SIIC Environment Holdings Announces Strategic Acquisition of Two Wastewater Treatment Companies in Liaoning Province

SIIC Environment Holdings Ltd. (the “Company”), a leading comprehensive environmental service operator in China, has announced a significant acquisition that is poised to expand its wastewater treatment business and strengthen its market position in Northeast China.

Key Details of the Acquisition

• Date of Agreement: 30 March 2026 (after trading hours)
• Purchaser: Longjiang Environmental Protection Group Co., Ltd. (a controlling subsidiary of the Company)
• Vendor: Qingdao Qing’an Technology Investment Co., Ltd.
• Target Companies:
  • Anshan Qingchang Water Services Co., Ltd.
  • Anshan Qinglang Water Services Co., Ltd.
• Total Consideration: RMB 270,000,000 (approx. HK\$305,370,000 or S\$50,193,000)
• Equity Interest Acquired: 100% in both target companies

Strategic Rationale and Business Impact

• The acquisition significantly expands SIIC Environment’s wastewater treatment business in Liaoning Province, enhancing its regional footprint and competitiveness.
• The two target companies collectively operate wastewater treatment plants with a total designed capacity of 230,000 tons per day, offering stable cash flows and operating income from long-standing operations.
• This strategic move is expected to provide stable returns for the Company and its shareholders, with the assets becoming wholly-owned subsidiaries and their financials consolidated into the Group’s accounts.

Details of the Sale and Purchase Agreement

• Consideration Breakdown:
  • Qingchang Water Services: RMB 149,150,000
  • Qinglang Water Services: RMB 120,850,000
• The consideration was determined based on professional valuation (using the income approach and WACC model) and is considered fair and reasonable by the Board.
• Payment Terms:
  • 1st Instalment: 10% deposit (RMB 27 million) within 7 business days after agreement takes effect.
  • 2nd Instalment: 80% (RMB 216 million) guaranteed by a bank letter, payable within 7 business days after completion.
  • 3rd Instalment: 10% (RMB 27 million) as risk retention, payable 6 months after completion, subject to no breaches by the Vendor.
• If the Vendor fails in delivery, double the deposit is to be refunded. If the Purchaser fails, the deposit is forfeited.

Completion and Preconditions

• The transaction is subject to several preconditions, including:
  • Completion of internal approvals by the Vendor
  • Deregistration of relevant subsidiaries
  • Debt extinguishment agreements
  • No material undisclosed defects or legal impediments
  • Truth and accuracy of all representations by the Vendor
• All preconditions must be met by 31 May 2026, with a possible 30-working-day extension if justified.
• Upon completion, the Target Companies will be fully integrated, and their employees (55 in total) will be retained at their current remuneration levels.

Interim Arrangements and Risk Management

• During the period from 30 June 2025 to completion, the Vendor must operate the Target Companies normally and not undertake actions detrimental to their financial health or operations without the Purchaser’s consent.
• Any profit or loss during this interim period is for the Purchaser’s account, except if losses are due to the Vendor’s breaches, in which case compensation or adjustment of consideration may occur.

Financial Effects and Shareholder Impact

• Net Tangible Assets per Share: No change (remains at RMB 6.2858 per share).
• Earnings per Share: Minimal increase from RMB 0.2370 to RMB 0.2379.
• The acquisition does not require shareholder approval under SGX or HKEX rules, as it is classified as a “disclosable transaction” (size test ratios below 20%).
• No new shares are being issued; the transaction is cash-funded from internal resources.

Valuation and Listing Rule Implications

• The transaction valuation was based on a discounted cash flow method, constituting a profit forecast under Hong Kong Listing Rule 14.61. A further announcement with detailed disclosures will be made within 15 business days.
• Under SGX Listing Rule 1006(c), the consideration represents 10.71% of the Company’s market capitalisation (above the 5% threshold for “disclosable transactions”).

Information on the Target Companies

• Anshan Qingchang Water Services Co., Ltd.:
  • Established in 2012
  • Registered and paid-in capital: RMB 92.35 million
  • Operator of Ningyuan Wastewater Treatment Plant (80,000 tons/day, BOT model, operational till 2042)
  • 2025 unaudited consolidated net assets: RMB 115.9 million
  • 2025 profit after tax: RMB 3.95 million
• Anshan Qinglang Water Services Co., Ltd.:
  • Established in 2012
  • Registered and paid-in capital: RMB 102 million
  • Operator of Dongtai Wastewater Treatment Plant (150,000 tons/day: 100,000 BOT, 50,000 entrusted operation, operational till 2042)
  • 2025 unaudited consolidated net assets: RMB 137.0 million
  • 2025 profit after tax: negative RMB 168,533 (notable for investors)

Vendor and Shareholding Structure

• The Vendor, Qingdao Qing’an Technology Investment Co., Ltd., is a wholly-owned subsidiary of Qingdao Shuang’an Green Technology Investment Co., Ltd., with a complex shareholding structure involving several investment companies and individuals.
• The Vendor and its ultimate beneficial owners are independent third parties to SIIC Environment Holdings and its connected persons, with no shareholding or business relationships with Company directors or major shareholders.

Important Information for Shareholders

• This acquisition is a strategic expansion in a stable, income-generating sector and region, likely to enhance long-term value and earnings stability for shareholders.
• There is a small, immediate positive impact on earnings per share, but no significant change to net tangible assets per share.
• The deal’s completion is contingent on strict preconditions, and there is a possibility that the transaction may not proceed if requirements are not met or waived.
• Investors should note the use of a profit forecast in the valuation, which can be price-sensitive and may require further regulatory disclosure. The Company will publish additional details as required by the Hong Kong Listing Rules.
• The acquisition strengthens SIIC Environment’s scale and market position in Northeast China, which could be viewed positively by the market, especially if integration is smooth and the assets perform to expectations.
• No directors or controlling shareholders have any interest in the transaction, and no new directors are to be appointed as a result of the deal.

Cautionary Note

Shareholders and potential investors are advised to exercise caution when dealing in the shares of the Company. The acquisition is subject to the fulfilment of various preconditions, and there can be no certainty that the transaction will be completed as announced. Investors should review both this announcement and any subsequent disclosures by the Company and consult professional advisers if in doubt.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. The actual impact of the acquisition may differ from the pro forma information presented. Shareholders and potential investors should exercise due diligence and consult relevant professionals before making investment decisions.

View SIIC Environment Historical chart here