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Citic Envirotech tells bourse that it believes hazardous waste treatment can drive revenue growth

MAINBOARD-LISTED Citic Envirotech, which used to draw most of its revenue from membrane system sales, told the bourse on Tuesday that it was confident that hazardous waste treatment can drive business growth for the environmental engineering group.

“Supported by government initiatives as growth drivers, (Citic Envirotech) is optimistic that its hazardous waste treatment segment will continue to grow,” the board said in a filing.

The Singapore Exchange had asked, among other queries, when the company started dealing in hazardous waste treatment and why the board believes this business will be key to revenue.

Citic Envirotech earlier disclosed, in its second-quarter results, that membrane system sales brought in just S$67.9 million in turnover for the three months to June 30 - down by 44.7 per cent year on year. The division’s contributions to the top line, which used to be in pole position, fell below engineering revenue - which was also down, by 29.8 per cent, to S$79 million.

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Meanwhile, treatment revenue - which includes the core wastewater treatment solutions segment - added 0.5 per cent to S$56 million.

Replying to the bourse, Citic said that the drop in engineering and membrane systems revenue was largely on a high base from more engineering projects being done in the year-ago period.

“In contrast to treatment revenue, which is stable and recurring in nature, engineering revenue and membrane systems sales are directly related to the order book of the engineering contracts as well as the progress of the execution of the engineering projects in the pipeline,” it noted.

Meanwhile, Citic had said on July 24: “The group expects its hazardous waste treatment, which is the most recent addition to its suite of capabilities, to become one of the key revenue drivers, led by government initiatives to introduce sustainable waste management mechanisms.”

It has since disclosed that its hazardous waste treatment plants - which it first secured in Shandong’s Rizhao city in December 2016 - will take about two years to build, and “are expected to contribute positively towards the company’s revenue, going forward”.

Its hazardous waste projects, which also span the provinces of Xinjiang, Jiangsu, Hebei and Shanxi, have a design capacity of about 630,000 tonnes a year, the company said.

The counter closed flat at S$0.305, before the announcement was made.