[ET Net News Agency, 30 August 2019] Citi Research lowered its target price for Beijing
Enterprises Water (BEW)(00371) to HK$5.2 from HK$5.4 and maintained its "buy" rating.
The research house said BEW peaked in April 2015 and then have dropped 45% since then.
Citi attributed the de-rating to investor concern about its negative free cash flow,
particularly as some big industry peers, such as Beijing Orient Landscape (Shenzhen code:
002310), are suffering from large losses and liquidity problems.
BEW has evolved to become more cash flow oriented and aims for positive free cash flow
in three to five years. Although the achievement of this target looks premature to
conclude, it seems to be a good long-term direction, said the research house.
Citi revised its 2019-21 net profit forecasts by within 3% on higher revenues but
thinner margins. (KL)