Sneak Peek at the 2024 Annual Reports of 221 A - share Environmental Listed Companies
The annual reports of listed companies in 2024 have been fully released. How are the major listed companies in the ecological and environmental protection industry doing? Except for five listed companies, namely Chiho Environmental, China Water Affairs, which have not disclosed their reports due to fiscal year or other reasons, 221 listed companies in the industry have completed their 2024 reports. Let's take a look at the industry changes and think about the problems faced by the industry.
01
Is there still growth? Which companies are experiencing growth?
In 2024, the total revenue of listed companies in the ecological and environmental protection industry was 612.8 billion yuan, representing a 1% decrease compared to 619.2 billion yuan in 2023. The average revenue of each listed company dropped from 2.8 billion yuan in 2023 to 2.77 billion yuan. Judging from the trend of revenue changes, the industry as a whole shows a stable state. The revenues of 120 companies (54%) declined, while those of 101 companies (46%) increased, basically showing a half - and - half pattern.
From the above data, instead of the expected gloom or large - scale revenue decline, nearly half of the companies are actually growing. So, what kind of companies are growing?
Chart One：The Revenue Growth of Listed Companies in the Eco & En-pro Industry in 2024
Judging from the distribution, an interesting phenomenon can be observed in the industry: the larger the scale (above 10 billion yuan), the more difficult it is to achieve growth; similarly, the smaller the scale (below 1 billion yuan), the more challenging it is to grow. On the contrary, the middle-sized enterprises show a better overall growth situation.
Among them, among the enterprises with revenues of over 10 billion yuan and in the high-growth channel are Beijing GeoEnviron with a revenue of 1.45 billion yuan and a growth rate of 37%, and FEINAN Resources, a newly promoted enterprise with revenues of 1.26 billion yuan and a growth rate of 45%. In addition, GEM, ZHEFU Holding, and Infore Enviro have also achieved growth. On the other hand, traditional leading enterprises such as EVERBRIGHT Environment, Beijing Enterprises Group, Capital Eco-Pro Group and Guangdong Holdings have shown declines to varying degrees. Interestingly, all the growing enterprises are private enterprises. Does this mean that the spring of private enterprises is coming?
Beijing GeoEnviron and FEINAN Resources, which are experiencing high-speed growth, both possess almost the same characteristics of industrial layout: taking high-value industrial solid hazardous waste as the core and circular economy as the main model. The basic business of the two enterprises comes from industrial hazardous waste containing rare and precious metals. They make profits by deeply processing hazardous waste and extracting high-value recycled metal products. Hitching a ride on the express train of the circular economy, the two enterprises have achieved very impressive growth rates and are also among the few environmental protection enterprises that have broken through the threshold of 10 billion yuan in recent years. However, due to the characteristics that the circular economy has both ends outside (in terms of raw materials and market) and there is a fair value in market pricing, the profitability of the two enterprises is restricted. The net profit margin of Beijing GeoEnviron is 3.7%, while that of FEINAN Resources is only 1.3%. Even though facing such unimpressive profitability data, compared with the dismal hazardous waste market, the performance of Beijing GeoEnviron and FEINAN Resources in 2024 is already very excellent.
02
Is there still profitable? How difficult is it to make money?
Judging from the annual reports of 2024, the total net profit of the 221 listed environmental protection companies is 29.7 billion yuan, with an average net profit of 135 million yuan per company, a 24% decrease compared to 178 million yuan in 2023. The average net profit margin of the industry has also dropped from 6.2% in 2023 to 4.8%. Based on the overall data, the profitability of the environmental protection industry is indeed declining, and the entire industry is facing great challenges.
There are 146 profitable listed environmental protection companies, accounting for 66%, and 75 companies are in loss, accounting for 34%. That is to say, about one-third of the environmental protection enterprises are not making money. At first glance, this proportion seems quite high. However, among all the listed companies on the A-share market and the Hong Kong stock market, 2,573 companies suffered losses in 2024, accounting for about 32%. The overall profitability ratio of the environmental protection industry is at the average level, neither particularly good nor particularly bad. In 2023, the proportion of profitable listed companies in the ecological and environmental protection industry was 72%, and the proportion of loss-making companies was 28%. The proportion of loss-making companies in 2024 expanded by 6 percentage points. This means that a considerable number of environmental protection enterprises shifted from a profitable state to a loss-making state in 2024. The exact figure is 21 companies, that is, 10% of the listed companies in the ecological and environmental protection industry experienced a "turnaround" in their performance. At the same time, 8 companies successfully turned losses into profits, namely Shandong High Speed Renewable Energy Group (SHERG), Tianjin MOMITO Membrane Tech, Shenzhen Water Planning & Design Institute, Tuna Corporation, DAQIAN Eco & Environment Group, HAIYUAN PSR, Water Business Doctor and Focused Photonics Inc.
In terms of absolute value, Capital Eco-Pro Group had the highest net profit in 2024, reaching an astonishing 4.1 billion yuan. However, the net profit after deducting non-recurring items of the company was only 1.56 billion yuan. Behind the high net profit was the investment income from the handling of the ECO project in Singapore in 2024. Therefore, it is highly unlikely that he will maintain such a high net profit in 2025. In addition, the net profits of EVERBRIGHT Environment, Guangdong Holdings, Beijing Enterprises Group, WEIMING Environment, Conch Venture and XINGRONG Environment etc. also exceeded 2 billion yuan. Basically, the base of operating revenue serves as the foundation for the absolute value of net profit.
From the perspective of the net profit margin, excluding the extreme values caused by the extremely small turnover, the companies with the highest net profit margins are Ningbo SHIMAO Energy (48%), GUOTAI Environmental Protection (43%), WEIMING Environment (39%), Conch Venture (34%), and Jindal Environmental (33%) in order. Among them, WEIMING Environment and Conch Venture have high absolute values of net profit while maintaining a high net profit margin, which makes them excellent performers in terms of profitability. This is no easy feat, as it is more difficult for companies with larger revenue scales to maintain high profitability.
Chart Two：Distribution of Net Profit Margin of Listed Ecological and Environmental Protection Companies in 2024
Where there are big profit-makers, there will also be big loss-makers. In 2024, the companies with the most severe losses are still some familiar names that have been trapped in difficulties and hard to extricate themselves. Orient Landscape tops the list with a loss of 3.85 billion yuan. Following it are TUS EST with a loss of 3.08 billion yuan, CECEP Techand Ecology with a loss of 2.73 billion yuan, Yunnan Water with a loss of 2.17 billion yuan, Palm Eco-Town Development with a loss of 1.58 billion yuan, and HAIXIN Energy Technology with a loss of 1.04 billion yuan. The loss-making companies basically have the following characteristics: they madly invested in ecological governance PPP projects in the early stage of the industry, borrowed a large amount of money regardless of the actual operability of the projects, or carried out blind diversification. The more prosperous they were in the early stage, the more miserable their current situation is. In business operation, the sustainability of cash flow should always be given the top priority.
03
Characteristics: Face Up to the Reality and Conform to the Laws
In 2024, there were 13 listed companies in the multi - billion - yuan club. (Among them, China Water Affairs and Chiho Environmental in the Hong Kong stock market have not yet disclosed their annual reports. However, judging from the historical data, the scales of these two companies in 2024 should both be above 10 billion yuan). During the five - year period from 2020 to 2024, the number of enterprises in the multi - billion - yuan club has been subtly changing. For the specific data, please refer to the following figure:
Chart Three：Number of Listed Companies with a Scale of Ten-Billion-Yuan in the Ecological and Environmental Protection Industry
Among them, 2021 was a bumper year for the enterprises with revenues of over 10 billion yuan in the industry. In that year, five enterprises, including China Water Affairs, Orient Landscape, ZHEFU Holding, Grandblue Environment etc., broke through the 10-billion-yuan revenue mark. However, in 2022, CN TIANYING Inc. saw a significant decline in revenue due to its withdrawal from overseas merger and acquisition projects and lost its qualification to be in the club of enterprises with revenues of over 10 billion yuan. Another enterprise that left the club of enterprises with revenues of over 10 billion yuan was Orient Landscape, whose revenue dropped from 15.2 billion yuan at its peak in 2017 to 8.7 billion yuan in 2020. After briefly breaking through the 10-billion-yuan mark again with a revenue of 10.5 billion yuan in 2021, it finally couldn't sustain its huge scale in 2022 (previously, it mainly maintained its scale relying on scrap metals with extremely low gross profit) and has been in a slump ever since - although Orient Landscape & Environment Co., Ltd. had been striving to maintain its revenue scale before, its loss amount was already astonishing. In 2023, the revenue of Beijing GeoEnviron broke through 10 billion yuan; in 2024, the revenue of FEINAN Resources broke through 10 billion yuan.
Even for enterprises with revenues of over 10 billion yuan, their resources and capabilities are limited. All these enterprises basically have a super-strong business, which can even serve as a representative symbol. For example, when it comes to EVERBRIGHT Environment, waste incineration is always the first thing that comes to mind, and when it comes to Capital Eco-Pro Group, water business is the most prominent. None of the enterprises with revenues of over 10 billion yuan can become a super strong player in multiple sub-sectors. At most, they can achieve a pattern of one super and multiple strong, and compared with the corresponding leading enterprises (the one super), the scales of these seemingly strong businesses are far from comparable, and there is basically no hope for them to become another super business - even though these enterprises are full of confidence when formulating strategies and setting goals, believing that as long as they go through the next five-year strategic cycle, their incubated strong or auxiliary businesses will become another growth pole and another super existence.
But that's not the most scary part. What's scary most is those 103 enterprises with a revenue scale of less than 1 billion yuan. They are in the awkward position of just having reached a certain scale in revenue, yet they unhesitatingly dream of becoming multiple super enterprises when formulating their strategies. Why is it the hardest for listed environmental protection companies with revenues below 1 billion yuan to achieve growth? Why do they have the highest number of changes in ownership? Why are there so many name changes? Essentially, it's because some enterprises are expanding wildly beyond their own capabilities, without any awe for following industry rules and respecting the competitive landscape.
Enterprises with revenues of over 10 billion yuan find it difficult to make a U-turn, but they have abundant resources and can cope with problems. What's more, it's possible for them to create multiple strong businesses - even if they can't achieve super businesses, adding strong supplementary businesses in the end is also a good outcome. Enterprises with revenues of 1 billion yuan can make a U-turn more easily, but if they make wrong choices, they may not have the opportunity to turn things around.