According to the Zhongtong Finance App, water affairs related stocks have risen again. As of press time, BJ ENT WATER (00371) rose by 3.81% to HKD 2.45; CHINA WATER (00855) rose by 3.05% to HKD 5.07; EB ENVIRONMENT (00257) rose 2.45%, to HKD 3.76.

In terms of news, the National Development and Reform Commission and 5 other departments recently jointly issued the "Guiding Opinions on Accelerating the Development of the Water Saving Industry," requiring the water saving industry to reach a scale of trillions by 2027, nurture a group of specialized, special and new "little giant" enterprises. By 2035, a number of billion-level leading enterprises will be cultivated, and water-saving technology, process, product equipment manufacturing and management services will reach the world advanced level, and water-saving production and living methods will be fully formed.

In addition, Zheshang Securities pointed out that water service assets are quality operating assets with sufficient operating cash flow. Recently, the capital expenditure of some water companies has been impacted in the short term but it does not have a basis for long-term expansion. It is expected to fall back to the normal level of the industry development logic in the future. Therefore, the free cash flow elasticity of relevant companies in the future is relatively large, which can ensure the sustainable and stable high dividend rate. The expected increase in water prices is likely to increase the profits of water service companies and improve their cash flow situation.