Here’s why SIIC Environment is ready to pop the champagne on Longjiang project

Profitability has already doubled to $2.02 million.

The top-waste water treatment player SIIC Environment Holdings was on a roll the previous quarter and it may continue to be as it embarks on its acquisition of Longjiang Environmental Protection Group.

While the group is hands-on with regards to upgrading its capacity, it is also looking forward to finalizing the said project at the soonest possible time, analysts from the Jefferies said.

"We expect construction and upgrade demand will continue to drive growth in the near term. Acquisition of Longjiang project could be a 2H16 catalyst," they explained.

The SIIC Environment has registered a stellar performance for the previous quarters. The group has reported a net profit of $20.5 million in 2Q16, a 21.8% boost from the year prior, mainly bolstered by its income.

More so, the profitability of the group’s North East China joint-venture in Longjiang has already doubled from around $1.01 million last year.

The group’s water facilities also increased from 880,000 tons to 7 million.

Meanwhile, RHB analysts foresee an increase in the operating income for group with design capacity being expanded and upgraded.

Currently, the group has about 750,000 tons of reconstruction projects under way.

"This will help to boost wastewater tariffs, ie when its projects are completed and commence operations next year. We believe this would support the growth of its operating income, if it does not make any new acquisition," the RHB analysts said.

The RHB analysts said construction works still dominate topline growth for the group in the first half of this year, with its revenue surging 33.5%.

"With government policies that support the grading of wastewater treatment standards, we expect most of SIIC Environment’s upgrading projects to happen in FY16-17," they said.

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