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China Jinjiang Environment’s notes offer higher yields than its shares

Jeffrey Tan
Jeffrey Tan8/7/2017 08:00 AM GMT+08  • 5 min read
China Jinjiang Environment’s notes offer higher yields than its shares
(Aug 7): Waste-to-energy (WTE) plant ope rator China Jinjiang Environment Holding Co has delivered a solid set of financials since its IPO in August last year. For FY2016 ended December, its revenue rose 35.9% y-o-y to RMB2.6 billion. Earnings increased 3
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(Aug 7): Waste-to-energy (WTE) plant ope rator China Jinjiang Environment Holding Co has delivered a solid set of financials since its IPO in August last year. For FY2016 ended December, its revenue rose 35.9% y-o-y to RMB2.6 billion. Earnings increased 34.7% to RMB598 million. The company paid out a dividend of 5.05 cents a share, or about half of its earnings, to shareholders. Based on China Jinjiang’s closing price of 82.5 cents on Aug 1, the stock now has an attractive dividend yield of 6.1%.

But there is no certainty that dividend payment will be repeated, let alone increased, this year. For 1QFY2017, China Jinjiang reported earnings of RMB127.4 million ($25.7 million) — a y-o-y increase of just 6.8%. Revenue fell 3.6% to RMB557.6 million, owing mainly to a plunge in contributions from construction services under its build-operate-transfer concession agreements. Cash generated from operations fell 9.6% to RMB116.9 million.

The company says in a commentary accompanying its results that construction works for two WTE projects are expected to begin in the second quarter and second half of this year. It also has a list of projects for which it has commenced preparatory work.

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