China Water Affairs (CWA) reported solid 1HFY22 results, stronger than we expected. Its water supply-related business reported resilient yoy revenue growth, and its waste water treatment business also reported good yoy growth in 1HFY22. CWA management discussed the potential for its pipeline direct drinking water operations, which in our view, will be one of the growth drivers. The less positive point about the Company’s 1HFY22 results was a yoy increase in its total gearing ratio. Despite its share price outperformance, CWA is trading at 6.7x FY22F P/E and 5.9x FY23F P/E, and with a yield of 4.2%, CWA’s valuation still looks attractive. We maintain our ADD rating, with a new target price of HK$11.12 (up from HK$8.29), based on 9x FY22F P/E, which is in line with its historical average.