Investment Rating - The report upgrades the company's investment rating to "Buy" with a target market capitalization of HKD 41 billion, representing a 24% upside from the current market capitalization [6] Core Views - The company's Q3 2024 unaudited financial results show revenue of HKD 18.142 billion, up 10.4% YoY, while net profit attributable to owners decreased 6.1% YoY to HKD 3.593 billion, slightly exceeding expectations [4] - Operating cash flow continues to improve, with H1 2024 operating cash flow (excluding Yuehai Properties) reaching HKD 3.584 billion, up from HKD 2.286 billion in H1 2023 [4] - The water business remains stable, with pre-tax profit increasing 0.3% to HKD 6.167 billion in the first three quarters of 2024, driven by steady growth in the water resources segment [5] - The real estate segment shows resilience, with no impairment in the first three quarters of 2024 and contracted sales of 212,000 square meters, slightly higher than the 209,000 square meters in the same period last year [5] - The company's dividend payout ratio remains stable at 65% in 2024, consistent with 2023, with an interim dividend of 23.97 HK cents per share announced [4] Financial Performance - The company's revenue for 2024E is projected at HKD 29.551 billion, a 22% YoY increase, with net profit attributable to owners expected to reach HKD 4.003 billion, up 28% YoY [7] - EPS for 2024E is forecasted at HKD 0.61, with a P/E ratio of 8.3x and a P/B ratio of 0.85x [7] - ROE is expected to improve to 10.3% in 2024E, up from 7.47% in 2023 [7] Industry Comparison - The company's 2024E P/E ratio of 8.3x is lower than the average P/E ratio of 12x for comparable companies with stable earnings and high dividends [6] - The company's dividend yield of 6.13% in 2023 is higher than the average dividend yield of 3.66% for comparable companies [10] Real Estate Segment Outlook - The real estate inventory is expected to decrease, with the book value of real estate inventory at HKD 32.8 billion at the end of 2023 and HKD 30 billion in the first three quarters of 2024, with prepayments of HKD 10.494 billion [5] - The report anticipates a reduction in real estate inventory impairment pressure in 2024 due to the decrease in inventory size and the implementation of macro policies [5]
粤海投资：水务主业稳健发展，地产减值压力小于预期