Investment Rating - The report maintains a "Buy" rating for China Water Affairs (00855.HK) [1] Core Views - The company reported a total operating revenue of HKD 5.953 billion for FY2025 H1, a decrease of 13.0% year-on-year, and a net profit attributable to shareholders of HKD 756 million, down 8.5% year-on-year. The interim dividend per share remains unchanged at HKD 0.13 [1] - Operating income continues to grow, while connection and construction revenues decline, leading to an optimized profit structure and a downward trend in capital expenditure [1] - The decline in revenue for FY25H1 is attributed to the peak construction period of projects having passed, resulting in reduced construction income across various segments [1] Summary by Sections Revenue and Profitability - Total revenue for FY2025 H1 was HKD 5.953 billion, with a year-on-year decline of 13.0% - Net profit attributable to shareholders was HKD 756 million, down 8.5% year-on-year - The gross profit margin for FY25H1 was 38.4%, an increase of 1.5 percentage points year-on-year [1] Segment Performance - Urban Water Supply: Revenue of HKD 3.765 billion, down 10.6% year-on-year; segment profit of HKD 1.140 billion, down 5.4% [1] - Direct Drinking Water: Revenue of HKD 367 million, down 64.3% year-on-year; segment profit of HKD 167 million, down 50.3% [1] - Environmental Protection: Revenue of HKD 766 million, up 20.1% year-on-year; segment profit of HKD 283 million, up 12.7% [1] - General Contracting Construction: Revenue of HKD 424 million, down 18.1% year-on-year; segment profit of HKD 398 million, up 10.7% [1] - Property: Revenue of HKD 253 million, segment profit of HKD 129 million, down 15.8% year-on-year [1] Financial Health - The debt-to-asset ratio was stable at 65.97% as of September 30, 2024, a slight decrease from March 31, 2024 [1] - Total outstanding loans amounted to HKD 25.621 billion, an increase of 3.1% from March 31, 2024 [1] - The average interest rate for FY25H1 was 5.71%, a year-on-year increase of 0.09 percentage points [1] Future Outlook - The report adjusts the net profit forecasts for FY2025-2027 from HKD 1.626 billion, 1.789 billion, and 1.989 billion to HKD 1.450 billion, 1.393 billion, and 1.438 billion, respectively, with corresponding P/E ratios of 5.0, 5.2, and 5.0 times [1]
中国水务：FY2025中报点评：运营性收入持续增长，盈利结构优化，资本开支迎向下拐点