BJ ENT URBAN issued a profit warning, expecting a year-on-year decrease of approximately 70% to 75% in profit attributable to shareholders for the first half of the year
BJ ENT URBAN issued a profit warning, expecting that the profit attributable to shareholders in the first half of 2025 will decrease by approximately 70% to 75% year-on-year. The main reason is the recognition of an asset impairment loss provision of approximately RMB 162 million, related to the hazardous waste treatment project of Xianju Pingfu Environmental Technology Co., Ltd. This project has been suspended due to an environmental leakage incident, and it is expected that additional costs and time will be required to resume production. The asset impairment provision will reduce the company's profit, but it is a one-time non-cash expense and will not affect cash flow
According to the announcement from BJ ENT URBAN (03718), it is expected that the profit attributable to shareholders for the six months ending June 30, 2025, will decrease by approximately 70% to 75% compared to the same period in 2024, primarily due to an asset impairment loss provision of approximately RMB 162 million to be recognized in the first half of 2025 (asset impairment).
Xianju Pingfu Environmental Technology Co., Ltd. (Xianju Project), a wholly-owned subsidiary of the company, was established in 2018 and mainly engages in hazardous waste treatment services. The Xianju Project focuses on the incineration treatment of solid hazardous waste, completing the construction of plant facilities and equipment in 2022, and began trial operations in the fourth quarter of 2022. However, at the beginning of 2024, an unexpected leakage incident was discovered around the plant facilities, leading to an immediate suspension of operations. Production has been halted to date.
Temporary emergency measures have been implemented to prevent further leakage. Based on an environmental assessment conducted by third-party experts, a rectification and enhancement plan has been developed. However, additional costs and time are expected to be required to restore production at the Xianju Project. Considering the current situation of the Xianju Project, as well as the competitive pressure from other market participants leading to an oversupply of local disposal capacity, the sales prices have significantly decreased compared to when the Xianju Project commenced operations, and the likelihood of recovery is low. The company has strategically decided to cease operations at the Xianju Project to focus on other sustainable growth opportunities and believes that the related assets of the Xianju Project need to be impaired. Therefore, a provision for asset impairment has been made for the first half of 2025.
The asset impairment provision for the first half of 2025 is approximately RMB 162 million, which includes a provision for property and plant impairment losses of approximately RMB 95.449 million; a provision for equipment impairment losses of approximately RMB 65.794 million; and a provision for other intangible asset impairment losses of approximately RMB 294,000.
The asset impairment provision is expected to reduce the profit attributable to shareholders for the first half of 2025 by approximately RMB 162 million. However, the asset impairment will be a one-time non-cash expense and is expected not to impact the group's cash flow
