Baguio's Net Profit Increased by 45%, Contracts On Hand Recorded a Historical High with a Substantial Increase of around 60% to HK$3.4 billion

Aug 30, 2022 20:08 JST

Accelerating Business Growth

HONG KONG, Aug 30, 2022 - (ACN Newswire) - Baguio Green Group Limited ("Baguio" or the "Group", Stock Code: 1397.HK) is pleased to announce its unaudited interim results for the six months ended 30 June 2022 (the "Period"). During the Period, revenue was approximately HK$710 million, representing an increase of approximately 22% as compared with the same period last year. The increase was mainly due to the strong performance of our cleaning segment. Profit attributable to shareholders of the Company was approximately HK$17.8 million, representing an increase of approximately 45% as compared with the same period last year. Gross profit margin was 8.1%.

Business Overview and Prospects
In the first half of 2022, new contracts awarded to the Group amounted to a total of HK$1.95 billion. As a result, the Group recorded a historical high for its contracts on hand of approximately HK$3.4 billion (as of 30 June 2022), representing an increase of 60% from approximately HK$2.1 billion as of 31 December 2021. This will drive a strong revenue growth in the second half of 2022 and the subsequent years.

The Group's core business, cleaning services, recorded a considerable growth. Revenue of cleaning services increased by 42% to approximately HK$500 million, accounting for 70% of the Group's overall revenue during the Period. In addition, the Group secured a number of new street cleaning service contracts from the HKSAR Government worth approximately HK$1.6 billion during the Period. Winning these Food and Environmental Hygiene Department ("FEHD") street cleaning service contracts confirms that Baguio is a leading player in the Hong Kong cleaning market. Baguio now covers a total of seven Hong Kong districts, serving more than 2.5 million people (or a third of the city's population).

With regard to the waste management and recycling business, the Group won two new FEHD waste collection service contracts worth approximately HK$140 million in total. The Group's waste collection services network now covers a total of five districts in Hong Kong and serves approximately 1.5 million people, placing Baguio one of the key waste management leaders in Hong Kong.

The Group is contracted by the Environmental Protection Department ("EPD") to handle over 5,000 recycling spots (including plastic, glass bottles, metals and waste paper) across Hong Kong. We currently operate various sorting facilities to support our recycling business. Baguio's 33-month service contract under EPD's Plastic Recycling Pilot Scheme for plastic collection services in the Eastern, Kwun Tong and Central & Western districts successfully commenced in the first half of 2022. The collection volume is expected to rise in the second half of 2022.

To support the expected growth in the volume of the plastic recycling business, the Group recently introduced a new high-speed and fully-automated plastic-sorting facility. Enhanced by Near-Infrared ("NIR") technology, the new plant facilitates rapid separation of all plastic types and colours. It not only increases the processing volume, but also strengthens Baguio's plastic-sorting capability to precisely and effectively separate the collected plastic recyclables into different types for quality conversion. This new technology will drive the Group's plastic recycling business future growth. When fully operational, the plant's plastic processing capacity per year could exceed 10,000 tonnes, equivalent to 400 million plastic bottles.

In line with the Hong Kong's sustainable development, we continue to enhance our collection and recycling capabilities. Our joint venture with Swire Beverages Holdings Limited and another investor to set up Hong Kong's first food-grade ready PET plastic factory at the EcoPark in Tuen Mun has commenced operation. Collected plastics are turning into recycled plastic flakes, which can then be re-manufactured as new products. The production volume is gradually increasing.

The Group launched the "ESG+" solution this year to support listed company clients to enhance their ESG performance, thereby increasing their chances of securing green financing and becoming an ESG index constituent.

Regarding our green technology business, we were awarded EPD's first service contract last year for using bioconversion technology (Black Soldier Flies) to help solve Hong Kong's chicken manure problem. Located at the EcoPark in Tuen Mun, the facility is currently undergoing commissioning tests and is scheduled to become fully operational by the end of 2022, opening a new chapter for the Baguio's green technology business.

The Group strive to inject new momentum into our business with biotechnology. In partnership with Jardine Engineering Corporation Limited, the Group formed a Pilot Biochar Production Plant at the EcoPark in Tuen Mun which will enter testing phase within this year. By converting wood waste into high-quality biochar with pyrolysis technology, the production plant effectively turns waste into useful resources.

Mr. Ng Wing Hong, Chairman of Baguio, commented, "With the Municipal Solid Waste (MSW) Charging Scheme scheduled to be launched in the second half of 2023, it is expected to further motivate the public to recycle and to increase the recycling volume. With the implementation of the Producer Responsibility Scheme on Plastic Beverage Containers, the recycling rate of plastic beverage containers is expected to have a significant increase. The two schemes are expected to directly drive the growth of Baguio's recycling business and create solid returns from our investment in recycling facilities which creates a strong entry barrier to the competition.

Looking ahead, the Group will continue to contribute to the global environment protection by developing its existing business and constantly exploring projects with strong growth potential and green technology."

For details of the Group's 2022 interim results announcement, please visit the following website:
http://www.baguio.com.hk/en-S/Investor%20Relations/Announcements%20and%20Notices

About Baguio Green Group
Established in 1980, Baguio Green Group (Stock code: 01397.HK) is one of Hong Kong's largest and most respected integrated environmental services groups. It provides a full spectrum of professional services including professional cleaning, waste collection & recycling, waste management, green technology, organic fertilizer and animal feed production, horticulture & landscaping, and pest control. It serves a wide range of customers in various sectors including Government departments, statutory organizations and multinational corporations. Fully committed to ESG, the Group works relentlessly to advance sustainable development and create a cleaner, greener, healthier city.

Sectors: Environment, ESG