China Conch Environment Protection Holdings Limited Issues Significant Profit Warning for 2025

Key Points

• Expected Loss for 2025: The Group anticipates a substantial loss attributable to equity shareholders for the financial year ending 31 December 2025, projected between RMB 190 million and RMB 270 million.
• Sharp Decline from Previous Year: In contrast, the net profit for the twelve months ended 31 December 2024 was approximately RMB 6.28 million, indicating a dramatic shift from profitability to significant losses.
• Reasons for Decline:
  • Intensified market expansion led to stable waste disposal volumes, but fierce competition kept disposal prices low.
  • Increase in depreciation and amortisation due to new projects being transferred to fixed assets.
  • Extension of customer repayment cycles resulted in higher provisions for credit impairment losses.
  • Declining utilisation rates of cement kilns caused underutilisation of production capacity in key regions (Henan, Shandong, Northeast China).
  • Preliminary asset impairment provisions for 2025 expected to be between RMB 70 million and RMB 100 million, subject to final determination.
• Asset Impairment Provisions: These provisions are based on preliminary appraiser calculations and may be adjusted following audit committee review and auditor approval.
• Management Response: The Company is implementing several measures to improve performance, including:
  • Expanding waste intake volumes and attempting to increase disposal prices.
  • Enhancing production management and synergy with cement plants to reduce operating costs.
  • Accelerating deployment of alternative fuel sources and expanding in Jiangsu, Zhejiang, and Shanghai.
  • Actively seeking high-quality projects and leveraging favourable policies such as the Action Plan for Comprehensive Treatment of Solid Waste.
  • Strengthening research in bulk solid waste, construction waste, and waste plastics to boost competitiveness.
• Financial Information Status: The 2025 consolidated management accounts are unaudited and subject to finalisation and possible adjustments.
• Investor Guidance: The annual results for the 2025 Financial Year are expected to be published by the end of March 2026. Shareholders and potential investors are advised to exercise caution when dealing with the Company’s securities.

Important Information for Shareholders

This profit warning is highly price sensitive. The anticipated shift from a small profit in 2024 to a substantial loss in 2025, combined with possible asset impairment provisions of up to RMB 100 million, could materially affect the Company’s share price. The competitive market conditions, increased credit impairment losses, and underutilisation of production assets point to structural challenges that may persist beyond 2025 unless management’s remedial actions yield results.

Details of Remedial Measures

• The Company is focusing on operational strategies to expand volume and increase prices, aiming to stabilise revenues.
• Production management is being optimised, especially through synergy with cement plants and benchmarking to drive efficiency.
• Alternative fuel sources deployment and expansion into new markets are underway to capture policy-driven opportunities, especially as fly ash landfill approaches zero.
• The Company is targeting “synergistic disposal, resource utilisation, and low-carbon recycling” for future projects, and actively pursuing quality acquisitions and partnerships.
• Forward-looking research in solid waste, construction waste, and waste plastics is being strengthened to enhance long-term competitiveness.

Board and Management Statement

The Board, led by Chairman Mr. LI Qunfeng, General Manager Mr. WANG Chunjian, and Company Secretary Ms. LIAO Dan, confirms that the financial information disclosed is based on unaudited, preliminary assessments. Final results will be published in March 2026, and all figures are subject to audit and possible adjustment.

Investor Advisory

Given the scale of expected losses, potential asset impairments, and uncertainty over the effectiveness of management’s remedial actions, shareholders and investors should exercise caution in trading or investing in the Company’s securities until audited results and further updates are available.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should refer to the Company’s official announcements and audited financial statements for the most accurate and up-to-date information. All projections, estimates, and forward-looking statements in this article are subject to change and should not be relied upon as guarantees of future performance.

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