Group 1: ASR Program and Water Supply Management - California American Water, a unit of American Water Works, is implementing the Aquifer Storage and Recovery (ASR) Program to ensure a reliable water supply during dry months by capturing and treating excess rainwater [1][2] - The ASR Program is a cost-effective water resource management technique that allows for underground water storage during periods of abundance, avoiding evaporation losses and providing emergency supplies [3][11] - The program is expected to enhance customer retention and expand the customer base by meeting the rising demand for water [4] Group 2: Infrastructure Investments - The U.S. water and wastewater infrastructure is deteriorating, with frequent water main breaks leading to wastage and contamination [5] - American Water Works plans to invest $3.7 billion in infrastructure upgrades in 2026, with a long-term capital expenditure plan of $19-$20 billion from 2026 to 2030 and $46-$48 billion from 2026 to 2035 [6][11] - The Environmental Protection Agency estimates that $1.25 trillion will be needed over the next 20 years for maintaining and upgrading water systems [7] Group 3: Industry Investment Trends - Other water utilities, such as Essential Utilities and California Water Service Group, are also making significant investments to upgrade aging infrastructure [8] - Essential Utilities plans to invest $7.8 billion from 2025 to 2029 for rehabilitating its water and natural gas pipeline systems [9] - California Water Service Group intends to invest between $450 million and $550 million in 2025 to strengthen its operations and believes its underground water aquifers can meet future demand [10]

Financial Performance - Thames Water reported a profit of £414 million for the six months ending in September, a significant turnaround from a loss of £149 million during the same period last year [1] - Revenues increased by 42% to £1.9 billion, driven by regulatory approval for substantial increases in utility bills [2] Debt and Financial Challenges - The company's debt rose to £17.6 billion, with a 5% increase noted over the six-month period [2][6] - Thames Water has nearly maxed out a £1.5 billion loan facility from creditors, indicating ongoing financial strain [2] Customer Impact - The average customer bill increased from £436 to £588, leading to a rise in customer complaints [3] - The CEO acknowledged that higher customer bills have funded increased capital investment, which rose by 22% to nearly £1.3 billion [4] Operational Improvements - The company has made progress in operational transformation, achieving a 20% reduction in pollution and maintaining steady leakage performance despite challenging weather conditions [8] - Investment has been directed towards fixing leaks, pollution control, and improving water quality [6][4] Future Outlook - Thames Water is working on a long-term transformation program expected to take at least a decade to complete [7] - Senior creditors are exploring a potential rescue deal to prevent the company from entering a taxpayer-backed special administration regime [5]

Core Viewpoint - The comparison between California Water Service Group (CWT) and American Water Works (AWK) indicates that CWT is currently more attractive to value investors due to its stronger Zacks Rank and better valuation metrics [1][3]. Group 1: Zacks Rank and Earnings Estimates - CWT has a Zacks Rank of 2 (Buy), while AWK has a Zacks Rank of 4 (Sell), suggesting that CWT is experiencing a more favorable earnings outlook [3]. - The Zacks Rank system emphasizes companies with positive earnings estimate revisions, which supports the notion that CWT is likely to see improved earnings [2][3]. Group 2: Valuation Metrics - CWT has a forward P/E ratio of 20.79, compared to AWK's forward P/E of 24.73, indicating that CWT may be undervalued relative to AWK [5]. - The PEG ratio for CWT is 2.37, while AWK's PEG ratio is 3.39, further suggesting that CWT offers better value considering expected earnings growth [5]. - CWT's P/B ratio is 1.78, whereas AWK's P/B ratio is 2.59, reinforcing the view that CWT is more attractively priced [6]. - Overall, CWT has a Value grade of B, while AWK has a Value grade of D, highlighting CWT's superior valuation profile [6].

Group 1 - The core viewpoint is that Lianyungang City is transforming water resource constraints into water resource guarantees through the implementation of effective water management practices in Donghai County and Ganyu District [1][2] - Donghai County has implemented a tailwater recycling project that has saved approximately 5 million cubic meters of fresh water while addressing severe drought conditions [1] - The city has developed a detailed implementation plan for agricultural tailwater recycling, covering over 200,000 acres, significantly reducing total water usage and improving water efficiency [2] Group 2 - Lianyungang Port Group has signed an agreement with China Everbright Water (Lianyungang) Co., Ltd. to transport treated recycled water for various uses, including industrial applications [2] - The construction of a high-quality recycled water treatment project in Xuwei New Area is underway, which will supply desalinated water to the Tianwan Nuclear Power Plant upon completion [2] - The city is focusing on enhancing water resource allocation and promoting structural adjustments in agriculture to improve drought resistance and water supply capabilities in the western Gangling area [3]

Report Industry Investment Rating - Not provided in the given content Core Viewpoints - Due to the escalation of US-China tensions, the Asia IG space widened 3-7bps across the board yesterday, with better selling on certain bonds and better buying on others [2] - China's export resilience strengthens its position in the trade war, leading to a revision of the 2025 export growth forecast from 3% to 4.5%, while maintaining the 2025 import growth forecast at 1.5%. The USD/RMB rate may appreciate from 7.13 to 7.1 by year-end and 7.05 by the end of 2026 [4][15][20] - China Water Affairs (CWAHK) proposes to issue a 5NC3 USD senior blue bond, with the FV of the new CWAHK 30 estimated at 6% [8] Summary by Directory Trading Desk Comments - Asia IG space widened 3-7bps due to US-China tension, with better selling on TW lifers, China TMTs, Japanese banks' bonds, and Southeast Asian names. Some bonds like FAEACO 12.814 Perp and NWDEVLs/LIFUNGs/FOSUNI 26 - 29s decreased in price. In Chinese properties, VNKRLE 27 - 29s and FTLNHD 26/FUTLAN 28 were lower, while some SOE property names had better buying. In Southeast Asia, VLLPM 27 - 29s edged up, and VEDLN 28 - 33s/GLPSPs were down. Long - end Yankee AT1s weakened in the morning and recovered slightly [2] - In the LGFV space, activities picked up with new CNH issues, and the space had a stable session with moderate two - way flows [3] - This morning, there were two - way flows on LGFV names. HAOHUAs recovered 3 - 5bps and HYUELEs recovered 5bps in Asia IG space, while NOMURA and Australian long - end Ts2 widened 2 - 3bps. CWAHK 26 had buyers and was 0.1pt higher [4] Marco News Recap - On Monday, S&P (+1.56%), Dow (+1.29%), and Nasdaq (+2.21%) were higher. The US bond market was closed for Columbus Day, and the UST yield was unchanged, with 2/5/10/30 yield at 3.52%/3.65%/4.05%/4.63% [7] Desk Analyst Comments - CWAHK proposes to issue a 5NC3 USD senior blue bond (Ba1/BB+/-), with the FV of the new CWAHK 30 at 6% considering its CWAHK 26 and peers' valuations, adjusted for rating and tenor differential. The issuance size should be capped at its remaining offshore - issuance quota of USD200mn [8] - The net proceeds will be used to repay offshore debt and finance eligible green projects. The new CWAHK 30 will have a CoC put at 101 [10] - CWAHK is a holding company operating mainly through PRC subsidiaries. The new CWAHK 30 will be guaranteed by non - PRC - incorporated subsidiary guarantors [11] - CWAHK is one of the largest water supply companies in China, focusing on water supply and sewage treatment, generating stable cash flow from exclusive concession rights in 58 districts. It serves various end - users with potential coverage of over 30mn people [12] - In FY25, CWAHK generated HKD11.7bn of revenue and HKD3.4bn of operating cash flow, with an estimated free cash flow of HKD40mn. Total debt was HKD25.6bn, and its operating performance weakened, with revenue and EBIT down c9%. Coverage ratios also weakened [13] - CWAHK is listed in Hong Kong, with the chairman and founder owning 27.4%, ORIX Corp and affiliates holding 27.2%, and Great Wall Life Insurance holding 6.0% [14] China Economy - China's export growth beat expectations as exports to Africa, Latin America, and the EU picked up. Exports of integrated circuits and ships remained robust, while personal consumption goods were subdued. Imports rebounded across the board, especially in processing trade. China's rare earth export control is a countermeasure to US semiconductor export restrictions. Trade tensions may intensify in the next two weeks before potentially easing after a possible Trump - Xi meeting [15] - Exports rebounded in September, reaching 8.3% YoY from 4.4% in August, beating market expectations. Exports to the US remained in deep contraction, while shipments to Africa, the EU, and Latin America accelerated. Exports to ASEAN moderated. Since the tariff shocks, exports to ASEAN and Africa have increased significantly, making up for over 120% of the export losses to the US since April. Trade surplus narrowed to US$91bn in September [16] - Integrated circuits and ships had strong growth in September, while personal consumption goods moderated. Low - value - added exports and housing - related products were hit by tariffs. Rare earth exports rebounded despite additional export controls [17] - China's imports increased to 7.4% in September from 1.3% in August, beating market expectations. Imports from the US steadied at - 16%. Import value of processing trade accelerated. For energy products, crude oil import volume rose, while coal and natural gas dropped. Raw material imports had mixed results, and crop imports picked up [18] Offshore Asia New Issues - No offshore Asia new issues were priced today [22] - There are several issuers in the pipeline, including the Macau Branch of Bank of China Limited, Jinan Hi - tech International, and KEB Hana Bank, with different tenors, coupons, and issue ratings [23] News and Market Color - Yesterday, 118 credit bonds were issued onshore with an amount of RMB138bn. Month - to - date, 191 credit bonds were issued with a total amount of RMB212bn, a 19.7% yoy increase [24] - Indonesia plans to shorten the permit process for geothermal projects to three months [24] - Country Garden's top shareholder agrees to a USD1.14bn debt - to - equity swap and will hold scheme meetings on 5 Nov'25 for creditors to vote on its offshore restructuring plan [24] - Freeport Indonesia halts the Gresik smelter due to a mine landslide [24] - China Energy Overseas will redeem GEZHOU 4.15 Perp of USD200mn on 25 Nov'25 [24] - LG Electronics expects a 8.4% yoy drop in 3Q25 operating profit due to higher tariffs [24]

Core Insights - The article compares California Water Service Group (CWT) and Middlesex Water (MSEX) to determine which stock offers better value for investors [1] Valuation Metrics - CWT has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while MSEX has a Zacks Rank of 4 (Sell) [3] - CWT's forward P/E ratio is 18.68, compared to MSEX's forward P/E of 21.37, suggesting CWT is more attractively priced [5] - CWT has a PEG ratio of 2.13, while MSEX's PEG ratio is significantly higher at 3.65, indicating CWT's expected earnings growth is more favorable [5] - CWT's P/B ratio is 1.6, whereas MSEX's P/B ratio is 2.08, further supporting CWT's valuation advantage [6] Investment Conclusion - CWT exhibits stronger estimate revision activity and more attractive valuation metrics than MSEX, making it the preferred choice for value investors at this time [7]

Industry Overview - The Zacks Utility - Water Supply industry includes companies that provide drinking water and wastewater services to various customers, including industrial, commercial, residential, and military bases [1] - Water utilities are essential for maintaining healthy living conditions by ensuring a constant supply of clean water and reliable sewer services [2] Infrastructure and Investment Needs - Water utility operators manage approximately 2.2 million miles of aging pipelines and require significant investments for maintenance and expansion, estimated at $1.25 trillion over the next 20 years according to the U.S. Environmental Protection Agency [3] - Recent interest rate cuts by the Federal Reserve, reducing benchmark rates to 4-4.25%, are expected to benefit capital-intensive utility operators by lowering capital servicing expenses [4] Company Comparisons - A comparative analysis was conducted on California Water Service Group (CWT) and The York Water Company (YORW), both currently rated Zacks Rank 2 (Buy) [5] - CWT's 2025 earnings estimate is $2.39 per share on revenues of $1 billion, reflecting a year-over-year decrease of 26.5% in earnings and a 3.3% decline in revenues [6] - YORW's 2025 earnings estimate is $1.35 per share on revenues of $78 million, indicating a 4.9% decline in earnings but a 4.1% growth in revenues [6] Financial Metrics - CWT has a debt-to-capital ratio of 48.11% and YORW has 48.22%, both below the industry average of 50.04% [7] - The times interest earned ratio for CWT is 2.9 and for YORW is 3.1, indicating both companies have sufficient financial flexibility to meet near-term interest obligations [8] Dividend and Performance - CWT's current dividend yield is 2.63% and YORW's is 2.82%, both higher than the Zacks S&P 500 composite average of 1.1% [9] - CWT shares have increased by 0.4% quarter-to-date, while YORW shares have decreased by 1.6%, compared to the industry's overall gain of 0.9% [10][12] Earnings Surprise and Historical Performance - CWT has delivered an average earnings surprise of 51.6% over the last four quarters, while YORW has experienced a negative earnings surprise of 5.22% [11] Conclusion - Both CWT and YORW are suitable choices for investment, focusing on water and wastewater services with potential for expansion. However, CWT is preferred due to better debt management and price performance compared to YORW [14]

Core Insights - Pentair plc (PNR) has successfully completed the acquisition of Hydra-Stop LLC from Madison Industries, enhancing its portfolio to address critical water issues in growing cities [1][3]. Acquisition Details - Hydra-Stop, a manufacturer of insertion valves and line stops, is based in Burr Ridge, Illinois, and employs 50 people. It will be integrated into Pentair Flow's business segment within the Commercial and Infrastructure unit [2][7]. - The acquisition is valued at $290 million, with a net value of approximately $240 million after accounting for $50 million in tax benefits. Hydra-Stop is expected to generate $50 million in revenues by 2025, with a return on sales of 30% [3][7]. Financial Performance - In Q2 2025, Pentair reported adjusted earnings per share of $1.39, exceeding the Zacks Consensus Estimate of $1.33 by 4.5% and marking a 14% increase from the previous year. Net sales rose 2% year-over-year to $1.123 billion, surpassing the consensus estimate of $1.115 billion [4]. - The Flow segment's net sales remained flat at $397 million compared to the prior year, while operating earnings increased by 10% year-over-year to $93 million [5]. Stock Performance - Pentair's stock has appreciated by 18.2% over the past year, significantly outperforming the industry average growth of 4.8% [6].

Core Viewpoint - Investors in the Utility - Water Supply sector should consider California Water Service Group (CWT) and American Water Works (AWK), with CWT appearing more attractive for value investors due to its stronger earnings outlook and better valuation metrics [1][3]. Valuation Metrics - CWT has a forward P/E ratio of 18.95, while AWK has a forward P/E of 24.05, indicating that CWT is potentially undervalued compared to AWK [5]. - The PEG ratio for CWT is 2.16, compared to AWK's PEG ratio of 3.25, suggesting that CWT offers better value when considering expected earnings growth [5]. - CWT's P/B ratio is 1.62, while AWK's P/B ratio is 2.51, further supporting the notion that CWT is more attractively priced [6]. Zacks Rank and Style Scores - CWT currently holds a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions, while AWK has a Zacks Rank of 4 (Sell) [3]. - The Style Score Value grade for CWT is B, whereas AWK has a Value grade of D, highlighting CWT's superior valuation metrics [6]. Conclusion - Based on stronger estimate revision activity and more attractive valuation metrics, CWT is positioned as the superior option for value investors compared to AWK [7].

Industry Overview - The Zacks Utility - Water Supply industry includes companies providing drinking water and wastewater services to various customers, including military bases [1] - Water utilities are essential for maintaining healthy living conditions by ensuring a constant supply of clean potable water and reliable sewer services [2] Investment Requirements - Water utility operators manage nearly 2.2 million miles of aging pipelines and require significant investments for maintenance and expansion, estimated at $1.25 trillion over the next 20 years [3] - The need for massive investments presents growth opportunities for operators in the water supply sector [3][4] Company Comparisons - Consolidated Water (CWCO) has a market capitalization of $534.5 million, while Global Water Resources (GWRS) has a market cap of $275.56 million [5] - CWCO's 2025 earnings estimate is $1.05 per share on revenues of $133.09 million, indicating a year-over-year decrease of 6.3% in earnings and 0.7% in revenues. GWRS's 2025 earnings estimate is 22 cents per share on revenues of $55.85 million, reflecting a 15.4% decline in earnings but a 6% growth in revenues [6] Financial Metrics - CWCO has a debt-to-capital ratio of 0.06%, significantly lower than GWRS's 61.14%, while the industry average is 50.04% [7] - The current ratio for CWCO is 5.24, indicating strong financial flexibility, compared to GWRS's 1.09 and the industry average of 0.9 [8] Dividend Yield - CWCO's dividend yield is 1.67%, while GWRS offers a higher yield of 3.03%, both exceeding the Zacks S&P 500 Composite average of 1.15% [11] Earnings Surprise History - CWCO has delivered an average earnings surprise of 40.1% over the last four quarters, whereas GWRS has experienced a negative earnings surprise of 6.1% [12] Stock Performance - In the past six months, CWCO shares have increased by 21.9%, while GWRS shares have decreased by 13%. The industry overall has risen by 11.5% during the same period [10][13] Conclusion - Both CWCO and GWRS are viable options for investment, focusing on water and wastewater services with potential for expansion. However, CWCO is favored due to its superior debt management, liquidity, and stock performance compared to GWRS [15]