Soochow Securities Co., Ltd.: Maintains "Buy" rating on GUANGDONG INV, water resource business is stable

According to the Zhitong Finance APP, Soochow Securities released a research report stating that Guangdong Investment (00270) has stable performance in its water services sector, improved liabilities after divesting Guangdong Land, stable dividend ratio, and strong cash flow certainty. Considering the cost reduction and efficiency increase exceeding expectations, the bank has raised its net profit attributable to the parent company for 2025-2027 from HKD 4.274 billion / 4.357 billion / 4.453 billion to HKD 4.536 billion / 4.649 billion / 4.741 billion, corresponding to PE ratios of 10.3 / 10.0 / 9.9 times. Assuming a 65% dividend payout ratio for the entire year of 2025, the expected dividend yield for 2025 is 6.3%, maintaining a "Buy" rating. Key points from Soochow Securities are as follows: Event: For Q1-Q3 2025, the company's continuing operations revenue was HKD 14.281 billion, a year-on-year increase of 1.3%, with a comprehensive profit attributable to the owners of the company of HKD 4.067 billion, a year-on-year increase of 13.2%. Net profit attributable to the parent company increased by 13.2%, financial expenses decreased by 52.9% year-on-year For Q1-Q3 2025, the company's continuing operations revenue was HKD 14.281 billion, a year-on-year increase of 1.3%, with a pre-tax profit from continuing operations of HKD 6.241 billion (year-on-year +9.5%, same below), mainly due to savings in financial expenses for continuing operations down to HKD 263 million (-52.87%) and reductions in administrative expenses. The comprehensive profit attributable to the owners of the company for Q1-Q3 2025 was HKD 4.067 billion, a year-on-year increase of 13.2%. Water resource business is stable, with both revenue and profit growth from the Dongshen water supply project, and revenue from water supply to Hong Kong increased by 2.6% year-on-year ① Dongshen water supply project: For Q1-Q3 2025, revenue was HKD 5.242 billion (+1.6%), of which revenue from water supply to Hong Kong was HKD 4.303 billion (+2.6%), and revenue from water supply to Shenzhen and Dongguan was HKD 939 million (-2.5%). It contributed a pre-tax profit of HKD 3.596 billion (+3.9%), with a total water supply volume of 1.670 billion tons (+1.5%). The Dongshen water supply project saw both revenue and profit growth, exceeding the growth rate of water supply volume, reflecting smooth market-based pricing for water supply to Hong Kong and good profitability; ② Other water resource projects: For Q1-Q3 2025, revenue was HKD 5.611 billion (+5.8%), of which operating revenue was HKD 5.307 billion (+4.2%); it contributed a pre-tax profit of HKD 1.601 billion (-2.6%). As of September 30, 2025, this sector had an operational water supply capacity of 10.8368 million tons/day (+0.9%), with a construction water supply capacity of 1.187 million tons/day (-8.0%), and an operational sewage treatment capacity of 2.2979 million tons/day (+12.09%). The property sector's Guangdong Tianhe City saw a pre-tax profit increase of 11.3% to HKD 767 million, and the department store's pre-tax profit increased by 37.3% to HKD 64 million Property investment: For Q1-Q3 2025, Guangdong Tianhe City and Guangdong Investment Tower (Hong Kong) contributed revenues of HKD 1.262 billion (+4.8%) and HKD 36 million (+2.6%), respectively; Guangdong Tianhe City contributed a pre-tax profit of HKD 767 million (+11.3%). 2) Department store operations: For Q1-Q3 2025, five department stores contributed revenue of HKD 317 million (-45.6%), contributing a pre-tax profit of HKD 64 million (+37.3%) Hotel segment: 25Q1-Q3 contributed revenue of HKD 505 million (+57.8%); contributed pre-tax profit of HKD 69 million (-20.3%). 4) Road and bridge segment: 25Q1-Q3 Guangdong-Hai Expressway contributed revenue of HKD 446 million (-7.0%), contributed pre-tax profit of HKD 231 million (-8.2%). 5) Energy segment: 25Q1-Q3 Guangdong-Hai Energy and Guangdong Electric Jinghai project contributed revenue of HKD 1.173 billion (-3.5%) and HKD 4.161 billion (-21.4%) respectively; Guangdong-Hai Energy contributed pre-tax profit of HKD 143 million (+17.1%), and the group’s share of Guangdong Electric Jinghai project pre-tax profit was HKD 35 million (-56.5%). Risk Warning: Water supply volume is below expectations, water service price adjustment is lower than expected, accounts receivable collection risk