Investment Rating - The investment rating for the company is "Buy" and is maintained [8] Core Views - The company reported a revenue of 1.738 billion yuan in Q3 2025, representing a year-on-year increase of 2.41%. The net profit attributable to shareholders was 324 million yuan, up 2.13% year-on-year, while the net profit excluding non-recurring items grew by 7.18% [2][6] - The decline in capital expenditure, which was 662 million yuan in the first three quarters of 2025 compared to 1.58 billion yuan in the same period last year, supports a high dividend payout ratio [2][13] - The ongoing market-oriented reforms in public utilities are expected to enhance the company's profitability and improve cash flow [13] Summary by Sections Financial Performance - For the first three quarters of 2025, the company achieved a total revenue of 5.426 billion yuan, a decrease of 3.85% year-on-year. The net profit attributable to shareholders was 933 million yuan, an increase of 1.18%, while the net profit excluding non-recurring items was 929 million yuan, up 2.60% [6] - In Q3 2025, the company’s revenue was 1.738 billion yuan, with a net profit of 324 million yuan, and a net profit excluding non-recurring items also at 324 million yuan, reflecting a growth of 7.18% [6] Cost Management - The gross margin for Q3 2025 was 38.1%, an increase of 0.21 percentage points year-on-year, primarily due to changes in accounting for pipeline depreciation [13] - The operating expense ratio for Q3 2025 was 12.3%, down 1.07 percentage points year-on-year, indicating effective cost control [13] Cash Flow and Capital Expenditure - The cash collection ratio for Q3 2025 was 87.8%, a decrease of 13.3 percentage points year-on-year, attributed to slower payment from local governments [13] - The net cash flow from operating activities for the first three quarters of 2025 was 981 million yuan, a decrease of 28.7% year-on-year, while capital expenditures were significantly reduced [13] Market Outlook - The company is expected to benefit from ongoing reforms in the public utility sector, which may enhance profitability and cash flow [13] - Forecasted net profits for 2025-2027 are 1.23 billion, 1.27 billion, and 1.30 billion yuan, respectively, with corresponding price-to-earnings ratios of 9.55, 9.20, and 8.99 [13]

Investment Rating - The investment rating for the company is "Buy" and is maintained [9]. Core Viewpoints - In H1 2025, the company achieved a net profit attributable to shareholders of 609 million yuan, a year-on-year increase of 0.68%. However, in Q2 2025, the net profit was 277 million yuan, a decrease of 1.56% year-on-year. The wastewater treatment business showed steady growth, while gas connection and engineering services experienced declines, negatively impacting revenue and gross profit [2][6]. - Capital expenditure in H1 2025 was 435 million yuan, significantly down from 1.11 billion yuan in the same period last year, which supports a high dividend payout ratio. The ongoing market-oriented reforms in public utilities are expected to enhance the company's profitability and cash flow [2][6]. Summary by Sections Financial Performance - In H1 2025, the company reported total revenue of 3.687 billion yuan, a decrease of 6.54% year-on-year. The net profit attributable to shareholders was 609 million yuan, up 0.68% year-on-year, while the net profit excluding non-recurring items was 605 million yuan, an increase of 0.31% year-on-year. In Q2 2025, revenue was 1.765 billion yuan, down 1.63% year-on-year, and net profit was 277 million yuan, down 1.56% year-on-year [6]. - The company’s revenue by segment showed: - Water supply: 436 million yuan, down 4.08% with a gross margin of 49.4%, up 2.48 percentage points - Wastewater treatment: 1.39 billion yuan, up 12.3% with a stable gross margin of 42.3% - Energy segment: 1.33 billion yuan, down 6.97% with a gross margin of 9.0%, down 3.22 percentage points - Solid waste treatment: 382 million yuan, down 2.80% with a gross margin of 37.9%, down 1.49 percentage points - Engineering: 432 million yuan, down 41.2% with a gross margin of 20.1%, up 3.22 percentage points [2][6]. Future Outlook - The company expects net profits attributable to shareholders for 2025-2027 to be 1.23 billion, 1.27 billion, and 1.30 billion yuan respectively, corresponding to price-earnings ratios of 9.7, 9.3, and 9.1 times. The company plans to maintain a high dividend payout ratio, with a commitment of no less than 50% for 2024-2026. Assuming the dividend ratio remains unchanged, the expected dividend yield for 2025 is 5.2% [2][6].

Investment Rating - The investment rating for the company is "Buy" and is maintained [8] Core Insights - In Q1 2025, the company achieved revenue of 1.922 billion yuan, a year-on-year decrease of 10.64%, while the net profit attributable to the parent company was 332 million yuan, an increase of 2.63% year-on-year [2][6] - The company's capital expenditure has significantly decreased, which is beneficial for maintaining a high dividend payout ratio [2][13] - The ongoing market-oriented reforms in public utilities are expected to enhance the profitability and cash flow of water companies, supporting valuation recovery [2][13] Summary by Sections Financial Performance - Revenue for Q1 2025 was 1.922 billion yuan, down 10.64% year-on-year; net profit attributable to the parent company was 332 million yuan, up 2.63% year-on-year; and the non-recurring net profit was 331 million yuan, up 2.45% year-on-year [2][6] - The gross margin for Q1 2025 was 31.12%, an increase of approximately 2.1 percentage points year-on-year, attributed to cost reduction and efficiency improvements [13] - The basic earnings per share (EPS) was 0.26 yuan, a decrease of 3.7% year-on-year, mainly due to dilution from an increase in share capital [13] Capital Expenditure and Cash Flow - The cash paid for the acquisition of fixed assets, intangible assets, and other long-term assets was 294 million yuan, a significant decrease from 738 million yuan in the same period last year, indicating a downward trend in capital expenditure [2][13] - The net cash flow from operating activities was 104 million yuan, down 56.22% year-on-year, with a cash collection ratio of 81.1%, up approximately 2.0 percentage points year-on-year [13] Market Reforms and Future Outlook - The market-oriented reforms in public utilities are expected to improve the profitability and cash flow of water companies, with price adjustments for water services already being implemented in several first-tier cities [13] - The company forecasts net profits attributable to the parent company for 2025-2027 to be 1.23 billion, 1.27 billion, and 1.30 billion yuan, respectively, with corresponding price-to-earnings ratios of 10.2, 9.8, and 9.58 [13]