[ET Net News Agency, 9 July 2019] Citi Research lowered its target price for Beijing
Enterprises Water (BEW)(00371) to HK$5.4 from HK$5.65 and maintained its "buy" rating.
The research house said cut our 2019-21 net profit forecasts for BEW by around 5% owing
to Rmb/HK$ depreciation. Citi said the Rmb/HK$ exchange rate has depreciated 1% to 1.13
year-to-date. The average exchange rate is 1.13 year-to-date, 5% below 1.19 in 2018. The
Rmb/HK$ depreciation is adverse to net profits, which are reported in HK$ while earnings
are mostly in Rmb. Citi forecast Rmb will not depreciate below 7.0 versus the US$ in 2019.
It added that BEW's 9.5x 2019 PER and 1.5x 2019 PB look inexpensive, being 41% and 25%
below their historical averages of 16.2x PE and 2.0x PB. (KL)