Bank of America Securities: Everbright Environmental (00257) A share issuance is expected to increase the dividend per share by 38%, implying a 7.5% dividend rate

The Zhitong Finance App learned that Bank of America Securities released a research report saying that Everbright Environment (00257) revealed the progress of the A-share listing plan. The bank expects the dividend payout per share to rise 38% year-on-year after the issuance of A-shares, implying a 7.5% dividend rate, and maintaining a “buy” rating and target price of HK$6.8.

According to the bank, Everbright Environmental plans to issue no more than 800 million shares on the Shenzhen Stock Exchange, accounting for about 13% of the currently issued shares. The proceeds will be used for 7 construction projects, mainly waste-to-energy projects in Dongguan, Uzbekistan and Vietnam, with a total capital expenditure of RMB 8.6 billion.

The bank pointed out that as a state-owned enterprise, Everbright Environment must issue A shares at a rate higher than 1 times the market account rate, with an estimated book value of HK$8.9 per share at the end of 2026; the bank understood that mainland investors require a dividend rate of more than 4%, which means that the dividend per share needs to rise to about HK$0.37. The bank believes that the increase in dividend per share will dilute earnings per share by about 9%, and expects the dividend level to remain at least unchanged in the future. To achieve a dividend payout of HK$0.37 per share after expanding the share capital, a dividend ratio of about 55% may be required.

Bank of America Securities anticipates that Everbright may only promise a dividend payout ratio of not less than 40% to 50% over the next three years, but it is still confident that the dividend will reach HK$0.37 per share.