Core Viewpoint - The company reported a decline in total revenue and net profit for the first half of FY2026, with total revenue at HKD 5.183 billion, down 12.9% year-on-year, and net profit at HKD 571 million, down 24.4% year-on-year [1] Revenue Breakdown - The company's revenue decreased by HKD 769 million year-on-year, with the largest declines in the following segments: water supply construction (down HKD 456 million), property sales (down HKD 241 million), water supply connections (down HKD 223 million), and direct drinking water construction (down HKD 80 million) [2] - The net profit of HKD 571 million reflects a 24.4% year-on-year decline, but adjusted for a non-cash loss of HKD 64 million due to a share dilution from a takeover offer, the adjusted net profit would be approximately HKD 635 million, down 15.9% year-on-year [2] Cost Management - The company has successfully reduced costs, with selling and administrative expenses down 9.0% to HKD 437 million and financial expenses down 17.6% to HKD 352 million [2] - The debt-to-asset ratio showed a downward trend, decreasing by 2.5 percentage points to 64.3% at the end of FY26H1 compared to the beginning of the period [2] Segment Performance - In the urban water supply segment, revenue was HKD 3.271 billion, down 13.1%, with segment profit at HKD 941 million, down 17.4%, primarily due to a reduction in installation, maintenance, and construction projects [2] - The pipeline direct drinking water segment saw revenue of HKD 263 million, down 28.3%, with segment profit at HKD 75 million, down 55.2%, also affected by reduced installation and maintenance projects [2] - The environmental segment reported revenue of HKD 832 million, up 8.7%, with segment profit at HKD 367 million, up 29.7%, driven by increased revenue from the Huizhou Daya Bay Mobil project [2] - The total contracting construction segment had revenue of HKD 398 million, down 6.1%, with segment profit at HKD 158 million, down 60.2%, mainly due to a decrease in water supply project construction [2] - The property segment generated revenue of HKD 170 million, with segment profit of HKD 500,000, down 96.4% year-on-year due to a decline in property project sales [2] Water Supply Operations - The company reported a 5% year-on-year increase in water supply volume, with revenue from water supply operations at HKD 1.801 billion, up 4.5% [3] - The average water price was HKD 2.37 per ton, with 8 projects completing price adjustments and over 20 projects initiating price adjustment procedures, which is expected to enhance profit margins [3] Capital Expenditure and Dividends - Capital expenditure decreased by 31.8% to HKD 1.243 billion, while the total dividend remained stable at HKD 0.13 per share, maintaining a dividend yield of 4.8% [4] - The company anticipates steady growth in core water supply operations, with no accounts receivable risk and increasing free cash flow, enhancing dividend capacity [4] Profit Forecast - Due to the ongoing decline in connection and construction revenue, the company has revised its net profit forecasts for FY2026-2028 from HKD 1.372 billion, 1.387 billion, and 1.415 billion to HKD 1.136 billion, 1.206 billion, and 1.232 billion, respectively, corresponding to PE ratios of 8.4, 7.9, and 7.8 times [4]

FY26H1供水量同增5%，8个项目完成水价调整 FY26H1，公司1)供水运营：营收18.01亿港元，同比+4.5%(人民币口径同比+5.6%)。①售水量7.6亿吨， 同比+5.0%。根据项目明细统计，截至2025/9/30，自来水和原水项目投运规模合计928万吨/日(同比 +7.8%)，在建85万吨/日，拟建403万吨/日。②水价平均2.37港元/吨，FY26H1公司8个项目实现调价， 超过20个项目已启动调价程序，调价机制常态化将进一步推动利润率回升。2)供水安装及维护：营收 5.56亿港元；3)供水建设：营收11.64亿港元。 直饮水板块优化拓展策略，推动轻资产高质量发展 FY26H1，1)直饮水运营：营收1.85亿港元；2)直饮水安装及维护：营收0.07亿港元，3)直饮水建设：营 收0.53亿港元；4)设备销售：营收0.19亿港元，同比+34.1%；5)桶装水/瓶装水：营收0.04亿港元，同比 +145.4%。 东吴证券发布研报称，维持中国水务(00855)"买入"评级，核心供水运营业务稳健增长，且无应收风 险，资本开支向下，自由现金流持续增厚，现金流价值凸显，分红能力提升。 东吴证券主要观点如下： ...