该行表示，供水和直饮水运营收入稳健增长，考虑接驳和建造下滑影响，该行将FY2025-2027归母净利润预测从16.26/17.89/19.89亿港元调降至14.50/13.93/14.38亿港元，对应PE为5.0/5.2/5.0倍，维持“买入”评级。Jinwu Financial News | Soochow Securities pointed out that China Water (00855) announced its mid-term performance for FY2025, achieving total operating revenue of 5.953 billion HKD, a decrease of 13.0% year-on-year, and a net income of 0.756 billion HKD, a decrease of 8.5% year-on-year. An interim dividend of 13 HK cents per share was declared, unchanged year-on-year.
The bank indicated that the company's income decline in FY25H1 was mainly due to the peak construction period of projects having passed, leading to reduced construction revenue across various sectors, with capital expenditure also turning lower. Profit structure optimization has improved profits, and the sales gross margin for FY25H1 was 38.4%, up 1.5 percentage points year-on-year. By segment: 1) Urban water supply: Revenue was 3.765 billion HKD, down 10.6% year-on-year, with segment profit of 1.14 billion HKD, down 5.4% year-on-year, primarily due to a decrease in water supply installation, maintenance projects, and construction projects; 2) Direct drinking water: Revenue was 0.367 billion HKD, down 64.3% year-on-year, with segment profit of 0.167 billion HKD, down 50.3% year-on-year, largely due to the direct drinking water segment adopting a light asset development model, resulting in a decline in installation, maintenance, and construction project revenues.
The bank continued to indicate that as of September 30, 2024, the company's debt-to-asset ratio was 65.97%, a decrease of 0.11 percentage points from March 31, 2024. The total outstanding borrowings amount to 25.621 billion HKD, an increase of 3.1% compared to March 31, 2024, mainly in HKD, RMB, and USD. The total borrowing cost for FY25H1 was 0.732 billion HKD, an increase of 10.1% year-on-year, of which the financial expenses accounted for 0.427 billion HKD, an increase of 13.5% year-on-year. The average interest rate, measured by total borrowing cost/ending total borrowings, was 5.71% annualized for FY25H1, an increase of 0.09 percentage points year-on-year. Domestic financing rates continued to decline, and the Federal Reserve lowered interest rates by 50 and 25 basis points in September and November 2024, respectively, signaling a bullish turning point for the company's financing costs.
The bank stated that the operation revenue from water supply and direct drinking water grew steadily. Considering the impact of the decline in connectivity and construction, the bank revised its net income forecast for FY2025-2027 from 1.626/1.789/1.989 billion HKD down to 1.45/1.393/1.438 billion HKD, corresponding to PEs of 5.0/5.2/5.0 times, maintaining a 'buy' rating.