Edison Investment Research Limited: Edison issues outlook on China Water Affairs Group (855)
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Edison Investment Research Limited
London, UK, 23 July 2020 Edison issues outlook on China Water Affairs Group (855) In FY20, despite a very challenging operating environment, China Water Affairs (CWA) delivered another year of growth for shareholders. Requirements for environmental expenditure in the Chinese water sector present opportunities for it to extend its track record of growing returns into FY21 and beyond. This opportunity does not appear to be reflected in CWA's current modest market rating of an FY21e P/E multiple of 5.6x.
Despite the persistence of COVID-19 and political related uncertainty in Hong Kong, following the better than anticipated FY20 results, we have nudged up our FY21 EPS forecasts for CWA from HK$1.06 to HK$1.08, implying a P/E of c 5.6x. The market appears to be taking a cautious view of CWA's growth prospects with a PEG ratio of 0.6x. Applying a PEG ratio of 1.0x (peer group: 1.1x) would indicate a valuation of HK$9.5/share. Our revised DCF model (EBIT growth FY20-25 12% CAGR and WACC 10%) indicates a valuation of HK$7.9/share.
All reports published by Edison are available to download free of charge from its website About Edison: Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities. For more information please contact Edison: Graeme Moyse, +44 (0)20 3077 5700
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1100791 23-Jul-2020
China Water Affairs Group Stock
With 0 Sell predictions and 2 Buy predictions the community sentiment towards the China Water Affairs Group stock is not clear.
As a result the target price of 1 € shows a very positive potential of 63.67% compared to the current price of 0.61 € for China Water Affairs Group.
