SIIC Environment Holdings Ltd. Announces Discloseable Transaction for 100% Acquisition of Target Companies

Key Highlights and Investor Implications

SIIC Environment Holdings Ltd. (stock code: Hong Kong 807, Singapore BHK), a leading environmental services company, has released a detailed further announcement regarding its acquisition of 100% equity interests in two target companies involved in wastewater treatment operations in Anshan City, Liaoning Province, China. This transaction is considered a “discloseable transaction” under Hong Kong Listing Rules, and the report contains several price-sensitive details that investors and shareholders should carefully consider.

Transaction Overview

• The acquisition involves the purchase of the total equity of Anshan Qingchang Water Services Co., Ltd. and Anshan Qinglang Water Services Co., Ltd.
• The valuation of the target companies was performed as of 30 June 2025, using the discounted cash flows (DCF) method under an income approach. This constitutes a profit forecast under Rule 14.61 of the Hong Kong Listing Rules.
• The valuation and underlying profit forecast were reviewed for arithmetical accuracy by Deloitte & Touche LLP, an independent public accounting firm.

Principal Assumptions Underpinning the Valuation

The report details a comprehensive set of assumptions that form the basis of the DCF valuation. These include:

• Transaction Assumption: The assets are assumed to be in a transaction process in a simulated, competitive market.
• Open Market and Going Concern Assumptions: Free trading in a fully competitive market with the business operations expected to continue indefinitely.
• Stability Assumptions: No significant changes in laws, regulations, macroeconomy, or the political, economic, and social environment affecting the companies. No major changes in tax policy, credit policy, or industrial and regional policies.
• Operational Assumptions: The assets will continue their current use, management remains stable and responsible, and no major non-compliance issues exist.
• Financial Information: All information provided is assumed to be true, accurate, and complete.
• Accounting Policy Consistency: The accounting policies used after the valuation benchmark date will remain consistent with those used in the current valuation.
• Business Model Stability: The business scope, model, and structure will remain consistent on the existing management basis.
• Cash Flow Assumption: Cash inflows and outflows are assumed to be evenly distributed after the valuation date.

Independent Expert Involvement

• Deloitte & Touche LLP reviewed the mathematical accuracy of the DCF calculations and confirmed the compilation of discounted cash flows was in accordance with the stated assumptions.
• Jinzheng (Shanghai) Asset Appraisal Co., Ltd. acted as the independent valuer to prepare the valuation report.
• Both experts confirmed their independence and provided written consent for their opinions to be included in the company’s announcement.

Board Confirmation and Corporate Governance

• The board, including Executive Director Mr. Ji Guanglin, reviewed and confirmed that the valuation has been made after due and careful enquiry.
• The board also confirmed that the profit forecast is mathematically accurate and not affected by accounting policies.
• The qualifications and independence of the involved experts are transparently disclosed, and no expert holds any shares or rights in the company or its subsidiaries.

Reporting Accountant’s Assurance

• Deloitte & Touche LLP issued an independent assurance report, confirming that, as far as calculations are concerned, the discounted future estimated cash flows were properly compiled in accordance with the underlying assumptions.
• The firm highlighted that the valuation is based on future assumptions that may not materialize as expected, and actual results may differ materially from the forecast.
• Deloitte’s work did not constitute a valuation of the target companies or an opinion on the reasonableness of the assumptions.

Potential Price-Sensitive Information for Shareholders

• This acquisition, once completed, will see SIIC Environment Holdings Ltd. expand its presence in Liaoning Province’s water services sector, potentially impacting future financial performance and share value.
• The use of DCF-based profit forecasts and the involvement of independent experts increases transparency and may enhance investor confidence.
• Any material deviation from the stated assumptions (regulatory, economic, operational) could significantly impact the valuation and realized profitability of the acquisition.
• The transaction’s disclosure and the assurance of accurate calculation by a reputable accounting firm may be viewed positively in terms of corporate governance and risk management.

Board and Management Composition

As of the announcement date, the board includes Mr. Zhou Yuding (Chairman and Executive Director), Mr. Ji Guanglin, Mr. Wang Xiwang, and Mr. Yang Xing (Executive Directors), with Dr. Kimmis Pun Kim Ming, Mr. An Hongjun, and Mr. Zhong Ming serving as Independent Non-Executive Directors.

Disclaimer

This article is a detailed summary and analysis of SIIC Environment Holdings Ltd.’s acquisition announcement. The information is based on company disclosures and independent expert reports. Actual future performance may differ materially from forecasts due to risks and uncertainties. This article does not constitute investment advice. Investors should consult professional advisors and review the full official disclosures before making investment decisions.

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