综合上述因素，该行分别降低FY25-26股东净利润预测16.6%及23.3%，并新增FY27预测。考虑到相对上次更新时的市场风险下跌，该行滚动至7.5倍FY26目标市盈率。该行将目标价由6.30港元降低至6.10港元，对应29.1%上升空间。待自来水调价及分红比率落实情况，该行不排除未来调高估值的可能性。维持“买入”评级。King's Financial News | Zhongtai International issued a research report stating that China Water (00855) announced in September to suspend the listing plan for the spin-off of tap water and pipeline direct drinking water business, adjusting its development strategy from rapid expansion projects to strengthening existing operations and management in order to reduce capital expenditure. This strategy adjustment is expected to mainly lead to a decrease in non-cash flow construction income contribution of the tap water and pipeline direct drinking water businesses. The bank predicts that the proportion of construction income to total income of the company will decrease from 45.5% in FY24 to 42.0%, 41.2%, and 39.8% in FY25-27.
On the other hand, the tap water price adjustment process continues. In FY24, the company had four projects that received price increases, including tap water projects in Hubei's Hanchuan and Hunan's Huaihua, with a combined operating capacity of 0.065 million tons/day.
The bank expects a reduction in cash outflow from investment activities of the company during FY25-27. In addition, domestic and foreign interest rates are declining, making it easier for the company to obtain favorable new financing costs. For example, in August, the company issued a 3-year RMB 0.5 billion panda bond with a coupon rate of 3%. These factors will give the company more room to increase the dividend payout ratio in the future.
Taking into account the above factors, the bank respectively reduces the shareholders' net profit forecast for FY25-26 by 16.6% and 23.3%, and adds the forecast for FY27. Considering the market risk decline relative to the previous update, the bank rolls over to a 7.5 times FY26 target price-earnings ratio. The bank lowers the target price from HK$6.30 to HK$6.10, corresponding to a 29.1% upside potential. Depending on the implementation of tap water price adjustments and dividend payout ratio, the bank does not rule out the possibility of raising the valuation in the future. Maintaining a “buy” rating.
