The net profit of 2111.22 increased by 12%: the company's revenue during the period increased by 25.2% to HK $12.95 billion, of which the water supply sector recorded HK $9.65 billion, an increase of 14.9% over the same period last year. The direct drinking water sector (listed separately for the first time) recorded income of HK $690 million, up 394% from the same period last year, and environmental protection business revenue increased by 5% to 1.22 billion yuan. Gross profit margin fell 3.6pct to 38.3% during the period, mainly due to rising electricity price costs, the impact of the epidemic and one-time disposal of non-core businesses with low gross margins. For the whole year, the dividend per share was 34 Hong Kong cents, an increase of 9.7% over the same period last year, and the dividend payout rate for the whole year was 29.3%.
Water supply business and water treatment have developed steadily, and direct drinking water business has developed by leaps and bounds: during the period, the company's water supply business income increased by 14.9% over the same period last year, of which the water supply service business increased by 20.3%. A total of 10 projects achieved price adjustment, the most in years. By the end of the period, the treatment scale of the company's tap water business has reached 1012 million tons per day, and the scale under construction and proposed construction has reached 6.58 million tons per day. In addition, Kangda has an environmental capacity of 4.36 million tons per day. During the period, the company's direct drinking water business started explosive growth, with more than 1000 new projects, about 1.5 million new users and 11 million new potential service population. By the end of the period, the company's direct drinking water business covers more than 100 counties and cities in 20 provinces, with more than 2000 projects (already under construction) and serving a population of more than 3 million. The company has been in the field of direct drinking water for as long as 7 years, with a leading advantage and many high-tech reserves, coupled with the fact that direct drinking water can meet people's demand for high-quality drinking water, effectively reduce the waste of water resources and low-carbon environmental protection. With the characteristics of huge market development potential, the company's direct drinking water business is expected to develop rapidly in the next five years.
Financing costs have fallen, and companies are still flush with capital: during the period, the company's average borrowing costs fell by 0.2ppt to 4.4%, and its total asset-liability ratio rose slightly to 64.1%, maintaining a healthy financial position. During the period, the company issued $150 million of green bonds due in 2026, cash and structured deposits increased by 42.1 per cent to 7.44 billion, with ample cash flow.
The company will be water supply and direct drinking water business spin-off listing process is also in progress as scheduled, there is no longer expected to be financing demand in the short term.
Maintain the target price of HK $10.7 and buy rating: in the future, the company will continue to focus on the integration of urban and rural water supply and the integration of water supply and drainage, and regard the direct drinking water business as the key development strategy in the next five years. Based on the expectation of double-digit growth in tap water supply and the explosive growth of direct drinking water business, we estimate that the company's return net profit over the next three years will be HK $2.18 billion\ 2.53 billion\ 3 billion respectively. We give the company a target price of HK $10.70 for the next 12 months, which corresponds to 8 times PE in 2022max 2023, maintaining the buy rating, which is more attractive.