMB441 million, and the villa project Shanghai Bay (Phase 5) in Qingpu, Shanghai, was sold out.

  • Last year, SI Development initiated a comprehensive exit from the project at North Bund No. 89 and completed the transaction in mid-January 2023, which generated approximately RMB4.6 billion in revenue and facilitated the return of funds to better focus on key projects. In March, SI Development, as part of a consortium, officially commenced construction of the project at North Bund No. 91 in Hongkou District, Shanghai. The planned construction area is 454,000 square meters, and the planned building height is 480 meters.

  • SI Development focused on optimizing its real estate business operations and diversifying its property management expansion. It managed contractual area amounting to approximately RMB 28.18 million square meters under 310 projects. This year, SI Development successfully renewed bids for 18 key projects and will explore more opportunities in new fields.

  • SI Urban Development (563 HKSE) recorded a revenue of HK$1.798 billion, a year-on-year decrease of 73.6%, and a loss attribute to shareholders of HK$303 million, primarily due to the impact on sales from the real estate cycle, as well as the weakening of Chinese yuan against Hong Kong dollar, resulting in foreign currency translation losses on bank and other borrowings. During the period, contracted amount was RMB5.01 billion, representing a year-on-year increase of 9.7%. The projects mainly include Originally in Xi'an, University Project in Tianjin, and others.

Consumer Goods

  • In the first half of the year, the revenue of Nanyang Tobacco amounted to HK$648 million, representing a decrease of 24.7% year-on-year. Net profit was HK$103 million, representing a decrease of 46.4% year-on-year, which gradually narrowed the decline compared with the first quarter. The Hong Kong government raised the tobacco tax in late February, resulting in a significant decline in sales in the local market in March. Additionally, since the second quarter consumption has been downgraded in many parts of duty-paid market in Mainland China. The recovery of overseas markets still needs time.

  • During the period, Nanyang Tobacco continued to develop its production projects in Malaysia, complementing the strengths of large cigarette companies and actively expanding into international markets. They have been studying the mixed-type cigarette market, and identifying South America as targeting market for sales. Mixed-type products produced in Malaysia were first manufactured in May this year and sales were achieved in June.

  • Wing Fat Printing achieved revenue of HK$724 million, representing a decrease of 17.2% year-on-year, which was primarily due to significant decreases in the tobacco and liquor packaging and molded-fibre businesses compared to the same period last year. Net profit was HK$29.10 million, representing a decrease of 27.1% year-on-year. Apart from the pharmaceutical packaging segment, all other business segments experienced significant declines. The transfer process of key clientele industries introduced a time delay for the overseas factory business to fully replace the lost revenue, thereby posing a challenge to the overall profitability. Despite these difficulties, Wing Fat Printing continued to expand the application field of eco-friendly packaging products through technological innovation. Moreover, it focused on tapping into the blue ocean market, aligning with the market's cutting-edge demand and the concept of environmental protection.

Mr. Shen Xiao Chu, Chairman of SIHL, said, "In the second half of the year, the Company will remain committed to innovation and transformation with ESG values. For our infrastructure and environmental protection businesses, SIIC will closely follow national strategies and continue to seek new opportunities in the environmental protection sector. The Group will further optimize its strategy for the Yangtze River Delta region, as well as other key areas and river basins, and construct more high-standard and modern environmental protection projects, to maintain its leading position in China's water and environmental protection industries. Toll roads business will continue to improve its operational efficiency and maintain stable development. New contributions will be made to the Group through investments in medical, health, and green energy sectors. For the real estate business, the Group will pay close attention to changes in industry policies while promoting ongoing projects and accelerate capital recovery. Nanyang Tobacco will step up efforts in terms of fostering new products and cultivating innovative tobacco products in overseas markets to improve integrated strengths in internationalization and marketability. Wing Fat Printing will leverage technological innovation to continue breaking into the blue ocean market with environmental-friendly packaging. Overall, the Group will accelerate upgrades of its core businesses, seize opportunities to acquire high quality projects, to create greater value for shareholders."

About SIHL

Shanghai Industrial Holdings Limited ("SIHL", HKSE Stock Code: 363) is the largest overseas conglomerate under Shanghai Industrial Investments (Holdings) Co., Ltd ("SIIC"). As the flagship of the SIIC group of companies, SIHL has been successful in leveraging its strengths in Shanghai since listing, in terms of securing the best investment opportunities in mainland China with full support from the parent company. Over 20 years' development, SIHL has become a conglomerate company with four core businesses: infrastructure and environmental protection (including toll roads/bridge, and environmental protection related business such as sewage treatment and solid waste treatment), real estate, consumer products (including Nanyang Tobacco and Wing Fat Printing), and Big Health. SIHL will continue to raise its governance standard in order to create favourable returns and value for shareholders.

For more information about SIHL, please visit the company website at www.sihl.com.hk.

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SOURCE Shanghai Industrial Holdings Limited