SINGAPORE (Mar 2): Phillip Capital is maintaining “buy” on China Everbright Water after the group’s FY17 revenue exceeded its forecasts by 12%, while PATMI came in line with estimates.
See: China Everbright posts 47% rise in FY17 earnings to $86.5 mil on higher revenue and finance income
In a Friday report, Phillip analyst Chen Guangzhi says he remains positive on China Everbright for its improved operations and synergy as evident over FY17 – which saw projects under Dongda seeing their receivables collection rate exceed 100% during the period under the review. This implies the group has managed to collect its old receivables in arrears.
While China Everbright’s attempts to establish a water affair-related fund has been put on hold, Chen points out that the group will still actively seek other channels to strengthen its funding position.
He also highlights that the group is still on track to meet its target for ramping up daily designed capacity, with market conditions to favour the group going forward.
“As of Dec 17, 22% of total capacity below G1A standard will be upgraded and will receive tariff hikes in the future. In 2018, we still see favourable support for PPP model from central government and the shift from quantity-oriented to quality-oriented in the market,” says Chen.
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The research house has revised its FY18E EPS forecast to 4.8 cents from 4.5 cents on expectations of improvement in profitability and the speedy ramp-up of new capacity.
This has resulted in a higher target price of 60 cents compared to 59 cents previously, based on a lower average 12-month forward PER of 12.5 times compared to the previous 17.4 times.
As at 4.25pm, shares in China Everbright are trading flat at 45 cents, or 0.7 times FY18 book.
