China Conch Environment (0587.HK) Q3 2024 Earnings Report

China Conch Environment Protection Holdings Limited delivered QQ3 2024 results characterized by a sharp sequential revenue decline driven by project phasing, while the company maintained a positive EBITDA but posted a negative net income and operating income. Revenue came in at 441.49 million CNY, down 3.05% year over year and 45.09% quarter over quarter, reflecting a high-dose of seasonality and timing in project recognition. Gross profit stood at 134.81 million CNY with a gross margin of 30.5%, but operating expenses and depreciation pushed operating income to a negative 61.02 million CNY and net income to a negative 37.93 million CNY. EBITDA remained positive at 74.15 million CNY, underscoring non-cash charges (notably 86.38 million CNY of depreciation and amortization) and other operating dynamics that offset a run-rate EBITDA strength. Free cash flow printed a healthy 277.62 million CNY, while net cash from operating activities was 94.28 million CNY, reflecting working capital movements and non-cash items that supported cash generation despite the quarterly earnings gap. On the balance sheet, total assets were 9.75 billion CNY with total liabilities of 6.09 billion CNY and total equity of 2.95 billion CNY, leaving a leveraged profile with net debt of about 4.31 billion CNY and a current ratio of 0.66. The market notes a challenging profitability trajectory in QQ3, with negative net income margins and modest liquidity headroom, against a backdrop of a cash-generative but capital-intensive business. Looking ahead, near-term profitability hinges on project maturity, working capital management, and continued disciplined capex, while long-term upside remains tied to a growing environmental services market and regulatory-driven waste-treatment opportunities in China.