Capital Environment Holdings Limited (3989) AI Stock Analysis

• Market Cap: HK$986.34M
• Dividend Yield: N/A
• Average Volume (3M): 7.75M
• Price to Earnings (P/E): 3.7
• Beta (1Y): 0.45
• Revenue Growth: -5.24%
• EPS Growth: -17.75%
• Country: HK
• Employees: 3,559
• Sector: Industrials
• Sector Strength: 72
• Industry: Waste Management
• EPS (TTM): 0.01
• Shares Outstanding: 14,294,732,000
• 10 Day Avg. Volume: 4,842,400
• 30 Day Avg. Volume: 7,749,066
• PEG Ratio: -0.30
• Price to Book (P/B): 0.19
• Price to Sales (P/S): 0.34
• P/FCF Ratio: 22.48
• 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: Hold
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 50 Neutral
• Price Target: HK$0.07 ▲(2.86% Upside)

The overall stock score reflects significant financial challenges and weak technical indicators. While the stock appears undervalued, the lack of positive cash flow and bearish market sentiment weigh heavily on its prospects.

Positive Factors

Stable Equity Base

A stable equity base indicates financial resilience, providing a buffer against economic fluctuations and supporting long-term growth initiatives.

Regulatory Incentives

Regulatory incentives enhance profitability and provide a competitive edge, supporting sustainable growth in the environmental services sector.

Public-Private Partnerships

PPPs ensure stable income through long-term contracts, enhancing revenue predictability and reducing business risk.

Negative Factors

Declining Revenues

Declining revenues indicate challenges in market demand or competitive positioning, potentially impacting long-term financial health.

High Leverage

High leverage increases financial risk, limiting flexibility in operations and investments, and can strain cash flow during downturns.

Negative Cash Flows

Negative cash flows hinder the company's ability to fund operations and growth, posing a threat to financial sustainability.

Capital Environment Holdings Limited Business Overview & Revenue Model

Company Description

Capital Environment Holdings Limited (3989) is a leading provider of environmental protection services in Hong Kong and mainland China. The company focuses on waste management, environmental remediation, and infrastructure development related to environmental sustainability. Its core services include solid waste treatment, wastewater treatment, and the operation of recycling facilities, aiming to contribute to the circular economy and enhance environmental quality in urban areas.

How the Company Makes Money

The company generates revenue primarily through contracts for waste management and treatment services offered to municipalities and industrial clients. Key revenue streams include fees for waste collection and disposal, sale of recycled materials, and governmental grants for environmental projects. Capital Environment Holdings also engages in public-private partnerships (PPPs) that help secure long-term contracts with local governments, providing stable income. Furthermore, the company benefits from regulatory incentives and subsidies aimed at promoting environmental protection initiatives, which can enhance profitability.

Capital Environment Holdings Limited Financial Statement Overview

Summary

Capital Environment Holdings Limited faces financial challenges, with declining revenues, inconsistent profit margins, and high leverage. The balance sheet remains stable with increasing equity, but poor cash flow performance highlights liquidity issues. The company needs to improve revenue growth and cash flow generation to strengthen its financial position.

Income Statement

The income statement reveals several challenges. Revenue has shown a declining trend over recent years, with a notable drop from 2020 to 2024. Gross profit margin has remained relatively stable, indicating cost control, but net profit margin has been inconsistent, with losses in 2022. EBIT and EBITDA margins are positive, showing some operating efficiency, yet the declining revenue and inconsistent net income present financial challenges.

Balance Sheet

The balance sheet shows a stable equity base with stockholders' equity increasing slightly over the years. The debt-to-equity ratio is high, indicating significant leverage, which can be risky. However, the company's ability to maintain its equity ratio suggests some balance in its financial structure. The overall asset base has decreased, indicating divestments or reduced asset acquisitions.

Cash Flow

Cash flow analysis reveals significant challenges; consistent negative operating and free cash flows point to ongoing liquidity issues. The free cash flow to net income ratio is unfavorable, indicating the company struggles to convert income into free cash flow. The absence of positive cash flow generation is a major concern for financial sustainability.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.76B	3.67B	4.08B	4.59B	5.40B	7.65B
Gross Profit	1.37B	1.31B	1.39B	1.39B	1.64B	1.93B
EBITDA	1.05B	1.03B	1.02B	1.15B	1.63B	1.78B
Net Income	251.65M	234.12M	285.38M	1.69B	510.75M	465.04M
Balance Sheet
Total Assets	21.08B	20.88B	20.29B	20.14B	26.17B	24.06B
Cash, Cash Equivalents and Short-Term Investments	2.22B	659.30M	2.29B	2.95B	2.81B	2.77B
Total Debt	10.95B	10.65B	10.52B	10.14B	14.05B	13.04B
Total Liabilities	13.89B	13.89B	13.59B	13.45B	18.46B	16.87B
Stockholders Equity	6.85B	6.66B	6.43B	6.49B	6.21B	5.62B
Cash Flow
Free Cash Flow	528.23M	55.54M	-675.47M	-520.63M	-876.66M	-475.06M
Operating Cash Flow	578.91M	297.55M	-385.22M	-231.99M	-445.07M	102.78M
Investing Cash Flow	-347.32M	-214.60M	-237.41M	7.60B	-1.33B	-1.98B
Financing Cash Flow	-280.14M	-81.85M	-219.55M	-7.50B	764.84M	3.01B

Capital Environment Holdings Limited Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 0.07
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Positive
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:3989, the sentiment is Negative. The current price of 0.07 is above the 20-day moving average (MA) of 0.07, below the 50-day MA of 0.08, and below the 200-day MA of 0.08, indicating a neutral trend. The MACD of >-0.01 indicates Negative momentum. The RSI at 12.25 is Positive, neither overbought nor oversold. The STOCH value of 77.78 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HK:3989.

Capital Environment Holdings Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3718	66 Neutral	HK$1.42B	-18.60	-2.24%	7.75%	―	―
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
0154	60 Neutral	HK$765.18M	2.58	7.62%	―	―	―
1790	60 Neutral	HK$570.00M	8.53	4.69%	―	17.22%	-21.23%
0587	54 Neutral	HK$1.00B	-12.94	-2.39%	5.45%	-3.37%	-149.08%
0979	54 Neutral	HK$339.08M	-21.19	-34.09%	―	-3.00%	-7.27%
3989	50 Neutral	HK$986.34M	3.68	3.71%	―	-5.24%	-17.75%

Capital Environment Holdings Limited Corporate Events

Capital Environment Holdings Limited Announces Board and Committee Composition

Capital Environment Holdings Limited has announced the composition of its board of directors and the membership of its three board committees. This announcement provides clarity on the leadership structure, which is crucial for stakeholders to understand the governance and strategic direction of the company.

Capital Environment Holdings Appoints New Executive Director and General Manager

Capital Environment Holdings Limited has announced the appointment of Mr. Guo Chaoyang as the new executive director and general manager, effective from September 17, 2025. This change aligns with the company’s strategic focus on separating the roles of chairman and chief executive, as Mr. Li Qingsong will continue as an executive director and chairman of the board. This move is expected to enhance corporate governance and operational efficiency, potentially impacting the company’s market positioning and stakeholder relations positively.