"Large Banks" Huayan raises BJ ENT WATER's target price to 2.7 yuan, maintains "Hold" rating

HSBC Research published a report indicating that BJ ENT WATER (00371.HK) saw its net profit shrink by about 20% to RMB 897 million in the first half of the year, in line with the bank's expectations. The dividend increased by 5% year-on-year to HKD 0.0735, with a payout ratio of 83%. Although the company has not provided guidance on future payout ratios or dividend growth targets, the bank expects that, based on the company's strong cash flow, its dividends in the second half of this year are likely to grow year-on-year.

The bank believes that BJ ENT WATER's non-cash construction income and profits continue to shrink, but concerns about the outlook for dividends per share have eased slightly, as the company has robust cash flow and payout ratios. Considering the valuation is reasonable, HSBC maintains a "Hold" rating for the group, raising the target price from HKD 2.6 to HKD 2.7