2016 annual results non-deal roadshow...

2016 Annual Results Non-Deal Roadshow PresentationApril 2017

Strictly Private and Confidential

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Disclaimer

This presentation incorporates information contained in the annual results announcement (the “Results

Announcement”) for the year ended 31 December 2016 of CT Environmental Group (the “Company”). This

presentation should be read in conjunction with the Results Announcement and is qualified in its entirety

by the more detailed information and financial information contained in the Results Announcement.

Other than the information contained in the Results Announcement, you shall not reproduce or distribute

this presentation, in whole or in part, and you shall not disclose any of the contents of this presentation or

use any information herein for any purpose without the Company’s prior written consent. You hereby

agree to the foregoing by accepting delivery of this presentation.

The contents of this presentation have not been reviewed or approved by any regulatory authority in

Hong Kong or elsewhere. The contents of this presentation are not investment, legal or tax advice. You are

advised to exercise caution in perusing the contents of this presentation. If you are in any doubt about any

of the contents of this presentation, you should obtain independent professional advice.

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Contents

• Strategic Overview and 2016 FY Highlights

• 2016 FY Financial Overview

• 2017 Strategic Focus

• Appendix

Strategy Overview and

2016 FY Highlights

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Leading environmental protection solution provider

CT Environmental Group is at the heart of an environmental and

resource revolution

There are increasingly favourable government policies to facilitate

economic growth in a more environmentally-friendly way along with

enhanced regulation of the protection treatment service

We are well positioned to take advantage of the growing market

demand for high-quality integrated industrial waste management

solutions

5

Market Position & Strength Growth Strategy 2016 Progress

Early mover in the industrial wastewater

treatment segment with well-recognized

franchise and effective BOO model

Ongoing diversification of our customer

base

Strong R&D capability & significant

project development experience

Continue to broaden our expertise and

service offerings

Vertical expansion into sludge treatment

Sector & effective diversification into

hazardous waste treatment sector

Penetrate into new provinces

A leading player in industrial waste treatment area with strong entrepreneurship and project track record poised to capture growth in a juncture when China

advocates environmental consciousness

Establishment of greenfield projects in

Guangdong Longmen as an integrated

solid waste environmental protection

base

Significant progress on the first flagship

project in Guangxi market, an energy-

saving environmental protection

industrial park project

Successful integration of acquisitions

CTEG continues to deliver on long-term strategy

6

2016 FY performance highlights

CTEG delivered strong growth and further strengthened its core businesses

• Strong revenue growth of approx. 30% to RMB1.87bn on sustained growth of three core

businesses

• Maintained steady gross profit margin at 46%

• Net profit impacted by one-off items, decreased by 13%

– Recurring net profit increased approx. 17%

• Major corporate actions

– Expansion beyond homebase into Guangxi Zhuang Autonomous Region with first comprehensive flagship project

• Final dividend of HK0.67 cents per share for the year ended 31 December 2016

• Proposed special dividend of HK0.86 cents per share in connection to the expected profit

from disposal of land in 2017

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Core Business SegmentIndustrial Wastewater

TreatmentSludge Treatment

Hazardous Waste

Treatment

Fiscal Period 2016 2015 2016 2015 2016 2015

No. of Projects 7 6 3 3 6 5

Operating Capacity579,500 m3/day

575,000 m3/day

3,442 tonnes/day

3,142 tonnes/day

830,000 tonnes/year

330,000 tonnes/year

Average Utilisation Rate 62% 58% >100% 93% 48% 65%

Achieved growth across all three business segments

• Industrial wastewater treatment:

– Processed volume of six existing industrial wastewater treatment facilities recognised organic growth of 8% YoY

• Sludge treatment:

– Increased overall capacity driven by strong demand from customers

• Hazardous waste treatment:

– Overall increase in operating capacity primarily due to commencement of Nansha Marine Conservation Centre with profitability at 31%

utilisation rate

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Strong pipeline offering high visibility for 2017-8

Projects SegmentBusiness

ModelCapacity

Status/Estimated

Time of Operation

Guangxi Yulin (Water) Water Treatment BOO IWWT: 50,000 m3/day; IWS: 50,000 m3/day 2017 Q2

Guangxi Yulin (Sludge) Solid Waste BOO Sludge: 200 tonnes/day 2017 Q2

Longmen Industry Base Solid Waste BOOSludge: Phase I: 500 tonnes/day

Industrial Solid Waste: 300,000 tonnes/year2017 Q3

Longmen Industry Base Solid Waste BOT Waste-to-energy: 600 tonnes/day 2017 Q3

Yinghong Park (Phase I) Water Treatment BOO IWWT: 20,000 m3/day; IWS: 50,000 m3/day 2017 Q4

Sichuan Guangyuan (Phase I) Water Treatment BOO IWWT: 50,000 m3/day; IWS: 50,000 m3/day 2017 Q4

Yulin Chinese Medicine (Phase I) Water Treatment BOO IWWT: 5,000 m3/day 2018 Q1

Xinfeng Lvzhi Solid Waste BOO Industrial Solid Waste: 350,000 tonnes/year 2018 Q1

Yonghe Haitao (Phase IV) Water Treatment BOO IWWT: 50,000 m3/day Under planning

2016 FY Financial Overview

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2016 FY financial highlights

• Delivered strong topline growth and maintained steady gross profit margin

• Net profit was impacted by one-off items, impairment on non-current assets and foreign exchange loss

2016 FY 2015 FY % Change

Turnover 1,865.9 1,435.0 +30.0%

Gross Profit 852.3 715.5 +19.1%

Profit Attributable to Equity Holders 519.1 598.9 -13.3%

Recurring Net Profit 589.6 503.7 +17.0%

Basic EPS 0.08 0.10 -20%

(RMB mm)

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37%

33%

10%

5%5%

3%7%

Strong sector penetration leading to revenue diversification

50%

25%

6%

3%6%

3%7%

20

16

20

15

Revenue Breakdown by CustomerRevenue Breakdown by Sector

34%

25%

16%

20%

5%

30%

26%

22%

16%

6%

RMB 1,866 mm

RMB 1,435 mm

Textile Automobile Manufacture

Municipalities

Water Treatment

Sludge and Solid Waste Treatment

Hazardous Waste Treatment

BOT Project Construction

Service

Heating Service

Electronic

Chemical Papermaking

Others

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Margins remain stable

EBITDA Margin, Gross Margin and Net Margin

56% 57%

50%55%

54%50%

42%46%

38%42%

28% 28%

1H2015 FY2015 1H2016 FY2016

EBITDA Margin Gross Margin Net Margin

Recurring* EBITDA Margin, Gross Margin

and Net Margin

58% 59% 58% 59%

53% 54% 54% 55%

29% 29% 30% 28%

1H2015 FY2015 1H2016 FY2016Recurring EBITDA Margin Recurring Gross Margin

Recurring Net Margin

*Add back VAT refund to turnover, exclude income from BOT construction services,

entrusted operation and one-off gain/loss

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139.3

256.2

2015 2016

70.2

88.2

2015 2016

9.7% 12.9%

% of Turnover

4.6% 4.5%

Effective interest rate

Administrative Expense Finance Cost

(RMB mm)

Expense analysis

• While costs and expenses increased, the ratio of cost as a percentage of turnover remained steady

13.7%

14.9

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Other financial indicators

As at 31/12/2016 As at 31/12/2015 31/12/2016 vs 31/12/2015

A/R Balance

(RMB million)554.9 411.4 +34.9%

A/R Turnover

(days) 97.5 94.7 +2.8 days

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56.3% 55.8%

31/12/2015 31/12/2016

Maintained healthy gearing ratio

(Total Bank Borrowing – Cash) / Total Equity

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Capital expenditure

27%

50%

65%12%

8%

38%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2016 2015

Water Treatment Sludge and Solid Waste Treatment Hazardous Waste Treatment

RMB 669 mm RMB 1,197 mm

2017 Strategic Focus

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Well-positioned to capture growth

• Government’s commitment to environmental protection

and associated policies increases

• Proven track record of delivering

• Focus on geographical expansion

APPENDIX

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CTEG business model

• CTEG

– Established business with strong track record in industrial wastewater, sludge and solid waste, and hazardous waste

treatment solutions

– Best positioned to capitalise on opportunities brought about by fighting global climate change and national policy

– Solid management team with operational excellence to deliver

Waste generating enterprises

Solid waste treatment facilities

Wastewater treatment facilities

Hazardous waste treatment facilities

CTEG’s major customers

Industrial water supply facilities

Untreated

solid waste

Untreated

hazardous waste

Untreated

wastewater

Reclaimed water (water

recycling)

Industrial water supply

Landfill, incineration and resource utilisation

Landfill, incineration, resource utilisation and concentrated

sewage treatment

Treated wastewater being discharged

Sludge produced in the

wastewater treatment

process Nutrition soil, green brick

and light ceramsite

Sludge treatment facilities

Business Model

Committed to becoming China’s leading fully integrated industrial

waste management solution provider

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120,000 130,000 130,000 130,000

575,000 579,500 675,000 750,000

280,000 280,000

380,000 480,000

2015 2016 2017(E) 2018(E)

Municipal Wastewater Treatment Industrial Wastewater Treatment

Industrial Water Supply

Operating Capacity (m3/day)

Mu

nic

ipa

l

Wa

ste

wa

ter

Tre

atm

en

t

Longmen Xilin

- 20,000m3/day

Yonghe Haitao

Phase I&II

- 100,000m3/day

Zhongshan Shazai

- 10,000m3/day

Ind

ustr

ial W

ate

r

Su

pp

ly

Guangzhou Xinzhou

Industrial Park

- 150,000m3/day

Zhongshan Project

- 60,000 m3 /day

Sichuan Guangyuan

Phase I

-50,000m3/day

Shunde Water

Supply Project

- 70,000m3/day

Sichuan Guangyuan

Phase II (planning)

- 50,000m3/day

Yinghong Park

Phase I

- 50,000m3/day

Yinghong Park

Phase II&III(planning)

- 150,000m3/day

Guangxi Yulin

Phase I

- 50,000m3/day

Ind

ustr

ial W

as

tew

ate

r T

rea

tme

nt

Guangzhou Xinzhou

Industrial Park

- 100,000m3/day

Huaihua Tianyuan

Phase I

- 45,000m3/day

Guangzhou Yinglong

Phase I&II

- 250,000m3/day

Yonghe Haitao

Phase III

- 50,000m3/day

Shunde WWT

Project

- 60,000m3/day

Zhongshan Project

Phase I&II

- 70,000m3/day

Sichuan Guangyuan

Phase I

-50,000m3/day

Guangfozhao

- 50,000m3/day

Sichuan Guangyuan

Phase II (planning)

- 50,000m3/day

Huaihua Tianyuan

Phase II (planning)

- 55,000m3/day

Yinghong Park

Phase I

- 20,000m3/day

Yinghong Park

Phase II&III(planning)

- 60,000m3/day

Yonghe Haitao

Phase IV

- 50,000m3/day

Guangxi Yulin

Phase I

- 50,000m3/day

Project portfolio – water treatment and supply

Guangxi Yulin

Phase II

- 50,000m3/day

Guangxi Yulin

Phase II

- 50,000m3/day

Yulin Chinese

Medicine Phase I

- 5,000m3/day

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Project portfolio - sludge and solid waste treatment

Longmen Industry Base

Industry: Sludge + solid waste

Treatment: – To produce green bricks from sludge and solid waste– To produce light weight ceramsites from sludge – To produce nutrition soil from municipal sludge– Incineration

Capacity: – Sludge: 1,389 tonnes/day （Phase I:500 tonnes/day)– Solid waste: 300,000 tonnes/year (planned)– Waste-to-Energy: 600 tonnes/day

Status: Under construction

Xinfeng Lvzhi

Industry: Industrial solid waste

Treatment:– Comprehensive utilization of industrial solid waste

Capacity:

− Solid waste: 350,000 tonnes/year (planned)


Industry: Sludge

Treatment:– To treat municipal sludge and produce

nutrition soil

Capacity: – 900 tonnes/day

Status: In operation

Yonghe Haitao Sludge

Heyuan Solid Waste

Industry: Sludge

Treatment:– Safety treatment and comprehensive

utilization of sludge

Capacity:

− 1,000 tonnes/day Status：In operation

Sludge Treatment Capacity (tonnes/day)

Industry: Sludge + industrial solid waste

Treatment:

− Comprehensive utilization of sludge and

general industrial solid waste

− Safety disposal to landfill

Capacity:

− Sludge: 1,542 tonnes/day

− Solid waste: 100,000 tonnes/year

− Landfill: 2,000,000 m3


Qingyuan Lvyou

Guangxi Yulin

Industry: Sludge

Treatment:

− To utilize the heat value of sludge

Capacity:

− 200 tonnes/day


3,142 3,442 4,142

4,642

2015 2016 2017E 2018E

+700

+500

+300

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Project portfolio - hazardous waste treatment

3 “TBT” Projects

Treatment: Copper etching wastewater (HW22)

Capacity : 61,000 tonnes/year

Model: TOT+BOT, with concession period of 20 years from 2015

to 2035


Kangxiang Metal

Treatment: – Waste organic solvent (HW06)– Waste mineral oil (HW08)– Waste photosensitive material (HW16)– Surface processing waste (HW17)– Copper etching wastewater (HW22)– Lead bearing waste (HW31)

Total Capacity : 9,500 tonnes/year


Guangzhou Lvyou

Treatment: Disposal and re-utilization of industrial wastes and

domestic wastes, mainly hazardous waste

Capacity : 259,500 tonnes/year for 20 types of hazardous waste

+ cleaning and recycling used drums of 1,500,000 pcs / year


Treatment: – Treating oily wastewater, oily sludge, waste oil; typically port

and vessel wastewater, offshore drilling pollutant

Capacity: – HW08: 500,000 tonnes/year

Status: Partially in operation, with future phases under planning

Nansha Marine Conservation Centre

2016 annual results non-deal roadshow...

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