Zonqing Environmental Limited (1855) AI Stock Analysis

• Market Cap: HK$1.10B
• Dividend Yield: 2.02%
• Average Volume (3M): 18.03M
• Price to Earnings (P/E): 29.1
• Beta (1Y): 0.23
• Revenue Growth: -22.25%
• EPS Growth: -73.66%
• Country: HK
• Employees: 799
• Sector: Industrials
• Sector Strength: 72
• Industry: Engineering & Construction
• EPS (TTM): 0.04
• Shares Outstanding: 825,000,000
• 10 Day Avg. Volume: 27,868,000
• 30 Day Avg. Volume: 18,032,266
• PEG Ratio: -1.91
• Price to Book (P/B): 7.95
• Price to Sales (P/S): 3.05
• P/FCF Ratio: -125.80
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 46 Neutral
• Price Target: HK$1.50 ▲(16.28% Upside)

The score is held down primarily by declining revenue and earnings, negative operating/free cash flow, and elevated leverage. Technical indicators show only modest near-term stabilization while the longer-term trend remains weak, and valuation looks demanding given recent profitability deterioration despite a modest dividend yield.

Positive Factors

Stable contractual revenue base

A business model built on long-term contracts provides predictable revenue visibility and underpins cash flow stability over quarters. This durability supports project financing, contract renewals and operational planning, reducing revenue volatility and helping withstand cyclical demand swings.

Diversified waste & environmental services

A diversified service mix across hazardous waste, waste-to-energy and water treatment spreads operational and regulatory risk, enabling cross-selling and flexibility to shift capital across segments. This structural diversification helps stabilize revenues as different services respond differently to regulatory cycles.

Margin resilience

Relatively stable gross margins and a positive EBITDA margin signal underlying operational controls and pricing power in core services. Even with revenue pressure, sustained margins enhance the firm's ability to cover fixed costs and preserve earnings leverage when volumes recover, supporting medium-term profitability.

Negative Factors

Declining revenue and profitability

A sharp multi-hundred-million decline in revenue and a steep drop in net income indicate structural demand or execution issues. Sustained top-line contraction erodes scale economics, reduces pricing leverage and limits reinvestment capacity, impairing the company's ability to compete and grow over the medium term.

Negative operating and free cash flow

Persistent negative operating and free cash flow point to liquidity and working capital stress, forcing reliance on external financing for operations and capex. Over months, this limits the firm's ability to fund projects, maintain assets or pursue strategic investments without increasing leverage or diluting stakeholders.

Elevated leverage

High leverage reduces financial flexibility and raises interest and refinancing risk, especially amid weak cash generation. This constrains the company's capacity to bid on capital-intensive projects, absorb revenue shocks, or invest in growth initiatives without further debt or equity issuance, increasing long-term risk.

Zonqing Environmental Limited Business Overview & Revenue Model

Company Description

ZONQING Environmental Limited, together with its subsidiaries, engages in landscaping, ecological restoration, and other related activities in the People's Republic of China. It is also involved in the projects include landscape designing, gardening, and construction works; urban renewal, urban gardens, municipal infrastructure construction, ecological restoration, urban construction maintenance, and sanitation; and investigation, survey, design, and technical consultancy services for municipal construction projects, as well as provision of environmental hygiene services. The company was formerly known as Zonbong Landscape Environmental Limited and changed its name to ZONQING Environmental Limited in December 2022. ZONQING Environmental Limited was founded in 2008 and is headquartered in Changchun, the People's Republic of China.

How the Company Makes Money

Zonqing Environmental generates revenue through multiple streams, including service fees for waste treatment and disposal, contracts for waste-to-energy solutions, and sales from processed materials. The company's primary revenue model is based on long-term contracts with industrial clients and municipalities, providing stable cash flows. Additionally, Zonqing Environmental has established partnerships with government agencies and environmental organizations, which not only enhance its credibility but also facilitate access to funding for large-scale projects. The growing demand for environmental solutions driven by stricter regulations and increased public awareness of sustainability further bolsters the company's earnings potential.

Zonqing Environmental Limited Financial Statement Overview

Summary

Weak fundamentals: revenue fell from 2.36B to 1.74B and net income dropped sharply (135.2M to 39.97M). Leverage is elevated (debt-to-equity 1.33) and operating/free cash flow turned negative, outweighing relatively stable gross margin (~18%) and improved EBITDA margin (~8.7%).

Income Statement

The income statement shows a declining trend in revenues and net income over the past year, with total revenue dropping from 2.36 billion to 1.74 billion and net income significantly decreasing from 135.2 million to 39.97 million. However, the gross profit margin remains relatively stable at around 18%, and there is a positive trend in EBITDA margin at approximately 8.7% indicating some operational efficiency. The company faces challenges in revenue growth and profitability, which affects its score.

Balance Sheet

The balance sheet reveals a stable equity position with stockholders' equity increasing slightly to 668.97 million. The debt-to-equity ratio remains high at 1.33, indicating significant leverage, which is a risk factor. However, the equity ratio is stable at about 15.3%, showing a moderate reliance on equity financing. Overall, the balance sheet presents a mixed picture with potential risks due to high debt levels.

Cash Flow

The cash flow statement indicates a concerning trend with negative operating cash flow of 42.25 million. The free cash flow also turned negative, highlighting liquidity issues. The operating cash flow to net income ratio is negative, suggesting operational inefficiencies. This negative cash flow generation significantly impacts the overall cash flow score.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.73B	1.74B	2.36B	1.12B	936.60M	1.00B
Gross Profit	289.67M	314.03M	450.85M	193.75M	211.23M	238.43M
EBITDA	153.06M	151.03M	250.89M	-31.09M	66.03M	142.44M
Net Income	35.05M	39.97M	135.21M	-96.34M	28.53M	68.50M
Balance Sheet
Total Assets	4.51B	4.38B	3.85B	4.18B	2.25B	2.07B
Cash, Cash Equivalents and Short-Term Investments	47.16M	122.78M	210.41M	220.23M	51.53M	144.00M
Total Debt	896.57M	891.75M	809.48M	1.06B	509.23M	480.90M
Total Liabilities	3.69B	3.59B	3.08B	3.26B	1.66B	1.58B
Stockholders Equity	700.73M	668.97M	649.60M	867.75M	585.31M	474.24M
Cash Flow
Free Cash Flow	147.72M	-42.26M	209.37M	86.30M	-104.76M	137.59M
Operating Cash Flow	159.26M	-42.26M	221.53M	99.35M	-101.22M	139.90M
Investing Cash Flow	-81.88M	-79.65M	164.98M	-84.02M	-6.67M	17.27M
Financing Cash Flow	-91.41M	34.27M	-396.33M	116.04M	10.56M	-86.77M

Zonqing Environmental Limited Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1.29
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:1855, the sentiment is Negative. The current price of 1.29 is below the 20-day moving average (MA) of 1.40, below the 50-day MA of 1.42, and below the 200-day MA of 4.68, indicating a bearish trend. The MACD of >-0.01 indicates Negative momentum. The RSI at 45.37 is Neutral, neither overbought nor oversold. The STOCH value of 22.42 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HK:1855.

Zonqing Environmental Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
1556	78 Outperform	HK$555.00M	4.14	17.51%	5.71%	17.51%	1.48%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
2236	52 Neutral	HK$1.59B	5.86	9.56%	―	96.63%	―
1707	47 Neutral	HK$70.56M	-4.57	-9.58%	―	3.97%	14.02%
1855	46 Neutral	HK$1.10B	29.10	5.09%	2.02%	-22.25%	-73.66%
2193	45 Neutral	HK$104.90M	-5.66	-6.89%	―	-1.91%	18.30%

Zonqing Environmental Limited Corporate Events

Zonqing Environmental Renews Key Agreements with ZIHG

Zonqing Environmental Limited has announced the renewal of its continuing connected transactions with ZIHG through a series of framework agreements set to last from January 2026 to December 2028. These agreements, which cover a range of services, are deemed fair and beneficial for the company and its shareholders, with the transactions classified as partially-exempt under the Hong Kong Listing Rules, thus requiring reporting and annual review but not independent shareholder approval.

The most recent analyst rating on (HK:1855) stock is a Hold with a HK$2.50 price target. To see the full list of analyst forecasts on Zonqing Environmental Limited stock, see the HK:1855 Stock Forecast page.