Citigroup: Reiterates that China Everbright Environment (00257) “Buy” Rating raised the target price to HK$5.4

The Zhitong Finance App learned that Citi released a research report stating that it reaffirmed the “buy” rating of China Everbright Environment (00257), and that the target price was raised from HK$5 to HK$5.4. Based on the expected increase in positive free cash flow last year, which is sufficient to cover financing costs and dividend payments for the first time, which is beneficial to continued dividend growth; capital expenditure is more prudent, mainly investing in overseas projects with higher returns than domestic projects; and a catalyst for the dual listing of A-shares, it is expected to drive the revaluation of H shares.

Based on lower financing costs, the bank raised China Everbright Environmental's net profit forecast for this year and next two years by 2% to 3%. Profit growth is expected to accelerate year-on-year this year, benefiting from reduced foreign exchange losses, financing costs and impairment losses.

The bank raised its target price for Everbright Environmental due to increased free cash flow and lower weighted average cost of capital. The bank believes that in the context of monetary easing in the mainland and US interest rate cuts, the stock currently predicts a price-earnings ratio of 7 times, a market account ratio of 0.5 times, and a dividend rate of 5.8 percent, and the valuation is attractive.