Summary of the Conference Call for Yuehai Investment Company Overview - The conference call pertains to Yuehai Investment, focusing on its financial performance and strategic outlook for 2025. Key Points and Arguments Financial Performance - In Q1 2025, Yuehai Investment reported a loss of 17 million due to the impact of the distribution of Yuehai Zhidi, but future financial conditions are expected to improve as the company will no longer bear related financial impacts [2][4]. - The company's pre-tax profit increased by 2% and shareholder profit rose by 2.5%, despite a slight revenue decline of less than 1% [3]. Investment Property Valuation - The value of investment properties decreased by 10 million in Q1 2025, a smaller decline compared to 21 million in the same period last year, indicating a potential stabilization in the real estate market [2][5]. Capital Expenditure and Financial Costs - The company has been actively reducing capital expenditures and financial costs, with Q1 financial expenses decreasing by 77 million. It is anticipated that expenses will continue to decline throughout the year [2][6]. - Capital expenditure is planned to be 1.9 billion for 2024 and controlled within 2 billion for 2025, prioritizing debt repayment and dividends [2][8]. Water Pricing Adjustments - Water pricing adjustments are proceeding normally, with no significant impact on business operations. The company is actively pursuing favorable outcomes for water pricing negotiations at the Guangzhou Nansha Water Plant [2][7]. Revenue Trends - Water supply revenue in Shenzhen and Dongguan declined primarily due to a decrease in the RMB exchange rate and reduced water supply volumes. In contrast, Hong Kong saw a slight increase in supply volume, but the fee increase was limited [2][11]. Cash Flow and Business Segments - Operating cash flow is predominantly derived from the Chinese water business, accounting for approximately 80% of total cash inflow, although trade war pressures have affected high-end consumer segments [2][13][14]. - The mid-to-low-end market is performing relatively well, while high-end consumption is under pressure [2][15]. Debt Structure and Dividend Strategy - The company maintains a 65% dividend payout ratio and aims to reduce HKD-denominated debt, which currently constitutes a small percentage of total debt [2][22][23]. Future Outlook and Strategic Plans - The company is exploring acquisition opportunities for water assets but is selective, focusing on high-return projects [2][12]. - There are no immediate plans for significant new capital projects, with a focus on completing existing water projects [2][10]. Market Challenges - The company faces challenges in the high-end market due to economic pressures, while the mid-to-low-end market has growth limitations [2][19][20]. - The decline in rental rates for high-end commercial properties is attributed to reduced demand from high-end tenants [2][17]. Impact of External Factors - The decrease in electricity prices in Guangdong is a concern for the company's power generation assets, and there is a willingness to consider divesting these assets if suitable buyers are found [2][25]. Additional Important Information - The company has been preparing for future contract renewals and has gradually reduced investments in non-East River water projects over the past few years [2][24]. - The overall performance in Q1 2025 was stable, with clear impacts from external factors [2][26].