China Everbright (1257.HK) Q2 2025 Earnings Report

China Everbright Greentech (1257.HK) delivered a strong Q2 2025 top-line performance with revenue of HKD 3.400B, up 95.9% year over year, underscoring a meaningful rebound versus the prior-year quarter and a stabilization in project activity. Gross profit reached HKD 856.8M, yielding a gross margin of 25.2%, while operating income registered HKD 540.2M and EBITDA of HKD 1.188B, corresponding to EBITDA margins around 34.9%. Net income rose to HKD 190.8M, translating to a net margin of 5.6% and EPS of HKD 0.0924. The results reflect a combination of higher project volumes, favorable project mix, and intensified cash generation despite a heavy balance sheet footprint. However, the company remains highly leveraged. As of 2025-06-30, total debt stood at HKD 21.94B with cash and cash equivalents of HKD 2.56B and net debt of HKD 19.39B. Net debt to EBITDA is elevated (approximately 16x using reported quarterly EBITDA), which eclipses typical renewable utilities benchmarks and elevates financing risk in a capital-intensive growth cycle. Liquidity metrics show a current ratio of ~1.29 and a cash ratio near 0.23, indicating modest near-term liquidity headroom. Free cash flow generation was HKD 297.0M against capex of HKD 105.9M, with net cash from operating activities of HKD 511.5M and operating cash flow per share of HKD 0.390. These dynamics imply that ongoing leverage management and capital allocation discipline are critical to sustain credit metrics and ensure funding for growth pipelines. Looking ahead, management did not issue explicit QQ3/annual guidance in the data provided. The medium-term trajectory hinges on project ramp-up, refinancing risk given the debt burden, and policy tailwinds for renewables in China. The company operates within a competitive landscape and a policy backdrop that increasingly emphasizes waste-to-energy and environmental remediation. Investors should monitor project milestones, working capital needs, debt maturity profiles, and potential government subsidy receivables to gauge the sustainability of cash flows and the ability to deleverage over time.