Citigroup raises the target price of EB ENVIRONMENT to 5 yuan, reiterating a "Buy" rating

Citigroup's research report states that it reaffirms its "Buy" rating on EB ENVIRONMENT (00257.HK), believing that the 10.1% decline in net profit in the first half of the year is not a major issue, mainly affected by foreign exchange losses; excluding this factor, the pre-tax profit actually grew by 11.2% year-on-year. Additionally, the company's earnings quality continues to improve, with operating revenue accounting for 70%, an increase of 9 percentage points year-on-year. Meanwhile, the interim dividend grew by 7.1% year-on-year, exceeding market expectations, and free cash flow doubled year-on-year to reach 2 billion yuan in the first half of the year, with expectations for quarterly growth in the second half.

Based on reduced construction revenue, the bank has lowered its net profit forecast for EB ENVIRONMENT in 2025 by 9.7%, but raised the target price from 4.3 yuan to 5 yuan due to more positive expectations for free cash flow. (ss/)