The Zhitong Finance App learned that China and Thailand International released a research report saying that considering that China Water (00855) can benefit from the national water price trend and that the new “Infrastructure and Utility Franchise Management Measures” law issued by six ministries and departments including the Development and Reform Commission at the beginning of the month can provide policy support to local governments, it can promote more tap water projects to be granted to private enterprises in the long term. Based on the principle of user self-payment, future domestic water pricing will become more marketable, providing more room for water prices to rise. The bank technically raised the target price from HK$7.00 to HK$7.10, maintaining China Water's “buy” rating.

China Thai International pointed out in the report that Guangzhou recently announced that it will hold a hearing on the water price adjustment plan for central urban areas). According to the two plans, water prices for first-tier to third-tier residential users will increase by 24.2% to 31.3%, 24.2% to 31.3%, and 86.4% to 97.0%, respectively. As for major cities in mainland China, tap water prices were raised in parts of Shanghai at the beginning of the year. Among them, water prices for residents in Pudong increased by 17.2% to 62.6%.

Although China Water has no projects in Guangzhou or Shanghai, it can still benefit from the general trend of water prices mentioned above. As of September 30, 2023, the company's tap water supply capacity in Guangdong Province (including Shenzhen, Huizhou, Renhua, Heyuan and Leizhou) reached 940,000 tons, accounting for 14.2% of the company's total tap water production capacity, and is awaiting future price adjustment opportunities.

Furthermore, at the beginning of the month, six ministries and commissions including the National Development and Reform Commission (including the Ministry of Water Resources) issued a new law “Measures for the Administration of Infrastructure and Utility Franchises”. China Thai International believes that the new law provides policy support to local governments and can promote the operation of more tap water projects to private enterprises in the long term and optimize public finance expenditure. Based on the principle that users pay out of pocket, the pricing of incoming water will be more marketable in the future, providing more room for water price increases. According to information, local governments or state-owned enterprises are still responsible for about 80% of tap water operations in mainland China, indicating that private enterprises still have plenty of room for development.