Huatai Securities raises the target price of BJ ENT WATER to 3.44 yuan and maintains a "Buy" rating

Huatai Securities research report pointed out that BJ ENT WATER (00371.HK) announced its 2025 performance, achieving revenue of RMB 22.06 billion, a year-on-year decrease of 9.1%. The main reason is that revenue from water governance construction fell by 53% year-on-year to RMB 1.62 billion; net profit attributable to shareholders was RMB 1.56 billion, a year-on-year decrease of 6.9%, which is basically in line with expectations.

The firm expects the company's net profit attributable to shareholders for 2026 to 2028 to be RMB 1.59 billion, RMB 1.65 billion, and RMB 1.72 billion, respectively, corresponding to earnings per share and dividends per share of RMB 0.16 and RMB 3.11 for 2026. The adjustments mainly consider 1) updates to the profit forecast for BJ ENT WATER's urban resources; 2) pressure on revenue forecasts for water governance construction services, technical services, and sales of equipment in 2025.

The firm is also optimistic about the company's future profitability improvement and dividend increase, giving it a price-to-earnings ratio of 19.2 times for 2026, raising the target price from HKD 3.15 to HKD 3.44, and maintaining a "Buy" rating