SINGAPORE (April 3): DBS is maintaining its “buy” call on China Everbright Water with a target price of 64 cents on stronger project pipeline after latest contract win.
China Everbright Water announced on Friday it had won the bid for the Ji’nan Zhangqiu urban-rural integration water supply project in Shandong.
(See also: China Everbright Water wins $628.6 mil water supply project contract in Shandong)
The project comprises different types of water projects, including water source expansion, urban-rural water supply, reservoir construction, pipeline network construction and water diversion and replenishment of reservoir. Total investment amount is RMB3.1 billion ($628 million).
In a Monday note, DBS says this project is China Everbright’s first project of this kind and underscores the company’s success in broadening its business scope. It will also enhance its integrated business strength and reinforce its market position.
China Everbright Water’s project wins are already RMB4 billion year to date, substantially higher than the RMB2.5 billion awarded for the full year of FY16, adds DBS.
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“The significant improvement in deal flow should bring about robust growth in construction revenue, which will subsequently increase operating services and cashflow,” says the research house.
“We maintain our “buy” rating on China Everbright Water with target price of 64 cents, based on 24x 12-month rolling adjusted PE but stripping out construction revenue,” says DBS.
Shares of China Everbright Water are up 2 cents at 50 cents.