中国水务（00855）：新供水条例整体影响料正面

Investment Rating - The report maintains a "Buy" rating for China Water Affairs (855 HK) with a target price of HKD 6.52, indicating a potential upside of 19.2% based on a 9.5x FY27 P/E ratio [1][8]. Core Insights - The new Water Supply Regulation, effective from June 1, 2023, is expected to have a positive overall impact on the company. The report outlines four key points regarding the regulation that support this view [1][2][3][4][5]. Summary by Sections New Regulation Key Points - Extension of Water Supply Networks: The new regulation mandates that water supply networks must extend to rural areas when the population reaches a specified scale, which the company has already anticipated and implemented, thus avoiding additional engineering and operational costs [2]. - Ensuring Water Sources: Local governments are required to reasonably arrange and enhance water source construction. The company has been following a diversified water source policy and operates its own reservoirs as needed [3]. - Multi-Department Collaboration: The regulation requires various departments to manage water supply facilities, which may lead to more detailed guidelines and responsibilities. The effectiveness of these policies remains to be observed [4]. - Responsibility for Last Mile: The regulation stipulates that water supply operators will be responsible for the operation and maintenance of new supply facilities, potentially allowing the company to charge additional fees and gain more user data and direct service channels [5]. Financial Data Overview - Revenue and Profit Forecasts: The company’s revenue is projected to decline from HKD 12,859 million in 2024 to HKD 9,899 million in 2026, with a slight recovery expected in 2028. Shareholder net profit is expected to stabilize around HKD 1,112 million in 2026, with a gradual increase to HKD 1,156 million by 2028 [6][14]. - Earnings Per Share (EPS): EPS is forecasted to be HKD 0.68 in 2026, with a slight increase to HKD 0.71 by 2028 [6][14]. - Dividend and Yield: The company plans to maintain a dividend of HKD 0.28 per share, resulting in a consistent dividend yield of 5.1% across the forecast period [6][14]. Stock Information - Current Stock Price: As of the report date, the stock is trading at HKD 5.47, with a market capitalization of HKD 8,898.12 million [8]. - Shareholder Structure: Major shareholders include Duan Chuanliang (27.40%) and Orix (27.27%) [8].