[ET Net News Agency, 22 November 2017] Credit Suisse trimmed its target price for
Guangdong Investment (GDI)(00270) to HK$12 from HK$12.1, and maintained its "neutral"
rating.
The Development Bureau of Hong Kong yesterday released the proposal of new HK water
supply contract with Guangdong province for 2018-20 (to be supplied by GDI). The annual
contract revenue is set to increase at 0.3% per year, slower than 6.5% for 2015-17 but
largely in line with market expectations (0-2%).
The research house said the new contract will still be based on a lump sum payment
approach, with annual supply ceiling unchanged at 820mn cubic metres. The HK water
business is the main earnings contributor for GDI (accounted for 60% of its pre-tax core
earnings in 1H1207).
With likely flat HK business, Credit Suisse expects single-digit earnings growth for GDI
in next two years, although dividend growth may be higher. It slightly cut its FY2018-19
EPS by 1-2% as the proposed revenue growth came lower than its previous assumption (2%).
(KL)
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00270 GUANGDONG INV
Nominal 
3.690 0.000 (0.000%) Others
22/11/2017 15:46
[I-bank focus]CS trims Guangdong Investment (00270) to HK$12
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