[ET Net News Agency, 8 September 2020] UBS Global Research lifted its target price for
Guangdong Investment (GDI)(00270) to HK$17.1 from HK$16.5 and upgraded its rating to "buy"
from "neutral".
The research house believes GDI's HK water business faces limited regulatory risks
because 80% of Hong Kong's water supply came from Dongjiang, China. Hong Kong does not
have other sources of water supply and the costs of water desalination are almost double
the cost of purchasing water from Dongjiang.
UBS raised its earnings forecasts for 2021-23 by around 1%, largely to reflect its
expected 1.4% annual HK water-revenue increase during this period (up from our previous
expectation of 1%).
The Hong Kong water-contract revenue is subject to review by the end of this year and
the new revenue for 2021-23 will be decided. Based on the previous renegotiation rounds,
UBS believes the HK and Guangdong governments largely track the three-year trailing
inflation and exchange rates (HK dollar vs Renminbi) when making decisions on the upcoming
contract. (KL)
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00270 GUANGDONG INV
Nominal 
3.490 -0.070 (-1.966%) Research Report
08/09/2020 16:42
{I-bank focus}UBS lifts Guangdong Invest (00270) to HK$17.1
| Remark: | Real time quote last updated: 19/04/2024 14:19 |
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