SIIC Environment Holdings Ltd. Announces Major Acquisition of 100% Equity Interests in Target Companies

Key Transaction Details and Potential Impact on Shareholders

SIIC Environment Holdings Ltd. (the “Company”) has released a detailed announcement regarding the acquisition of 100% equity interests in two target companies, Anshan Qingchang Water Services Co., Ltd. and Anshan Qinglang Water Services Co., Ltd., both engaged in wastewater treatment in Anshan City, Liaoning Province, China. This transaction is considered a discloseable transaction under the Hong Kong Listing Rules and is likely to be of significant interest to investors due to its potential impact on the Company’s future earnings and valuation.

Highlights of the Acquisition

• Acquisition Scope: 100% equity interests in the two target companies operating in the wastewater treatment sector.
• Valuation Method: The acquisition valuation is based on the income approach using the discounted cash flows (DCF) method, which constitutes a profit forecast under Rule 14.61 of the Hong Kong Listing Rules.
• Valuation Date: The valuation was conducted as at 30 June 2025, with the formal report issued on 6 February 2026.
• Independent Review: The calculations underlying the DCF valuation have been independently reviewed for arithmetic accuracy by Deloitte & Touche LLP, a reputable public accounting firm.

Key Assumptions and Methodology

The valuation is built on several principal assumptions, which are critical for shareholders to understand, as any deviation could materially impact the final outcome:

• Transaction Assumption: Assumes the assets are already in the process of transaction, with valuation made in a simulated open market environment.
• Open Market Assumption: Assumes fully competitive market conditions where asset prices reflect the judgment of independent buyers and sellers.
• Going Concern Assumption: The target companies are assumed to continue operating without interruption into the foreseeable future.
• Stability in Laws & Policies: No significant changes in laws, regulations, macro-economy, or relevant policies are expected post-valuation date.
• Asset Use: The assets will continue to be used for their current purposes, with no conversion or optimal utilization beyond current use considered.
• Management and Compliance: Assumes stable, responsible management and full compliance with all relevant laws and regulations.
• Financial Information: The information provided for the valuation is assumed to be true, accurate, and complete.
• Business Scope and Model: No major changes in the business scope, model, or structure are anticipated post-valuation benchmark date.
• Cash Flow Distribution: Assumes even distribution of cash inflows and outflows after the valuation benchmark date.

Expert Reviews and Board Confirmation

• Deloitte & Touche LLP reviewed the arithmetical accuracy of the discounted cash flows.
• The Board of SIIC Environment Holdings Ltd. has reviewed the valuation, underlying assumptions, and Deloitte’s report, confirming the valuation has been made after “due and careful enquiry”.
• The independent professional valuer involved was Jinzheng (Shanghai) Asset Appraisal Co., Ltd.

Both expert parties have provided written consents for their names and reports to be included in the Company’s public announcement.

Potential Price-Sensitive Factors for Shareholders

• Profit Forecast Disclosure: The use of DCF and profit forecast indicates expectations of significant future cash flows from the acquired entities, which may positively impact SIIC Environment Holdings Ltd.’s future earnings.
• Assumptions-Based Valuation: The valuation is highly sensitive to the underlying assumptions. Any significant change in economic conditions, laws, management quality, or business environment post-acquisition could materially affect the realized value.
• Regulatory Compliance: The transaction adheres to Hong Kong Listing Rules, providing transparency and governance assurance to shareholders.
• No Impact from Accounting Policy Changes: The valuation is not affected by the Company’s accounting policies, as it is based on future cash flows rather than historical financials.

Board and Management Involvement

The announcement is authorized by the Board, including Executive Director Mr. Ji Guanglin. The Board comprises experienced directors, including the Chairman Mr. Zhou Yuding, and several independent non-executive directors, underscoring the oversight and governance supporting this transaction.

Summary

The acquisition of 100% equity interests in two wastewater treatment companies in China marks a significant step in SIIC Environment Holdings Ltd.’s growth strategy. The deal, underpinned by a rigorously reviewed profit forecast, is likely to influence the Company’s earnings outlook and could impact its share price, especially as shareholders and the market digest the long-term cash flow potential and the robustness of the underlying assumptions.

Disclaimer: This article is a summary and analysis of a company disclosure by SIIC Environment Holdings Ltd. and should not be construed as investment advice. Investors are advised to review the full announcement and consult with professional advisors before making any investment decisions. The future performance of the Company and its share price may be affected by various risks, some of which may not be reflected or fully anticipated in this summary.

View SIICENVIRONMENT Historical chart here