Investment Rating - The report maintains a "Buy" rating for China Water Affairs (855 HK) with a target price of HK$6.23, implying a 43.6% upside potential from the current price of HK$4.34 [10][12][26] Core Views - FY25 interim results exceeded expectations, with operating revenue growth accelerating and a smaller-than-expected decline in shareholder net profit [9] - Water supply tariff adjustments have passed hearings in several regions, with over 20 cities initiating tariff adjustment procedures [9] - Direct drinking water and wastewater treatment operations showed strong growth, offsetting declines in construction revenue [9][10] - Capital expenditure is expected to decrease significantly from FY24 to FY26, supporting higher dividend payout ratios [10] Financial Performance Summary - FY25 interim revenue reached HK$5,953 million, with operating revenue up 16.6% YoY to HK$2,240 million [9] - Gross margin improved by 1.5 percentage points to 38.4% in 1H FY25 [9] - Shareholder net profit declined 8.5% YoY to HK$756 million in 1H FY25, better than expected [9] - Dividend payout ratio increased to 28.1%, with interim dividend maintained at HK$0.13 per share [9] Segment Performance Water Supply - Water supply volume increased 6.5% YoY to 720 million tons in 1H FY25 [9] - Water supply operating revenue grew 6.8% YoY to HK$1,724 million [9] - Tariff adjustments expected to drive 6.4%, 7.3%, and 2.5% YoY growth in water supply operating revenue for FY25-27 respectively [9] Direct Drinking Water - Direct drinking water operating revenue surged 57.1% YoY to HK$196 million in 1H FY25 [10] - Service population coverage expanded 42.5% YoY to 11.4 million people [10] - Projected YoY growth of 31.2%, 8.0%, and 5.0% in direct drinking water operating revenue for FY25-27 [10] Wastewater Treatment - Wastewater treatment operating revenue jumped 76.8% YoY to HK$315 million in 1H FY25 [10] - Growth driven by the operation of Huizhou ExxonMobil petrochemical wastewater treatment project [10] - Expected YoY growth of 64.8%, 7.3%, and 2.5% in wastewater treatment operating revenue for FY25-27 [10] Financial Forecasts - FY25-27 shareholder net profit forecasts revised upward by 11.9%, 2.1%, and 5.2% respectively [10] - EPS forecasts for FY25-27 adjusted to HK$0.90, HK$0.83, and HK$0.84 [10] - Dividend per share forecasts for FY25-27 increased to HK$0.27, HK$0.25, and HK$0.25 [10] - Capital expenditure expected to decrease from HK$5,330 million in FY24 to approximately HK$3,600 million in FY25 and HK$2,000 million in FY26 [10] Valuation Metrics - Current P/E ratios: 3.8x (FY24), 4.6x (FY25), 4.8x (FY26) [8] - Current P/B ratio: 0.55x [8] - Dividend yield: 7.8% (FY24), 6.5% (FY25), 6.2% (FY26) [8] - Target P/E multiple: 7.5x FY25 earnings [10]

Financial Performance - Total revenue for the six months ended September 30, 2024, was HKD 5,952.6 million, a decrease of 13.0% compared to HKD 6,846.0 million in the same period last year[4]. - The segment profit from the direct drinking water supply decreased by 50.3% to HKD 166.6 million, down from HKD 335.3 million[4]. - The profit attributable to the owners of the company for the period was HKD 755.6 million, representing an 8.5% decline from HKD 825.9 million in the previous year[4]. - Basic earnings per share decreased to HKD 46.29 cents from HKD 50.60 cents, reflecting an 8.5% drop[4]. - The gross profit for the period was HKD 2,286.2 million, down from HKD 2,523.9 million, indicating a decline in profitability[7]. - The company reported a net profit of HKD 1,238.0 million, compared to HKD 1,377.8 million in the same period last year[11]. - Segment profit for the period was HKD 1,996,558,000, compared to HKD 2,172,721,000 in the previous year, reflecting a decline of approximately 8.1%[31]. - The company reported a net profit of HKD 1,238,001,000 for the current period, down from HKD 1,377,784,000 in the prior year[34]. - The company reported a total tax expense of HKD 399,240,000, slightly down from HKD 414,345,000 in the same period last year[40]. Revenue Breakdown - The city water supply segment generated revenue of HKD 1,724,342,000, up 6.81% from HKD 1,614,677,000 in the previous year[23]. - The city water construction service revenue decreased to HKD 1,619,811,000 from HKD 2,083,743,000 year-over-year[23]. - Revenue from the urban water supply segment decreased from HKD 4,210,000,000 to HKD 3,765,200,000, a reduction of 10.6%[51]. - Revenue from the pipeline drinking water supply segment decreased significantly by 64.3%, from HKD 1,027,400,000 to HKD 367,100,000[52]. - Environmental segment revenue increased by 20.1%, from HKD 637,400,000 to HKD 765,600,000[53]. - Total external customer revenue from the general contracting construction segment decreased by 18.1%, from HKD 517,500,000 to HKD 424,000,000[55]. - Property segment revenue increased from HKD 85,900,000 to HKD 252,700,000, while profit decreased by 15.8%[56]. Dividends and Shareholder Returns - The company maintained an interim dividend of HKD 0.13 per share, unchanged from the previous year[4]. - The interim dividend declared was HKD 0.13 per share, consistent with the previous year's dividend[42]. - The company repurchased a total of 380,000 shares at a total cost of approximately HKD 1,918,000, with a maximum price per share of HKD 5.17 and a minimum price of HKD 4.90[75]. - The share repurchase was authorized by shareholders at the last annual general meeting[76]. Assets and Liabilities - Non-current assets increased to HKD 48,851.2 million from HKD 46,366.4 million, showing growth in asset base[13]. - Cash and cash equivalents decreased to HKD 4,689.8 million from HKD 4,804.8 million, indicating a reduction in liquidity[13]. - The total liabilities exceeded current assets by approximately HKD 4,400,305,000 as of September 30, 2024, compared to HKD 3,871,747,000 as of March 31, 2024[20]. - The company reported unused loan facilities and offers amounting to approximately HKD 10,700,000,000 as of September 30, 2024, an increase from HKD 9,864,100,000 as of March 31, 2024[20]. - The net asset value increased to HKD 22,568,707,000 as of September 30, 2024, compared to HKD 21,452,542,000 as of March 31, 2024[23]. - The company’s total equity as of September 30, 2024, was HKD 22,568,707,000, reflecting an increase from HKD 21,452,542,000[23]. - The company’s total liabilities as of September 30, 2024, were HKD 21,882,209,000, compared to HKD 21,042,119,000 as of March 31, 2024[23]. - Trade receivables increased from HKD 2,135,973,000 to HKD 2,579,362,000, with a notable rise in amounts overdue for more than 180 days[10]. - Trade payables increased from HKD 6,849,362,000 to HKD 7,108,245,000, with a slight increase in amounts overdue for 91 to 180 days[45]. - The total outstanding borrowings amounted to HKD 25,620,800,000 as of September 30, 2024, an increase from HKD 24,850,300,000 as of March 31, 2024[63]. - 71.3% of the outstanding borrowings are at floating interest rates, while 28.7% are at fixed rates[63]. Strategic Focus and Future Plans - The company plans to continue seeking new debt financing and bank loans to support its operations[20]. - The group plans to optimize development strategies and reduce capital expenditures to enhance management and investment efficiency[60]. - The government has introduced a series of stimulus policies to stabilize the economy and expand domestic demand, which is expected to benefit the water supply sector[59]. - The group aims to provide upgraded drinking water services, transitioning from safe to healthy water quality, to meet public demand for high-quality living[59]. - The group is focused on sustainable development by combining light and heavy assets to create good returns for shareholders[60]. - The group has not utilized derivative financial instruments to hedge foreign currency risks, but closely monitors the foreign exchange market[68]. Audit and Reporting - The audit committee, composed of four independent non-executive directors, reviewed the accounting principles and practices adopted by the group and discussed internal controls and financial reporting matters[77]. - The interim results announcement has been published on the company's and the stock exchange's websites, with the interim report to be sent to shareholders at an appropriate time[79]. Other Information - The company has decided to suspend the proposed spin-off of its subsidiary, Silver Dragon Water Group, from the main board of the stock exchange[58]. - As of September 30, 2024, the group's cash and cash equivalents totaled approximately HKD 5,032,400,000, a decrease from HKD 5,550,200,000 as of March 31, 2024[62]. - The capital debt ratio as of September 30, 2024, was 66.0%, slightly down from 66.1% as of March 31, 2024[62].

Investment Rating - The report maintains a "Buy" rating for China Water Affairs (855 HK) with a target price of HKD 6.10, reflecting a potential upside of 29.1% from the current price of HKD 4.73 [3][11]. Core Insights - The company has adjusted its development strategy following the suspension of its plan to spin off its water supply and pipeline drinking water businesses, focusing on strengthening operational management to reduce capital expenditures. This shift is expected to lead to a decline in non-cash construction revenue contributions from the water supply and pipeline drinking water segments [1]. - The company has initiated price adjustment applications for over 20 water supply projects, which represent about one-third of its total water supply capacity. The price adjustments are anticipated to start reflecting in FY26 [2]. - The reduction in cash outflows for investment activities during FY25-27, along with favorable financing conditions due to declining domestic and international interest rates, is expected to provide the company with more room to increase its dividend payout ratio [2]. Financial Summary - Revenue is projected to decline from HKD 12,859 million in FY24 to HKD 11,044 million in FY25, with a further decrease to HKD 10,991 million in FY26 and HKD 10,642 million in FY27, reflecting growth rates of 9.6%, -14.1%, -0.5%, and -3.2% respectively [5]. - Shareholder net profit is expected to decrease from HKD 1,534 million in FY24 to HKD 1,319 million in FY25, with slight recoveries to HKD 1,328 million in FY26 and HKD 1,307 million in FY27, showing growth rates of -17.4%, -14.0%, and 0.7% respectively [5]. - The earnings per share (EPS) is forecasted to be HKD 0.94 in FY25, HKD 0.81 in FY26, and HKD 0.80 in FY27 [5][6]. Adjustments to Forecasts - The report has revised down the forecasts for shareholder net profit by 16.6% for FY25 and 23.3% for FY26, while introducing a new forecast for FY27 [2][6]. - The target price has been adjusted from HKD 6.30 to HKD 6.10, reflecting the updated market conditions and risk assessments [2].

Investment Rating - The report maintains a rating of "Buy" for China Water Affairs (0855) [2][5]. Core Insights - The company's performance in FY2024 is impacted by a decline in installation, maintenance, and construction businesses, while the pipeline drinking water business is experiencing rapid growth [3][5]. - Revenue for FY2024 is projected at HKD 12.86 billion, a decrease of 9% year-on-year, with net profit expected to be HKD 1.53 billion, down 17% year-on-year [5][6]. - The dual-driven strategy of water supply and pipeline drinking water continues to progress, with the decline in profits primarily due to reduced installation and maintenance projects in urban water supply and environmental protection businesses, as well as the depreciation of the RMB [5]. Financial Summary - For FY2024, the company achieved revenue of HKD 12.86 billion, a year-on-year decline of 9%, and a net profit of HKD 1.53 billion, down 17% [5][6]. - The urban water supply segment generated revenue of HKD 8.28 billion, a decrease of 5%, with segment profit down 12% to HKD 2.49 billion [5]. - The environmental protection business saw revenue drop by 24% to HKD 1.07 billion, with segment profit also down by 24% to HKD 0.35 billion [5]. - The total construction business revenue fell by 31% to HKD 0.83 billion, with segment profit down 23% to HKD 0.61 billion [5]. - The pipeline drinking water business, however, reported a revenue increase of 31% to HKD 1.72 billion, with segment profit rising 17% to HKD 0.59 billion [5]. Future Projections - The net profit forecasts for FY2025, FY2026, and FY2027 have been adjusted to HKD 1.63 billion (previously HKD 1.97 billion), HKD 1.71 billion (previously HKD 2.06 billion), and HKD 1.80 billion respectively [5]. - Corresponding EPS for these years are projected at HKD 1.00, HKD 1.05, and HKD 1.10 [5]. Cash Flow and Dividends - The company reported a net cash flow from operating activities of HKD 2.78 billion, indicating a healthy cash flow situation [5]. - For FY2024, the total dividend payout is set at HKD 0.28 per share, maintaining a dividend payout ratio of 30% consistent with previous years [5].

Financial Performance - Total revenue for the year 2024 was HKD 12,858,515, a decrease of 9.4% from HKD 14,194,953 in 2023[7]. - Gross profit for 2024 was HKD 4,775,964, down 10.7% from HKD 5,346,297 in the previous year[7]. - Net profit attributable to shareholders for 2024 was HKD 1,533,543, reflecting a decline of 17.4% compared to HKD 1,856,786 in 2023[7]. - Basic and diluted earnings per share for 2024 were HKD 0.94, down 17.5% from HKD 1.14 in 2023[7]. - Operating profit for the year was HKD 4,050,171, a decline of 9.8% compared to HKD 4,489,728 in the previous year[117]. - The company reported a total comprehensive income of HKD 856,443 for 2024, down from HKD 1,380,119 in 2023, a decrease of 37.9%[118]. - The company reported a profit of HKD 1,856,786 thousand for the year, compared to HKD 1,231,559 thousand in the previous year, showing a significant increase of approximately 50.7%[121]. - The company reported a net loss of HKD 1,189,261 in comprehensive income for the year, compared to a loss of HKD 116,143 in the previous year[122]. Assets and Liabilities - Total assets increased by 3.4% to HKD 63,242,070 in 2024 from HKD 61,164,288 in 2023[7]. - Total liabilities rose by 4.5% to HKD 41,789,528 in 2024 compared to HKD 39,992,154 in the previous year[7]. - The company's total outstanding borrowings increased to HKD 24,850,300,000, with 71.0% of the borrowings at floating rates[21]. - The capital debt ratio as of March 31, 2024, was 66.1%, up from 65.4% the previous year[21]. - The company's borrowings increased to HKD 17,878,737 thousand in 2024, compared to HKD 15,607,292 thousand in 2023, reflecting a rise of approximately 14.5%[120]. - The total liabilities increased to HKD 36,950,641,000 in 2024 from HKD 35,400,088,000 in 2023, reflecting an increase of approximately 4.4%[183]. Segment Performance - The "pipeline drinking water supply" segment recorded significant growth, with total revenue increasing by 31.4% from HKD 1,310,100,000 to HKD 1,721,900,000[12]. - The urban water supply segment's revenue was HKD 8,276,400,000, a decrease of 5.2% from HKD 8,729,200,000[15]. - The environmental segment revenue decreased by 24.0% to HKD 1,071,500,000, with profit down 24.4% to HKD 354,200,000 due to the completion of several ongoing wastewater treatment projects[17]. - General contracting construction segment revenue fell significantly by 31.0% to HKD 826,800,000, with profit decreasing by 23.4% to HKD 610,500,000, primarily due to a reduction in external water supply and wastewater treatment projects[17]. Cash Flow and Financing - As of March 31, 2024, the company maintained a cash and cash equivalents total of approximately HKD 5,550,200,000, down from HKD 7,499,100,000 the previous year[21]. - The company continues to enhance cooperation with existing banks and expand financing channels to improve liquidity and debt structure[22]. - Cash flow from investment activities for 2024 was a net outflow of HKD 5,433,838,000, compared to a net outflow of HKD 4,112,341,000 in 2023, indicating an increase in cash outflow of approximately 32%[124]. - The company reported a significant increase in cash generated from financing activities, with a net inflow of HKD 605,348,000 in 2024, down from HKD 1,866,665,000 in 2023, reflecting a decrease of approximately 68%[125]. Corporate Governance - The company has maintained compliance with the Hong Kong Stock Exchange's Corporate Governance Code, with some deviations noted[34]. - The board believes that the current structure of separating the roles of Chairman and CEO does not impair the balance of power between the board and management[34]. - The company has a strong commitment to corporate governance standards to enhance shareholder value[34]. - The company has established a corporate governance policy to guide the effective application of governance principles[34]. - The company has independent non-executive directors who are responsible for understanding shareholder opinions[34]. Sustainability and Environmental Initiatives - The company is committed to sustainable development and aims to positively impact stakeholders while promoting an inclusive environment[36]. - The company has formulated a "Carbon Peak, Carbon Neutrality" implementation plan to accelerate its transition towards green sustainable development[36]. - The company is committed to environmental sustainability, focusing on energy conservation and reducing emissions as part of its core management practices[69]. - The company will publish an annual environmental, social, and governance report to keep stakeholders informed about its sustainability performance[69]. Risk Management - The company has implemented a centralized risk management policy to mitigate potential adverse impacts from financial market unpredictability[161]. - The company has identified key operational risks, including operational, liquidity, and legal compliance risks, and has implemented measures to manage these risks[64][65][66][67]. - The company is committed to continuous improvement of its risk management and internal control systems based on findings from internal audits[52]. Shareholder Information - The board proposed a final dividend of HKD 0.15 per share, bringing the total dividend for the year to HKD 0.28 per share[12]. - The company has adopted a dividend policy aiming for a payout ratio of at least 30% of basic earnings per share for each financial year[58]. - The final dividend will be distributed on November 15, 2024, pending shareholder approval at the annual general meeting on September 6, 2024[61]. Related Party Transactions - The group engaged in related party transactions with 江西銀麗, with a total transaction amount of approximately HKD 43,579,000 (around RMB 39,657,000) during the year[97]. - The independent non-executive directors confirmed that the related party transactions were conducted in the ordinary course of business and on normal commercial terms[98]. Audit and Compliance - The independent auditor's report confirms that the financial statements present a true and fair view of the group's financial performance and cash flows[102]. - The audit committee has conducted two meetings to assess the company's performance and review environmental, social, and governance matters[40]. - The audit committee, composed entirely of independent non-executive directors, has reviewed the company's financial reporting processes and risk management systems[40].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 6.58, representing a potential upside of 39.3% from the current price of HKD 4.72 [3][5]. Core Insights - The company's net profit for the fiscal year 2023/24 is expected to decline by 12.6%, with total revenue decreasing by 9.4% to HKD 12.86 billion. Excluding currency fluctuations, the revenue decline is 4.1% [3][4]. - Despite the decline in overall performance, core businesses such as water supply, direct drinking water, and environmental services remain robust, indicating a pathway to high-quality development [3][6]. - The direct drinking water segment saw a revenue increase of 31.4% to HKD 1.72 billion, now accounting for 13.2% of total revenue, with over 3,000 new projects added during the period [3][4]. - The water supply business experienced a slight revenue decline of 5.8% to HKD 8.90 billion, but the company anticipates significant revenue growth from over 20 water price adjustment projects currently in progress [3][6]. - The environmental segment's revenue decreased by 35% to HKD 1.03 billion, primarily due to the completion of large projects, but is expected to rebound with the upcoming production of the Mobil project [3][4]. Financial Summary - For the fiscal year 2023/24, the company reported a net profit of HKD 2.59 billion, down 16.1% year-on-year, with a core net profit decline of 4.0% when excluding currency impacts [3][4]. - The EBITDA margin improved slightly by 0.1 percentage points to 40.1%, indicating operational efficiency despite revenue challenges [3][4]. - The company plans to maintain a dividend payout ratio of 30%, with a proposed final dividend of HKD 0.15 per share [3][4]. Future Projections - The company is projected to achieve net profits of HKD 1.70 billion, HKD 1.93 billion, and HKD 2.12 billion over the next three fiscal years [3][4]. - The anticipated reduction in capital expenditures due to the commencement of trial production for approximately 800,000 tons of capacity in the water supply and environmental sectors is expected to improve the financial structure and cash flow [3][6].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company reported a significant increase in operational revenue from direct drinking water, up 73%, with expectations for accelerated water price adjustments [1] - For FY2024, total revenue was HKD 12,859 million, a year-on-year decrease of 9.4%, while net profit attributable to shareholders was HKD 1,534 million, down 17.4% [2][6] - The direct drinking water revenue accounted for 13.4% of total revenue, reflecting a growth of 4.2 percentage points [2][6] Summary by Sections Financial Performance - FY2024 total revenue was HKD 12,859 million, down 9.4% year-on-year, while net profit was HKD 1,534 million, down 17.4% [2] - The company maintained a dividend payout ratio of 30%, distributing HKD 0.28 per share [2] - The direct drinking water segment saw revenue growth of 72.5%, with operational revenue reaching HKD 293 million [2][6] Segment Analysis - Urban water supply revenue was HKD 8,276 million, down 5.2%, with segment profit decreasing by 12.2% [2] - Pipeline direct drinking water revenue was HKD 1,722 million, up 31.4%, with segment profit increasing by 17.3% [2] - Environmental services revenue fell by 24.0% to HKD 1,072 million, with segment profit also declining by 24.4% [2] - Total construction revenue decreased by 31.0% to HKD 827 million, with segment profit down 23.4% [2] Future Outlook - The company expects net profit for FY2025 to be HKD 1,626 million, and for FY2026 to be HKD 1,789 million, reflecting adjustments due to currency fluctuations and declining construction activities [2][6] - The projected net profit for FY2027 is HKD 1,989 million, corresponding to a P/E ratio of 5.0 for FY2025, 4.6 for FY2026, and 4.1 for FY2027 [2][6]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 6.30, reflecting a potential upside of 21.9% based on the FY25 earnings multiple of 6.5 times [2][3]. Core Insights - The company's FY24 results fell short of expectations, with a 17.4% year-on-year decline in net profit to HKD 1.534 billion, primarily due to a 1.3% drop in water operation revenue and a significant decrease in high-margin connection fee income [2][3]. - The company has initiated price adjustment applications for approximately one-third of its water supply projects, which could take effect by FY26 if approved [2]. - The pipeline drinking water business showed a total revenue increase of 31.4% year-on-year, indicating a cautious but positive growth trajectory [2]. Financial Performance Summary - FY24 revenue was HKD 12.859 billion, down 9.4% from FY23, with a projected revenue of HKD 13.217 billion for FY25 and HKD 14.292 billion for FY26 [5][6]. - The net profit for FY24 was HKD 1.534 billion, with forecasts of HKD 1.582 billion for FY25 and HKD 1.732 billion for FY26, reflecting a recovery trend [5][6]. - Earnings per share (EPS) for FY24 was HKD 0.94, with projections of HKD 0.97 for FY25 and HKD 1.06 for FY26 [5][6]. Market Position and Shareholder Information - The company has a market capitalization of HKD 8,439.11 million, with a circulating share ratio of 47.12% and a 52-week price range of HKD 3.76 to HKD 6.79 [1][2]. - Major shareholder Duan Chuanliang holds a 28.86% stake in the company [1].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公佈之內容概不負責， 對其準確性或完整性亦不發表任何聲明，並明確表示概不就因本公佈全部或任何 部分內容而產生或因倚賴該等內容而引致之任何損失承擔任何責任。 （於開曼群島註冊成立並遷冊往百慕達之有限公司） （股份代號：855） 截至二零二四年三月三十一日止年度之業績公佈 | --- | --- | --- | --- | --- | --- | |----------------|-------|--------------------------------------------------------------|---------------------------|---------------------------|---------------------| | | | 截至三月三十一日止年度之財務摘要 | 二零二四年 \n港幣百萬元 | 二零二三年 \n港幣百萬元 | 變動 \n% \n附註 (1) | | 收益 | | 總計 | 12,858.5 | 14,195.0 | (9.4) | | | | 管道直飲水供應經營及管道直飲水供應 | ...

Investment Rating - The report initiates coverage on China Water Affairs Group with an "Overweight" rating [2][31] Core Views - China Water Affairs is a leading integrated water operator in China, with a dual-drive business model of "water supply + direct drinking water" [2][8] - The company's direct drinking water business is expected to achieve above-expectation growth, driven by advanced water purification technology, rich customer resources, and strong brand and service capabilities [2] - The water supply business is stable, with clear trends of increasing volume and price [2][24] - The company has strong cash flow and stable dividend payouts, with a dividend payout ratio maintained at 29-30% over the past three years [2][29] Business Overview Water Supply Business - China Water Affairs is one of the top 10 urban water supply operators in China, with a total designed water supply capacity of 1,410 million tons per day and a water supply pipeline network of approximately 148,000 kilometers, covering a population of over 30 million [8] - The company focuses on rapidly growing third- and fourth-tier cities, implementing integrated urban-rural water supply and drainage systems and actively developing direct drinking water supply services [8] - The water supply business is expected to benefit from China's new cycle of water price increases, with a clear trend of increasing volume and price [24][27] Direct Drinking Water Business - The company began expanding its direct drinking water business in 2015 and currently operates over 3,600 direct drinking water projects nationwide, serving approximately 4.5 million people [13] - In 2022, the company ranked first in China in terms of direct drinking water sales revenue, with a market share of 7.3% [13] - The direct drinking water business revenue grew by 89% year-on-year in FY2023, reaching HKD 1.31 billion, with a gross margin of 44.1% [13] - The direct drinking water market in China is expected to grow rapidly, with the market size projected to reach RMB 14.6 billion by 2027 [20][21] Financial Performance - The company's revenue and net profit have shown steady growth, with a compound annual growth rate (CAGR) of 20% and 26%, respectively, from FY2014 to FY2023 [9] - The company's operating cash flow in FY2023 was HKD 4.851 billion, with a CAGR of 19% from FY2014 to FY2023 [29] - The dividend payout ratio has been maintained at 29-30% over the past three years, indicating stable dividend payments [29] Shareholder Structure - The top three shareholders are ORIX Corporation (17.84%), Duan Chuanliang (15.50%), and Asset Full Resources Limited (13.36%), with Duan Chuanliang being the actual controller of the company, holding 28.86% of the shares [11][12] Market Outlook - The direct drinking water market in China is still in its early stages, with significant growth potential driven by rising living standards, policy support, and consumer preference for convenient and environmentally friendly drinking water solutions [17][21] - The water supply business is expected to benefit from China's new cycle of water price increases, with a clear trend of increasing volume and price [24][27] Valuation and Forecast - The report forecasts the company's net profit for FY2024-2026 to be HKD 1.881 billion, HKD 1.973 billion, and HKD 2.062 billion, respectively, with corresponding EPS of HKD 1.15, HKD 1.21, and HKD 1.26 [2][31]