Due to valuation reasons, UBS downgraded 0923.HK to neutral from buy, leaving its target price unchanged at HK $3.20.

UBS said Fuhe shares had outperformed the Hang Seng Index by 25 per cent in the past three months and had risen 14 per cent since reporting 10-year interim results in early July. UBS expects little room for the stock to rise in the near future.

UBS also said it was optimistic about Fuhe's stable operations and was satisfied with its expansion of its sewage collection business in China. UBS still believes that Fuhe's business fundamentals are sound and is optimistic about its long-term prospects in China's recycled paper market.

The stock fell 0.7 per cent to HK $2.86 on Friday.