The Zhitong Finance App learned that water stocks generally rose. As of press release, Guangdong Investment (00270) rose 5.8% to HK$4.74; Beijing Holdings Water Group (00371) rose 5.26% to HK$2.6; and China Water (00855) rose 4.12% to HK$5.81.
According to the news, the central city of Guangzhou previously held a hearing on the tap water price reform plan. The results showed that 17 people supported the price reform. Of these, 9 were in favor of plan 1, 6 were in favor of plan 2, and the plan with a large increase in residents' water prices received many votes. Debon Securities pointed out that many cities across the country are holding water price adjustment hearings one after another, and the new water price policy is expected to further promote the marketization of water asset returns, and water companies in various regions may experience a double recovery in revenue and profit. Sino-Thai International said earlier that the 2024 tap water price increase cycle is expected to begin nationwide, and the water supply industry has investment highlights.
Orient Securities previously pointed out that the “Urban Water Supply Price Management Measures” newly revised in 2021 are clearly based on cost monitoring. Permitted revenue is determined through approval of licensing costs and regulatory licensing benefits, and water supply prices are determined based on approved water supply volume. This water price pricing method, in addition to the relatively long water price adjustment cycle, determines that the revenue and profitability of water supply companies remain relatively stable. As a result, water supply companies have strong dividend sharing capacity, and expectations are relatively stable.