HKD9683.8m market cap
HK$6.11 last close
China Water Affairs (CWA) is a pioneer in the privatisation of water supply assets in China. The company seeks to create growth via volume/price increases.
Investment summary
Despite a challenging environment, CWA performed strongly in FY20, achieving growth in all key financial metrics. Revenue rose 4.7%, helped by a strong performance from the water business (c 90% of profits) and operating profit rose by 5.3%. Lower finance costs, a stronger than forecast associate line and a lower than expected tax rate delivered a 17.7% rise in net profits (2.8% ahead of forecast). A lower than forecast attribution to minorities and a small fall in the share count (buy-back) saw EPS rise 20%. The DPS of HK$0.30 was below our forecast (HK$0.33), but still up 7.1% y-o-y. Based on our updated forecasts CWA’s share price rating appears modest despite requirements for significant environmental expenditure in the Chinese water sector presenting it with an opportunity to grow.
Y/E Mar |
Revenue (HK$m) |
EBITDA (HK$m) |
PBT (HK$m) |
EPS (c) |
P/E (x) |
P/CF (x) |
|---|---|---|---|---|---|---|
| 2019A | 8302.0 | 3536.0 | 2772.0 | 85.1 | 7.2 | N/A |
| 2020A | 8694.0 | 3781.0 | 3165.0 | 102.1 | 6.0 | N/A |
| 2021E | 9731.0 | 4278.0 | 3374.0 | 108.0 | 5.7 | N/A |
| 2022E | 10787.0 | 4725.0 | 3810.0 | 122.0 | 5.0 | N/A |
Industry outlook
Water supply in China remains fragmented. The central government encourages local governments to deleverage their own balance sheets with private–public partnerships. This trend remains positive for CWA.
Last updated on 26/02/2021
Sector |
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| Industrials |
Share price graph
Balance sheet |
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| Forecast net debt (HK$m) | 0 |
| Forecast gearing ratio (%) | N/A |
Price performance
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Key management |
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| Duan Chuan Liang | Chairman |
| Liu Yu Jie | Executive director |
| Ding Bin | Executive director |
| Li Zhong | Executive director |
