According to the Finance and Economics app, water affairs related stocks expanded in the final hour of trading. As of press time, BJ Ent Water (00371) rose by 5.02%, reporting at HKD 2.3; China Water (00855) rose by 3.61%, reporting at HKD 4.88; Guangdong Inv (00270) rose by 0.49%, reporting at HKD 4.11.

Zheshang Bank pointed out that water affairs assets are high-quality operating assets with abundant operating cash flow. Recently, capital expenditures of some water affairs companies remained high due to cyclical impacts, but there is no long-term expansion foundation. It is expected to fall back to a normal level within the industry's inherent development logic in the future. Therefore, the free cash flow elasticity of relevant companies in the future is larger and can provide support for sustainable and stable high dividend payouts. The increase in water prices is expected to increase the profitability of water affairs companies and improve their cash flow situation.

The bank stated that for several years, the growth rate of water prices has been continuously slowing down, and most cities or regions have not adjusted prices for a long time. Additionally, water fee expenditures only account for 0.5% of residents' disposable income, so there is ample room for water price adjustments. With the implementation of price adjustments in Shanghai and the introduction of the Guangzhou plan, the policy signals are clear, price hike expectations are clear, and the market-oriented and dynamic attributes of water prices are gradually strengthened, which will benefit relevant companies.