Goldman Sachs released a research report saying that it still expects interest rate trends and potential mergers and acquisitions to bring re-rating opportunities to Yangtze River Infrastructure (01038), maintaining a “neutral” rating, taking into account performance and the latest exchange rate expectations, lowering the 2024-26 earnings forecast by up to 4%, and raising the target price from HK$50 to HK$52. It indicates that after undergoing regulatory adjustments in the UK and Australia over the past few years, the profit level declined, but working capital increased to 8.6 billion yuan during the period.
The bank pointed out that Changjiang Infrastructure Group's performance last year was in line with expectations. Net profit increased 4% year on year to 8 billion yuan. Excluding exchange earnings and one-time income recorded from the sale of some of Northumbrian Water's equity in 2022, core net profit increased 7% year over year to 7.6 billion yuan, which is also in line with the bank's and market expectations. Goldman Sachs pointed out that, as in previous years, the Group adopted a dividend policy of steady growth and announced a final dividend of 1.85 yuan, a total annual dividend of 2.56 yuan, an increase of 1% over the previous year. The dividend ratio was 80%, down 2 percentage points from the previous year.