Core Viewpoint - Yuehai Investment reported a year-on-year revenue increase of 1.3% to HKD 14.281 billion for the first three quarters of 2025, primarily driven by growth in water resource business revenue [1] - The company achieved a net profit of HKD 4.067 billion, reflecting a 13.2% year-on-year increase, attributed to reduced financial and administrative expenses, net gains from investment properties, and the divestment of Yuehai Land [1] Group 1: Financial Performance - The company's pre-tax profit rose by 9.5% to HKD 6.241 billion, supported by lower financial and administrative costs, with financial expenses decreasing to HKD 263 million [1] - The net gain from ongoing investment properties was HKD 1 million, a significant improvement from a net loss of HKD 73 million in the same period last year [1] - The divestment of Yuehai Land resulted in a reduced loss of HKD 17 million, compared to a loss of HKD 39 million in the previous year [1] Group 2: Water Resource Business - The Dongshen Water Supply project reported a total water supply of 1.67 billion tons, with revenue of HKD 5.242 billion, marking a year-on-year increase of 1.6% [2] - Revenue from water supply to Hong Kong was HKD 4.303 billion, up 2.6% year-on-year, while supply to Shenzhen and Dongguan decreased by 2.5% to HKD 939 million [2] - Other water resource revenues increased by 5.8% to HKD 5.611 billion, although pre-tax profit decreased by 2.6% to HKD 1.601 billion [2] Group 3: Strategic Acquisitions - Yuehai Investment announced the acquisition of a 51% stake in Yangjiang Yuehai Qingyuan for RMB 156 million, enhancing its operational scale in wastewater pipeline renovation [3] - The company also acquired a 2% stake in Shantou Yuehai Water for RMB 70.88 million, increasing its ownership to 51% [3] - Post-acquisition, the operational scale of the company will rise from 11.18 million tons per day to 12.10 million tons per day, strengthening its market presence [3] Group 4: Profit Forecast and Target Price - The company maintains its profit forecast, expecting net profits of HKD 4.218 billion, HKD 4.397 billion, and HKD 4.576 billion for 2025-2027, with year-on-year growth rates of 34.2%, 4.2%, and 4.1% respectively [3] - The estimated EPS for the same period is projected at HKD 0.65, HKD 0.67, and HKD 0.70 [3] - The target price is set at HKD 9.11, based on a 2026 PE ratio of 13.6 times, reflecting the company's stable growth and strong cash flow [3]