The Zhitong Finance App learned that Guotai Junan released a research report stating that the initial “increase” rating for Beijing Water (00371) predicts net profit of 2,225 billion, 2,398 billion, and HK$2,563 billion (same below) for 2023-25, with corresponding earnings per share of 22 cents, 24 cents and 26 cents, respectively. The company is the leader in the water treatment industry with the largest production capacity in the country. The sewage and water supply business is growing steadily; capital expenditure has entered a downward cycle, cash flow has improved, dividends are stable, and the characteristics of high dividends are obvious, and it is expected to usher in a revaluation.

The report points out that Beijing Water's capital expenditure has entered a downward cycle. The quality of reports is solid, and the characteristics of high dividends are obvious. The company's capital expenditure has also been gradually reduced, and the future trend of improving free cash flow is clear. The company's subsidiary's water treatment assets are of high quality, and the balance sheet quality is solid. The company has maintained a steady dividend level in recent years. Assuming that the total dividend in 2023 reaches the 2022 level, the expected dividend rate is 8.32%, and the characteristics of a high dividend rate are obvious.