China Conch Environment (0587.HK) Q1 2025 Earnings Report

China Conch Environment Protection Holdings Limited delivered a modest top-line contraction in QQ1 2025, reporting revenue of 388.59 million CNY (-3.34% YoY; -55.99% QoQ) with a stable gross margin of approximately 31.7%. EBITDA stood at 119.07 million CNY, yielding an EBITDA margin of about 30.6%, while operating income was 32.38 million CNY (8.33% operating margin). Net income was a small positive 2.16 million CNY, reflecting a YoY deterioration (-94.7%) but a solid QoQ rebound (+102.9%), aided by a favorable operating cadence and a reduction in some cost line items on a sequential basis. The quarter benefited from a robust depreciation/amortization burden (88.17 million CNY), underscoring a heavy asset base and non-cash charges that compress net profitability despite healthy EBITDA. Total other income/expenses were negative (-31.05 million CNY), which weighed on pretax profitability and taxes (income tax expense of 5.85 million CNY) relative to pretax income of 1.33 million CNY.

From a business-health perspective, the company continues to generate meaningful EBITDA in a capital-intensive waste-treatment business, with an EBITDA margin in the low-30% range signaling operating-scale efficiency. However, the bottom line remains highly sensitive to non-operating items and tax treatment, and profitability remains below the scale of peers in some characteristics due to one-off and non-cash items. Investors should monitor the trajectory of other income/expenses, tax position, and any potential capex-driven cash flow implications as the company scales its cement-kiln waste treatment solutions and related recycling/consulting services. Overall, QQ1 2025 suggests resilience in core operations but highlights the need for clearer improvement in net profitability and cash flow conversion going forward.