HK Stock Market Move | BJ ENT WATER (00371) rises by more than 4% again, company expected to benefit from debt-to-equity swap policy, institutions say dividend yield is attractive.

BJ ENT WATER(00371) rose over 4% again, rising 3.29% to HK$2.51 as of the time of writing, with a turnover of HK$24.33 million. On the news front, on November 8, Minister of Finance Liao Lv'an introduced that starting from 2024, China will directly increase local debt resources by 10 trillion yuan. Haitong believes that with the continuous promotion of the debt policy, it is expected to effectively improve the current collection issues. This will not only reduce the credit impairment losses in the profit and loss statement and bring down the profit margin, but also further improve the cash flow of the sector in order to maintain a high dividend payout ratio in the water sector. This will help to address the existing flaws in the high dividend payout logic and further drive the sector's valuation. Soochow pointed out that BJ ENT WATER's (51%) elasticity is outstanding, measured by the accounts receivable market value elasticity. Huatai also noted that Beijing Enterprises Water Group is persisting in its transition to light assets, with a net free cash flow of RMB 37 million in the first half of the year, turning from negative to positive on an annual basis. While there may be certain pressure on short-term collections, the operation of water utilities is closely related to the government's financial payment capacity. It is expected to benefit from the improvement in cash flow brought about by the debt policy. With a stable dividend policy, the dividend yield is at 6.6%, making it attractive.