SIIC Environment Holdings Announces Major Acquisition of Two Wastewater Companies

Key Highlights

• Acquisition Announcement: SIIC Environment Holdings Ltd. (Shanghai Industrial Environment Holdings) announced that its majority-owned subsidiary, Longjiang Environmental Protection Group Co., Ltd. (“Longjiang Environmental Protection”), has entered into a share transfer agreement with Qingdao Qing’an Technology Investment Co., Ltd. (“Qingdao Qing’an”) to acquire 100% equity of Anshan Qingchang Water Affairs Co., Ltd. (“Qingchang Water”) and Anshan Qinglang Water Affairs Co., Ltd. (“Qinglang Water”).
• Transaction Value: Total consideration for the acquisition is RMB 270 million (approximately HKD 305.37 million and SGD 50.193 million).
• Shareholder Relevance: According to HKEX and SGX listing rules, the seller is not a connected party or interested person for SIIC Environment Holdings Ltd.
• Payment Structure: The payment will be made in three tranches:
  • First tranche: 10% as deposit (RMB 27 million).
  • Second tranche: 80% (RMB 216 million) with bank guarantee.
  • Third tranche: 10% (RMB 27 million) as risk retention, payable six months after closing, subject to no breach by seller.
• Completion Conditions: Multiple pre-conditions must be met or waived by the buyer before completion, such as internal approvals, subsidiary deregistration, debt extinguishment, and compliance checks.
• Deadline and Flexibility: All pre-conditions must be met by May 31, 2026, with a possible extension of up to 30 working days if reasons are not attributable to the seller.
• Transition Arrangements: During the transition period (from June 30, 2025, to closing), all profits and losses are attributable to the buyer. Seller must maintain normal operations and cannot engage in activities that may negatively impact the companies without buyer’s consent.

Detailed Transaction Structure and Rationale

• Valuation Basis: The price is based on independent valuation reports using the Weighted Average Cost of Capital (WACC) model and the income approach. Qingchang Water and Qinglang Water were valued at RMB 153 million and RMB 123 million respectively.
• Strategic Importance: The acquisition will substantially increase SIIC’s wastewater treatment scale in Liaoning Province, China, and strengthen its regional market presence, bringing stable cash flow and business returns.
• Operational Details:
  • Qingchang Water operates the Ningyuan Wastewater Treatment Plant (BOT project) with a capacity of 80,000 tons/day.
  • Qinglang Water operates the Dongtai Wastewater Treatment Plant (capacity of 150,000 tons/day, including BOT and entrusted operation projects).
  • Both companies have been operating for multiple years.
• Employee Transfer: All 55 current employees will be retained after closing, with labor contracts to be signed under buyer’s systems and original compensation levels maintained.

Financial Impact and Shareholder Considerations

• Financial Performance:
  • As of June 30, 2025, Qingchang Water’s unaudited net asset value: RMB 115.9 million; Qinglang Water: RMB 137 million.
  • 2024 (audited) and 2025 (unaudited) financials show positive earnings but Qinglang Water had a small loss in 2025.
  • Combined pre-tax profit for 2025: RMB 9.91 million, compared to SIIC Environment Holdings’ group pre-tax profit of RMB 1,057 million.
• Impact on Share Metrics:
  • Post-acquisition, tangible net asset value and EPS per share will see minor positive impact. EPS for 2025 increases from RMB 0.2370 to RMB 0.2379 per share.
  • The deal represents 10.71% of SIIC’s market capitalization, making it a “disclosable transaction” under both HKEX and SGX rules.
  • No shareholder approval required as the ratios do not exceed thresholds for “major transaction.”
• Price Sensitivity:
  • The acquisition strengthens SIIC’s presence in northeast China and could support future earnings growth, potentially positive for share value.
  • Completion is subject to multiple conditions and deadlines; any delays or failure could impact investor sentiment.
  • Seller is an independent third party; no connected party or interested person transaction risk.
• Project Duration: Both target companies have operating licenses until May 3, 2042.
• Transition Risks: Any breach or financial issues during transition could allow buyer to adjust price or claim damages.

Additional Information for Investors

• Seller Background: Qingdao Qing’an is a wholly-owned subsidiary of Qingdao Shuang’an Green Technology Investment. Shuang’an’s shareholding is diversified among multiple parties, none of whom are related to SIIC.
• Document Availability: Share transfer agreement and valuation reports are available at SIIC Environment Holdings’ Singapore office for three months post-announcement.
• Regulatory Disclosure: SIIC will publish further announcements as required under HKEX and SGX rules, especially regarding profit forecast disclosures.
• Directors and Related Parties: No SIIC directors or controlling shareholders have any direct or indirect interest in the acquisition, except through their existing SIIC shareholdings.

Shareholder Advisory

Shareholders and potential investors should note that the completion of the acquisition is subject to the fulfillment of several pre-conditions. There is no guarantee the deal will be completed as scheduled. SIIC advises shareholders to exercise caution in trading its shares and to consult professional advisors if needed. The company will issue further updates and announcements regarding the progress of the acquisition.

Disclaimer

This article summarizes information from SIIC Environment Holdings Ltd.’s public disclosure regarding its acquisition of Qingchang Water and Qinglang Water. The information presented above does not constitute investment advice. Investors should conduct their own research and consult with professional advisors before making any investment decisions. Completion of the acquisition is subject to various conditions and uncertainties. SIIC Environment Holdings Ltd. makes no warranty as to the accuracy or completeness of this summary.

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