EB ENVIRONMENT (00257) surged over 6% following its earnings announcement. As of press time, the stock was up 5.14% to HK$4.5, with trading volume reaching HK$241 million.

On the news front, EB ENVIRONMENT released its interim results showing revenue of HK$14.304 billion for the period, down 8% year-on-year. Net profit attributable to equity holders reached HK$2.207 billion, declining 10% year-on-year. Basic earnings per share stood at HK$0.3592, with the company proposing an interim dividend of HK$0.15 per share.

Citigroup noted that the 10.1% decline in first-half net profit was not a major concern, as it was mainly dragged down by foreign exchange losses. Excluding this factor, pre-tax profit actually grew 11.2% year-on-year. Additionally, the company's earnings quality continued to improve, with operating income's proportion rising 9 percentage points year-on-year to 70%. The interim dividend increased 7.1% year-on-year, exceeding market expectations, while free cash flow doubled year-on-year to HK$2 billion in the first half, with further quarter-on-quarter growth expected in the second half.

Bank of America Securities stated that EB ENVIRONMENT's first-half net profit fell 10% year-on-year. However, excluding one-off items, pre-tax profit (PBT) grew 23% year-on-year, significantly beating expectations. The interim dividend increased by 1 cent, with the payout ratio reaching 42%, up 7 percentage points year-on-year. The bank reiterated its "Buy" rating on EB ENVIRONMENT, expecting an attractive full-year yield of 6.5% and anticipating upside potential for dividends. Earnings per share forecasts for 2025-27 were raised by 23-38% to reflect improved gross margins in waste-to-energy, green technology, and sewage treatment businesses, reduced impairment losses, and lower debt costs.