Investment Rating - The investment rating for the company is "Buy" and is maintained [6]. Core Views - The company reported a revenue of 10.46 billion HKD for H1 2025, a decrease of 7.5% year-on-year, and a net profit attributable to shareholders of 0.897 billion HKD, down 20.0% year-on-year. The interim dividend per share is 0.0735 HKD, reflecting a 5.0% increase from 0.0700 HKD in the same period last year [2][4]. Summary by Sections Revenue Breakdown - The total revenue of 10.46 billion HKD consists of 86.1% from operational services, 6.8% from construction services, and 7.1% from technical consulting and equipment sales. The operational business's proportion increased by 10.8 percentage points year-on-year [7]. - Water treatment services generated 4.52 billion HKD in revenue, up 3.0% year-on-year, with a domestic gross margin of 60%, an increase of 1 percentage point. Water supply services achieved 1.45 billion HKD, a slight increase of 0.4% year-on-year, with a domestic gross margin of 41%, down 2 percentage points due to changes in customer structure [7]. - Construction services revenue fell to 0.712 billion HKD, a decline of 56.6% year-on-year, attributed to the company's light asset strategy and the completion of existing projects [7]. - Technical services and equipment sales generated 0.742 billion HKD, down 35.5% year-on-year, with a gross margin of 34%, up 4 percentage points [7]. - Urban resource services reported 3.04 billion HKD in revenue, a 13.1% increase year-on-year, with a gross margin of 20%, down 1 percentage point due to intensified competition and reduced demand from upstream industrial enterprises [7]. Financial Performance - The company recognized an asset impairment loss of 0.259 billion HKD in H1 2025, which negatively impacted performance but did not affect cash flow. Financial expenses were optimized, resulting in a reduction of 0.37 billion HKD [7]. - Capital expenditure significantly decreased to 0.943 billion HKD, down 40.0% from 1.57 billion HKD in the same period last year. Free cash flow has turned positive since 2022, with a favorable trend expected to continue as capital expenditures decline [7]. Profit Forecast and Valuation - The company is projected to achieve net profits attributable to shareholders of 1.66 billion HKD, 1.70 billion HKD, and 1.71 billion HKD for 2025, 2026, and 2027, respectively. Assuming a 3%-5% increase in dividends for 2025, the corresponding dividend yield for the stock price as of August 28, 2025, is estimated to be between 6.4%-6.6% [7].
北控水务集团（00371）：2025H1业绩点评：减值拖累利润，中期每股派息额提升5.0%