Equity Analysis /
Hong Kong

HK : China Water Affairs - To spin off its direct drinking water business

    Mark Po
    Mark Po

    Research Analyst

    20 December 2021
    Published byCGS-CIMB

    China Water Affairs announced that it plans to spin off the city direct drinking water and water supply operations and construction business on HKEX. We expect the pipeline direct drinking water operations to be one of the growth drivers for China Water Affairs Despite its share price outperformance, China Water Affairs is trading at 6.9x FY22F P/E and 6.1x FY23F P/E, so with a yield of 4.1%, its valuation still looks attractive. We maintain our ADD rating, with a target price of HK$11.12, based on 9x FY22F P/E, which is in line with its historical average.