Investment Rating - The report initiates coverage on Yuehai Investment with a "Buy" rating and sets a target price of HKD 9.10, corresponding to a 2025 target PE of 14.0 times [1][7]. Core Views - Yuehai Investment is a high-quality water utility platform controlled by Guangdong state-owned assets, with its core asset being the Dongshen Water Supply Project, which has undergone significant structural changes since 1997 [1]. - The company has a strong free cash flow and is expected to maintain high dividend returns following the divestment of Yuehai Land [1][19]. Summary by Sections Investment Highlights - The Dongshen Water Supply Project is a premium asset, accounting for nearly 80% of Hong Kong's freshwater supply, with a projected revenue of HKD 63.60 billion in 2024, representing 34% of total revenue [20]. - The company has turned positive in free cash flow since 2023, with projections of HKD 92.29 billion in 2024, and maintains a high dividend payout ratio of 65% [21]. - The divestment of Yuehai Land allows the company to focus on its core water business, enhancing stability and potentially increasing valuation [22]. Valuation and Financial Projections - The DCF valuation of the Dongshen Water Supply Project is estimated between HKD 450 billion and HKD 620 billion, with a stable profit contribution from other water resources and businesses [2][23]. - The forecasted net profit for 2025-2027 is HKD 42.18 billion, HKD 43.97 billion, and HKD 45.76 billion, with corresponding EPS of HKD 0.65, HKD 0.67, and HKD 0.70 [5][11]. Market Perspective - The report contrasts with market concerns regarding the uncertainty of the Dongshen project's operating rights renewal, water pricing, and transaction pricing, asserting that the renewal visibility is strong due to the project's historical significance [4][23]. - The report emphasizes that the water pricing will remain reasonable despite rising costs, as the Hong Kong Water Supplies Department aims to adjust water pricing cautiously [4][23].

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $14,200,000, an increase of $700,000 or 5.4% compared to Q2 2024, driven by a 3.8% increase in active service connections, increased consumption, and higher rates [14] - Operating expenses for Q2 2025 were $11,600,000, up $900,000 or 8.5% from Q2 2024, with notable increases in depreciation, personnel costs, and other operating expenses [15] - Net income for Q2 2025 was $1,600,000 or $0.06 per diluted share, compared to $1,700,000 or $0.07 per diluted share in Q2 2024 [16] - Adjusted EBITDA for Q2 2025 was $6,900,000, an increase of approximately $100,000 or 2.1% from Q2 2024 [17] Business Line Data and Key Metrics Changes - Total active service connections increased by 3.8% to 65,639 as of June 30, 2025, with an annualized growth rate of 3.5% [10] - The Tucson acquisition added approximately 2,200 connections and $7,700,000 in rate base, expected to generate around $1,500,000 in annual revenue [6] Market Data and Key Metrics Changes - The single-family dwelling unit market in the Phoenix area saw a 14% decrease in building permits in Q2 2025 compared to 2024, with the City of Maricopa experiencing a 24% decrease [12] - Despite the decrease in permits, population growth in the City of Maricopa was strong, with a 7.4% increase in 2024, indicating potential for future revenue growth [9] Company Strategy and Development Direction - The company aims for long-term value creation through acquisitions, infrastructure investments, and regulatory strategies, with a focus on sustainable growth [6][10] - The recent acquisition of Tucson's water systems is expected to enhance operational efficiency and customer service while expanding the utility portfolio in Pima County [20] - The company is processing rate cases to address cost increases and support future growth, with a proposed $6,500,000 annual rate increase under consideration [13][22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the mixed economic environment, including high inflation and interest rates, but expressed confidence in the company's growth strategy and operational performance [24] - The company believes that the recent legislative changes in Arizona will drive growth in service areas and improve aquifer sustainability [7] Other Important Information - The company invested $35,400,000 in infrastructure improvements year-to-date, focusing on major utilities in Pinal County [11] - The Highway 347 expansion project is expected to support growth in the City of Maricopa, which is projected to grow nearly 90% by 2040 [8] Q&A Session Summary - The Q&A session did not take place as the call concluded without any questions being addressed [29][30]

Group 1: Green Finance Initiatives - The Construction Bank of Shandong Province integrates its development into national strategic frameworks, focusing on green finance to support the transformation of the economy and society towards sustainability [1][25] - The bank has provided significant financial support for major infrastructure projects, including a total of 40 billion yuan in fixed asset loans for three Huanghe River crossing tunnel projects in Jinan [7][4] - The bank's innovative financial solutions, such as dynamic interest rate adjustments based on environmental performance, are designed to facilitate the green transformation of traditional industries like aluminum [21][22] Group 2: Infrastructure Development - Jinan has initiated a series of crossing projects over the Huanghe River, with the completion of the Jinan Huanghe Jiluo Road Tunnel, which is a key infrastructure for the city's "northward expansion" strategy [2][4] - The bank has played a crucial role in financing these projects, including a 20 billion yuan basic construction loan and a 20 billion yuan financing lease for the Jiluo Road Tunnel [4] - The Huanggang Road Tunnel project has received 10 billion yuan in funding from the bank, demonstrating its commitment to supporting large-scale infrastructure developments [6] Group 3: Renewable Energy Projects - The bank has approved a total credit of 1.571 billion yuan for the fourth phase of a distributed photovoltaic project, which aims to utilize highway slopes and service areas for solar energy generation [13] - This project is part of a broader initiative to reduce coal consumption and carbon emissions, contributing to the national "dual carbon" goals [13] - The bank's innovative service model has streamlined the funding process, allowing for quicker deployment of financial resources to support renewable energy projects [13] Group 4: Water Supply Improvement - The bank has provided 350 million yuan in credit for the Dongming County Urban and Rural Water Supply Improvement Project, addressing the growing water demand in the region [24] - This project is expected to enhance the water supply for both residential and industrial needs, thereby supporting local economic development [24] - The bank's proactive approach in creating tailored financial solutions has facilitated the timely execution of this essential infrastructure project [24]

Core Viewpoint - The water supply transformation in Yuncheng County, benefiting 420,000 residents, is a significant achievement driven by Heze Ruiyuan Company, showcasing their commitment and innovation in improving public welfare [1][4]. Group 1: Project Overview - The water source replacement project, covering 22 towns and 439 administrative villages, is nearing completion by July 2025, achieving a 100% water quality compliance rate [1][8]. - The project addresses severe water quality issues, including high salinity and fluoride levels, which posed health risks and hindered local ecological and economic development [4]. Group 2: Implementation Strategies - Heze Ruiyuan Company established a special task force with local government and technical teams to implement three key measures for project advancement [6]. - New corrosion-resistant materials (PCCP and PE pipes) were utilized to enhance pipeline durability, alongside an intelligent scheduling system for real-time monitoring of water pressure distribution [6]. - A "daily scheduling, weekly summary" mechanism was established to strengthen process management, resulting in the completion of six months' worth of work in just four months [6]. Group 3: Project Impact - The project has laid 631 kilometers of pipelines, ensuring comprehensive coverage of Yuncheng County's 22 towns and streets [8]. - The water source replacement will provide clean and safe water to 420,000 residents, with fluoride and hardness levels reduced by 80%, and an expected 35% decrease in waterborne disease consultations [8]. Group 4: Long-term Sustainability - Heze Ruiyuan Company has developed a "construction and management integration" service system to ensure long-term water quality safety and transparency for residents [9]. - Monthly third-party water quality testing and advanced real-time monitoring systems are in place to detect and respond to any anomalies promptly [9]. - The introduction of the "Yunzhou Water" WeChat mini-program and hotline services enhances public access to water quality information and service requests, significantly improving resident satisfaction [9].

【免责声明】本文仅代表作者本人观点，与和讯网无关。和讯网站对文中陈述、观点判断保持中立，不对所包含内容 的准确性、可靠性或完整性提供任何明示或暗示的保证。请读者仅作参考，并请自行承担全部责任。邮箱： news_center@staff.hexun.com (责任编辑：宋政 HN002) 格隆汇8月12日｜综合媒体消息，继杭州余杭街道居民反映自来水有异味后，深圳南山区有小区亦出现 类似问题。8月初，深圳南山区粤海街道一小区的部分住户反映水出现臭味，有关部门对二供泵房水池 存水进行取样，检测结果显示菌落总数、总大肠菌群、大肠埃希氏菌不合格。 当地水务公司工作人员日前证实了上述消息，称该小区为二次供水，此前接到反映后，他们已及时转接 市政直供水，保障居民用水。目前正在进一步修复相关隐患点，污水不会回流。"受暴雨天气影响，小 区的水池上方发生积水渗漏，路面水、雨水流入污染了水池。现在居民用水没有问题，我们进行了水样 检测，都显示水没问题，后续事项仍在积极处理。" ...

Group 1 - The core principle of business development in the Hotan region is "lawful operation and honest taxation," which serves as a crucial guarantee for stable regional economic growth [1] - The State Taxation Administration and the Hotan Regional Taxation Bureau have implemented the "Strong Foundation Project" to promote proactive compliance among enterprises through precise policy delivery, intelligent risk prevention, and positive credit incentives [1] Group 2 - The tax handling of corporate restructuring is complex, and improper tax treatment can lead to significant risks, as seen in the case of the merger between Biquan Water Co., Ltd. and the rural safe drinking water service station in Moyu County, which resulted in a substantial decrease in taxable income [2] - Tax authorities provided specialized guidance to the company, helping them understand tax policies and rectify their financial reporting, which led to the identification and rectification of historical tax liabilities [2] Group 3 - Xinjiang Milan Food Co., Ltd. emphasizes lawful and honest taxation as a fundamental aspect of its operations, having established a comprehensive internal tax control system that ensures accurate tax calculations and timely payments, benefiting from over 2.5 million yuan in tax incentives this year [3] - The company has developed from a small operation to a modern enterprise with an annual production capacity of 8,000 tons, contributing to rural revitalization by directly sourcing 90% of its raw materials from local farmers [3] Group 4 - The Hotan Regional Taxation Bureau plans to continue improving the tax credit system, optimizing credit repair mechanisms, and strengthening incentive measures to encourage enterprises to value their "credit wealth" [4]

Group 1 - The demand for water in Suzhou is increasing due to the ongoing high temperatures, prompting the Suzhou Water Authority to implement a comprehensive water supply guarantee plan [1] - The water quality monitoring team has increased the frequency of monitoring due to favorable conditions for algae growth during summer, focusing on key indicators such as algae and odor substances [1] - The Suzhou Water Authority is conducting inspections and follow-ups on water supply facilities to ensure the stability of critical infrastructure during high-temperature periods [1] Group 2 - Water treatment plants are facing challenges from fluctuations in raw water quality, peak water demand, and pipeline pressure during the summer supply period [2] - Emergency drills have been organized to enhance response capabilities for scenarios such as water source pollution and pipeline bursts, ensuring effective handling of emergencies [2] - Water supply hotlines are available 24/7 to address residents' inquiries and repair requests, ensuring timely resolution of water-related issues [2]

Core Viewpoint - The State Administration for Market Regulation has released a draft guideline for compliance in the metering behavior of public utilities providing water, electricity, and gas services in urban areas, inviting public feedback until September 3 [1] Group 1: Guideline Overview - The guideline integrates requirements from the metering law, relevant regulations, mandatory national standards, and technical specifications for public utility metering behavior [1] - It consists of three main sections: general principles, compliance requirements for metering behavior, and supplementary provisions, totaling seven chapters and 24 articles [1] Group 2: Scope and Requirements - The guideline applies to public utilities engaged in the provision of water, electricity, and gas services within urban areas, specifically defining "metering instruments" as residential water, electricity, and gas meters used for trade settlement [1] - Public utilities are required to establish comprehensive metering management systems and enhance the full lifecycle management of metering instruments, ensuring traceability from procurement to disposal [1] - The guideline emphasizes the collection and monitoring of metering data and encourages data integration with regulatory platforms of relevant departments [1] Group 3: Rural Considerations - The guideline acknowledges the similarities in metering management between urban and rural public utilities, suggesting that rural utilities can refer to the guideline for their metering activities [1]

Market Overview - The Hong Kong stock market rebounded last week, with the Hang Seng Index rising 1.4% to close at 24,858 points and the Hang Seng Tech Index increasing 1.2% to 5,460 points. The average daily trading volume decreased by 22.1% week-on-week to over 226.5 billion HKD, while net inflow from the Stock Connect was 21.7 billion HKD. All 12 major sectors in the Hong Kong stock market saw gains, with the materials sector surging 11.0% and the healthcare sector rising only 0.1%, the lowest performer [1]. Earnings Expectations - Current earnings expectations for Hong Kong stocks remain robust, with projected earnings growth rates of 2.7% and 8.5% for 2025 and 2026, respectively. The upstream resources sector benefits from anti-involution policies, coupled with stabilization in the Chinese bond market supporting earnings upgrades. However, short-term valuations have significantly recovered, with the Hang Seng Index's forecast PE returning to mid-range levels of 2018-2019, leading to a high-level consolidation phase in the market [1]. Sector Performance - The automotive sector saw a counter-trend increase last week, with new energy vehicle stocks like Li Auto and NIO rising 1%-3%. Dongfeng Motor surged 22.8% due to domestic anti-involution policies and potential state-owned enterprise restructuring news, outperforming its peers [3]. Industry Dynamics - The environmental, photovoltaic, wind power, natural gas, and electric equipment sectors have shown relative outperformance against the market, with average leads of 1.0%, 2.2%, 0.2%, 17.0%, and 2.2% percentage points, respectively, as of July 31. Conversely, the thermal power, nuclear power, and water supply sectors lagged behind by 0.6%, 6.1%, and 0.5% percentage points, respectively [4]. Power Generation Sector - The thermal power sector is expected to be impacted by rising coal prices, with July coal prices showing a narrowing year-on-year decline. The seasonal increase in coal demand has led to a month-on-month rise in prices, while coal inventories at major ports have decreased [5]. Electric Equipment Sector - The launch of the Yarlung Tsangpo River hydropower project, with a total investment of 1.2 trillion RMB and an expected capacity of 60-70 GW, is anticipated to significantly boost the national hydropower capacity. However, the long construction period may limit short-term profitability for related electric equipment manufacturers, who may face challenges in passing on rising costs to investors [6]. Photovoltaic Sector - As of July 30, the average price of polysilicon rose to 4.94 USD/kg, reflecting a year-on-year increase of 13.3% and a month-on-month increase of 17.1%. In contrast, the average price of photovoltaic modules decreased by 22.4% year-on-year, indicating that downstream demand needs to strengthen to confirm the price increases in polysilicon [7]. Stock Recommendations - Harbin Electric (1133 HK) is positioned to benefit from the Yarlung Tsangpo project, with a projected 95.0% year-on-year increase in net profit for the first half of 2025. Hong Kong and China Gas (1083 HK) expects moderate growth in natural gas sales, with a projected dividend yield of 4.8% for FY25. Cheung Kong Infrastructure (1038 HK) is stable in its operations across public utilities in the UK and Australia/New Zealand, also projecting a 4.8% dividend yield for FY25 [8]. Pharmaceutical Sector - The healthcare sector has shown strong performance, with the Hang Seng Healthcare Index rising 22.8% last month, outperforming the Hang Seng Index by nearly 20 percentage points. Policy support for innovative drug development and successful overseas collaborations for Chinese pharmaceutical companies have contributed to this growth [10]. Policy Developments - The government plans to establish a new directory for innovative drugs and support the use of medical insurance data for drug development, which is expected to enhance the sales of high-priced innovative drugs and accelerate research and development processes [11]. Drug Procurement Policy - The latest drug procurement policy is expected to trend towards moderation, allowing medical institutions to select brands for procurement, which may benefit high-quality products. The new rules aim to ensure that the lowest bids are reasonable and not below cost, thus maintaining the quality of procured drugs [12]. Key Individual Stocks - China Biologic Products (1177 HK) is projected to achieve double-digit growth in product sales revenue for 2025, bolstered by a significant milestone payment from Merck. Haijia Medical (6078 HK) is expected to benefit from the easing of government policies regarding medical insurance, which may improve its operating environment [13].

Core Viewpoint - Dongying City is prioritizing rural water supply reform as a key driver for comprehensive rural revitalization, focusing on improving water quality and ensuring safe drinking water for residents [3][4]. Group 1: Measures and Achievements - The city has implemented a three-year action plan to enhance rural water supply quality, resulting in significant upgrades to water supply infrastructure [3]. - A total of 11 new reservoirs have been constructed, adding an effective storage capacity of 1.2 billion cubic meters, facilitating regional interconnectivity and multi-source coordination [3]. - The number of operational rural water supply projects has been reduced from 23 to 13, all of which now provide water from large-scale plants, ensuring uniform quality and service standards across urban and rural areas [3]. - The coverage of deep treatment processes in water plants has increased, with 71.5% of the rural population now benefiting from upgraded facilities [3]. Group 2: Safety and Management - All five districts have passed the Ministry of Water Resources' standardization review for rural drinking water safety, achieving comprehensive coverage in standardized management [4]. - A robust water quality monitoring system has been established, integrating multiple departments to ensure safety from source to tap [4]. - The management structure has been optimized, with five state-owned enterprises overseeing the operation of rural water supply projects, enhancing efficiency and accountability [4]. Group 3: Future Plans - The Dongying Water Authority aims to continue improving rural water supply, with plans to update 400 kilometers of pipelines and replace 28,500 smart water meters by the end of 2025 [5]. - The authority will seek funding support for the ongoing renovation of aging water supply facilities and enhance collaboration with health departments to ensure water quality [5].