According to the smart financial APP, Kangda Environmental Protection (06136) announced the unaudited interim performance of the company and its subsidiaries for the six months ending June 30, 2024. During the review period, due to the operation of newly built and expanded sewerage treatment facilities, the actual volume of sewage and recycled water treatment increased by approximately 2.6% compared to the same period last year, reaching 0.624 billion tons, driving a 2.0% increase in the company's total revenue to RMB 1.116 billion compared to the same period last year.

However, due to the lag in the adjustment of sewage treatment prices, it was unable to effectively cover the increased operating costs such as electricity and drug fees, and the completion of new projects also increased depreciation and amortization expenses, resulting in a slight decrease of 1 percentage point in the overall gross margin compared to the same period last year, which is 48.8%. The overall gross profit was RMB 0.545 billion, which is basically the same as that of the same period last year. If the sewage treatment price can be adjusted normally and the cost increase can be reasonably reimbursed, the profitability will be greatly improved. Thanks to the decrease in financing costs and cost-saving measures, the net profit attributable to shareholders of the parent company for this period increased significantly by 32.8% compared to the same period last year, reaching RMB 0.109 billion. The earnings per share for this period were approximately RMB 5.08, a year-on-year increase of 33.0%.

Kangda Environmental Protection is committed to strengthening the company's operating cash flow, improving financing efficiency, and optimizing the balance sheet. In this period, the net inflow of operating cash flow was RMB 0.161 billion, the highest level since 2017. In terms of financing activities, due to the general decline in interest rates in China, the average borrowing interest rate for this period was 5.53%, a significant decrease of 0.53 percentage points compared to the same period last year, resulting in a reduction in financing costs by about 6.3% to RMB 0.274 billion compared to the same period last year. As of June 30, 2024, long-term borrowings accounted for 65.2% of total borrowings, with a balanced ratio of long-term and short-term debts. The current ratio at the end of this period was 1.19, the best level since 2019. The asset-liability ratio has also steadily decreased to 69.24% (June 30, 2023: 69.57%), continuously decreasing since 2019. The People's Bank of China announced a 10 basis point reduction in the loan prime rate (LPR) in July and is expected to continue to decrease, which will help further reduce future financing-related expenses.

The company continues to cautiously invest in high-quality sewerage treatment projects and focuses on operating municipal sewerage core business. The proportion of operating income to total revenue increased from 90.85% in the same period last year to 91.02% in this period, while the capacity utilization rate remained at a high level of 84%. As of June 30, 2024, the company has a total of 112 service franchise arrangements with a total processing capacity of 4.361 million tons per day and an operating sewerage treatment capacity of 4.14 million tons per day.

During the period, the government continued to improve and optimize public and environmental policies, and successively issued policy documents such as the "Regulations on the Management of Infrastructure and Public Utility Franchise Operations", "Notice on Strengthening the Construction and Operation and Maintenance of Urban Domestic Sewage Pipelines", and "Guidance on Accelerating the Development of Water-saving Industry", emphasizing the maintenance of fair market order, setting specific goals to improve the comprehensive efficiency of urban domestic sewage collection and treatment, promoting the use of recycled water, and encouraging financial institutions to provide financing support for sewage construction projects. At the same time, during the Third Plenary Session of the Twentieth Central Committee, the "Decision of the Central Committee of the Communist Party of China on Further Comprehensively Deepening Reform and Advancing China's Modernization" was deliberated and adopted, proposing the establishment of a sound ecological environment governance system and promoting price reforms in the public utility sector to optimize pricing mechanisms. The National Development and Reform Commission also recently issued the "Notice on Comprehensively Promoting the Normalized Issuance of Real Estate Investment Trusts (REITs) in the Infrastructure Field", which promotes the normalized issuance of REITs. The company will actively activate stock assets through the REITs mechanism when appropriate. The company will continue to deepen energy-saving measures, improve operational efficiency, rigorously control operating costs, contribute to the improvement of the national ecological environment quality, and strive for better returns for shareholders.