The Zhitong Finance App learned that ICBC International released a research report stating that it maintained the “buy” rating of China Water (00855) and raised the target price to HK$9.0.

The bank believes that as economic activity returns to normal, China Water's water price increases will accelerate. ICBC International predicts that China Water's water prices will rise slightly by 3% year-on-year in fiscal year 24/25.

As for the direct drinking water business, ICBC International believes that the untapped market space is huge. This business will be one of the key drivers of China's water growth. The bank predicts that its direct drinking water revenue will account for 8.3%/12.8%/17.9% of the Group's total FY23E/FY24E/FY25E revenue.

The bank believes that the collection environment for industrial wastewater treatment facilities is far superior to municipal sewage. Benefiting from direct billing arrangements with customers, about 30% of China Water's sewage treatment plants currently serve industrial customers, and the overall sewage treatment fee rate is still close to 100%.

ICBC International pointed out that the current stock price of China Water is equivalent to 0.7 times PB and 5.5 times PE in the 2024 fiscal year, and the stock price is attractive.