Capital Environment Holdings Limited (3989) AI Stock Analysis

• Market Cap: HK$1.33B
• Dividend Yield: N/A
• Average Volume (3M): 7.75M
• Price to Earnings (P/E): 4.9
• Beta (1Y): 0.42
• 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: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 52 Neutral
• Price Target: HK$0.10 ▲(18.75% Upside)

The score is held back primarily by weak financial performance, especially consistently negative operating/free cash flow alongside declining revenue and high leverage. Technicals are supportive due to positive momentum and price above key averages, but extremely overbought RSI/Stoch signals add near-term risk. Valuation looks inexpensive on P/E, but fundamentals reduce confidence in that discount.

Positive Factors

Balance Sheet Cushion

A stable or slightly rising equity base provides a durable capital cushion that helps absorb operational losses and supports access to financing. This bolsters long-term solvency and gives management flexibility to navigate cash flow volatility and refinance needs.

Operating Efficiency

Sustained gross margins and positive EBIT/EBITDA indicate the company retains operational leverage and cost control capability. These traits support profit generation even amid revenue pressure, helping preserve cash flow potential and long-term viability.

Defensive Industry Exposure

Operating in waste management offers structurally recurring demand and regulatory-driven service needs. This tends to produce stable revenue backdrops and higher customer stickiness, supporting medium-term predictability despite company-specific execution headwinds.

Negative Factors

Negative Operating and Free Cash Flow

Persistent negative operating and free cash flows erode liquidity and limit the firm's ability to fund capex, service debt, or invest for growth without external financing. Over months, this raises refinancing, covenant, and solvency risks if cash conversion doesn't improve.

Declining Revenue Trend

A multi-year revenue decline undermines scale economics and pressures margins and fixed-cost absorption. If top-line contraction persists, it can weaken competitive position, reduce pricing power, and make it harder to reverse negative cash flow dynamics without strategic change.

High Leverage

Significant leverage raises long-term financial risk by increasing interest and refinancing burdens, especially alongside weak cash generation. High debt limits strategic flexibility, raises refinancing vulnerability, and can amplify downturn impacts on credit and operations.

Capital Environment Holdings Limited Business Overview & Revenue Model

Company Description

Capital Environment Holdings Limited, an investment holding company, engages in the waste treatment and waste-to-energy businesses in the People's Republic of China and New Zealand. The company is involved in technology development, design, system integration, project investment, consultancy, operation, and maintenance of waste treatment facilities for waste-to-energy projects. It also offers kitchen and hazardous waste treatment, waste collection and transportation, waste sweep and management, technical, and municipal solid waste treatment services; and recycles and disassembles waste electrical and electronic equipment. In addition, the company is involved in the restoration and operation of waste accumulation sites; and biomass incineration power generation activities. Its operation and trial operation projects include 26 waste-to-energy projects; 7 waste landfill projects; 6 anaerobic digestion treatment projects; 17 waste collection and transportation projects; 9 hazardous waste treatment projects; 2 waste electrical appliances dismantling projects; and 2 biomass electricity generation projects. The company was formerly known as New Environmental Energy Holdings Limited and changed its name to Capital Environment Holdings Limited in May 2014. Capital Environment Holdings Limited was incorporated in 2004 and is headquartered in Central, Hong Kong.

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

Weak fundamentals driven by declining revenue, inconsistent profitability (including losses in 2022), and significant liquidity pressure from consistently negative operating and free cash flows. Balance sheet is somewhat supported by a stable/slightly rising equity base, but leverage is high and assets have declined.

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: Positive
• Last Price: 0.08
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:3989, the sentiment is Positive. The current price of 0.08 is below the 20-day moving average (MA) of 0.08, above the 50-day MA of 0.08, and below the 200-day MA of 0.08, indicating a bullish trend. The MACD of <0.01 indicates Negative momentum. The RSI at 64.11 is Neutral, neither overbought nor oversold. The STOCH value of 74.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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$1.40B	-18.37	-2.24%	7.75%	―	―
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
0154	60 Neutral	HK$780.19M	2.58	7.62%	―	―	―
1790	60 Neutral	HK$520.00M	7.78	4.69%	―	17.22%	-21.23%
0587	54 Neutral	HK$968.19M	-12.47	-2.39%	5.36%	-3.37%	-149.08%
0979	54 Neutral	HK$427.24M	-26.69	-34.09%	―	-3.00%	-7.27%
3989	52 Neutral	HK$1.33B	4.89	3.71%	―	-5.24%	-17.75%

Capital Environment Holdings Limited Corporate Events

Capital Environment Subsidiary Signs Connected Equipment Deal for Wastewater Project

Capital Environment Holdings Limited has announced that its indirect wholly owned subsidiary, Xinjiang Tianfu Company, has entered into a new equipment procurement agreement with Capital Aihua Company to purchase monitoring room equipment for a wastewater treatment plant upgrading and renovation project for RMB3,803,100. As Capital Aihua is majority-owned by Capital Eco Group, the controlling shareholder of Capital Environment, the deal constitutes a connected transaction under Hong Kong listing rules; when aggregated with a prior related equipment transaction, it triggers reporting and announcement requirements but remains exempt from independent shareholders’ approval, underscoring the group’s ongoing execution of its awarded wastewater project while maintaining compliance with connected transaction regulations.

The most recent analyst rating on (HK:3989) stock is a Hold with a HK$0.07 price target. To see the full list of analyst forecasts on Capital Environment Holdings Limited stock, see the HK:3989 Stock Forecast page.

Capital Environment Lends RMB61.7 Million to Xiongan Wastewater Venture

Capital Environment Holdings Limited has arranged for its wholly owned subsidiary Capital Investment to extend a RMB61.74 million unsecured one-year loan at 4.55% interest to Xiongan Pioneer, a wastewater treatment and recycling business in which it holds a 49% stake, while controlling shareholder Capital Eco Group is separately lending RMB64.26 million in proportion to its 51% interest. The transaction, financed from the group’s general working capital, is classified as a discloseable transaction under Hong Kong listing rules and is intended to bolster Xiongan Pioneer’s balance sheet by refinancing interest-bearing liabilities and providing working capital for ongoing development, thereby reinforcing the group’s position in the environmental services sector and supporting the growth of a key associate without triggering connected transaction approval requirements.

The most recent analyst rating on (HK:3989) stock is a Hold with a HK$0.07 price target. To see the full list of analyst forecasts on Capital Environment Holdings Limited stock, see the HK:3989 Stock Forecast page.