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China Water Affairs Announces FY2023/24 Interim Results

Profit from Pipeline Direct Drinking Water Business Surged by 1.75 Times YoY

(27 November 2023, Hong Kong) China Water Affairs Group Limited (“China Water Affairs” or the “Company”, stock code: 0855.HK), a leading integrated water operator in China, today announced the interim results of the Company and its subsidiaries (collectively known as the “Group”) for the six months ended 30 September 2023 (the “Reporting Period”).

The Group pushed forward the expansion of pipeline direct drinking water operation to strengthen the business model powered by dual-engines of "water supply + pipeline direct drinking water" services, whereby driving the steady growth of overall operations. During the Reporting Period, the Group posted revenue of HK$6.846 billion, up 0.9% year-on-year or 6.8% year-on-year if the impact of RMB exchange rate fluctuation was excluded. Gross profit for the period amounted to approximately HK$2.524 billion, up 0.6% year-on-year or 6.5% year-on-year if the impact of RMB exchange rate fluctuation was excluded. Net profit for the period was approximately HK$1.378 billion, down 8.8% year-on-year or 3.5% year-on-year if the impact of RMB exchange rate fluctuation was excluded. If the impacts from one-off non-operating factor, the increase in finance expenses and the exchange rate fluctuation were excluded, net profit for the period increased by 9.5% year-on-year.

During the Reporting Period, the pipeline direct drinking water supply segment maintained brisk growth, with its revenue soared by nearly 1.61 times year-on-year to approximately HK$1.027 billion. The segment profit climbed nearly 1.75 times year-on-year to HK$335 million. Currently, the Group's pipeline direct drinking water supply service covers approximately 8 million people in 24 provinces and direct-administered municipalities across the nation. The number of population served surged by 100% from a year ago.

In order to put in more resources for the Company to seize ample opportunities from pipeline direct drinking water business and deliver sustainable and reasonable returns to shareholders, the Board of Directors recommended the payment of interim dividend of HK13 cents per share to the Company’s equity holders.

During the Reporting Period, the performance of city water supply operation remained stable. It generated revenue of approximately HK$1.615 billion, down 4.4% year-on-year but up 1.2% year-on-year if the impact of RMB exchange rate fluctuation was excluded. Revenue from the city water supply segment for the period was HK$4.210 billion, down 1.2% year-on-year but up 4.6% year-on-year if the impact of RMB exchange rate fluctuation was excluded. Dragged by the decrease in installation and maintenance works, a slowdown in macro-economy and fewer cities approved to adjust water tariffs, profit from the city water supply segment dropped 14.7% year-on-year to approximately HK$1.205 billion. Excluding the impact of RMB exchange rate fluctuation, the segment profit fell 9.8% year-on-year.

Benefiting from high-quality development of the projects such as Huizhou Qingyuan Environmental Protection, revenue from the environmental protection segment for the Reporting Period grew by 19.9% year-on-year to approximately HK$637 million. The segment profit was approximately HK$251 million, up 35.1% year-on-year.

The Group retained a sound financial position. As of 30 September 2023, its gearing ratio stayed at a healthy level of 66.2%, representing a slight increase of approximately 0.9 percentage points from the end of March this year. While its total outstanding borrowings fell by 3.0% from the end of March this year (of which short-term borrowings dropped significantly by HK$1.187 billion or 14.8% from the end of March this year), the total debt-to-EBITDA ratio came down by 3.3% year-on-year to 4.1. Meanwhile, the Group further deepened cooperation with existing banks and expanded financing channels in Mainland China. By refinancing outstanding loans payable within one year with long-term loans, the Group improved its debt structure and gradually enhanced its liquidity position. The long-term borrowings to total borrowings ratio increased 4.1 percentage points from the end of March this year to 70.2%.

Looking ahead, there is plenty of room to grow for pipeline direct drinking water market as the provision of superior water supply services will become a major trend for domestic water supply industry in future amid ever-increasing demand for high-quality and healthy drinking water in China. The size of China’s pipeline direct drinking water market is estimated to reach RMB14.6 billion by 2027. Being the first-mover in the pipeline direct drinking water sector, China Water Affairs is the only water enterprise having carried out preparations for national development. The Group will take advantage of supportive policies and market opportunities and focus on the provision of quality-based water supply services. By adopting a sustainable development model integrating light and heavy assets, it will strengthen technological innovation and green and low-carbon development, enhance operational efficiency and business synergies, strive to satisfy people’s aspirations for a better life, and deliver promising returns to shareholders.


About China Water Affairs Group Limited
China Water Affairs Group Limited is a leading professional, international, market-oriented and cross-regional water services operator in China and the only Hong Kong listed company focusing on tap water business. Headquartered in Hong Kong, it has operations management centers in Beijing and Shenzhen. The Group (including associate companies) mainly engages in urban water supply, pipeline direct drinking water, sewage treatment and drainage and other related value-added services in Mainland China. Its services cover more than 30 million people in over 100 cities across 22 provinces and 3 direct-administered municipalities. With total daily handling capacity of more than 20 million cubic meters, the Group has established a leading position as a full-service operator in China’s water affairs market. Its management comprises of veteran experts in the water industry with an insight into government policies and services management. The Company’s shares were included in the first batch of securities eligible for trading through Shenzhen-Hong Kong Stock Connect in 2016 and have been the constituent stock in the FTSE Environmental Opportunities Asia Pacific Index since 2009.

This press release is issued by PRChina Limited on behalf of China Water Affairs Group Limited.

For investor and media enquiries
PRChina Limited
Kenneth Liu / David Shiu
Tel: (852) 2522 1368 / (852) 2522 1838
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