Beijing Enterprises Water Group Limited : Neutral assessment

Beijing Enterprises Water Group Limited moves from OVERVALUED to NEUTRAL

It has a Fundamental Analysis Score of 56  and a Capital Cube Implied Price of 4.45 HKD

Relative Valuation

Beijing Enterprises Water Group Limited is currently neutrally valued, as its previous close of HKD 4.73 lies within the CapitalCube estimate range of HKD 4.18 to HKD 4.73. Over the last 52 week period, Beijing Enterprises Water Group Limited has fluctuated between HKD 4.13 and HKD 5.62.

Relative Valuation

Company Overview

  • Relative underperformance over the last year and the last month suggest a lagging position.
  • Beijing Enterprises Water Group Limited’s current Price/Book of 2.35 is about median in its peer group.
  • The market expects 371-HK to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • 371-HK’s relatively high profit margins are burdened by relative asset inefficiency.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • 371-HK’s return on assets currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • The company’s relatively high pre-tax margin suggests tight control on operating costs versus peers.
  • While 371-HK’s revenues growth has been below the peer median in the last few years, the market still gives the stock a PE ratio that is around peer median and seems to see the company as a long-term strategic bet.
  • The company is likely overinvesting in a business with only median returns.
  • 371-HK seems to be constrained by the current level of debt.

Investment Outlook

Beijing Enterprises Water Group Limited has a fundamental score of 56 and has a relative valuation of NEUTRAL.

Beijing Enterprises Water Group Limited’s Fundamental Analysis Score is about average , thus not allowing for a specific classification into the Value – Price Matrix.

Fundamentals Vs Relative Valuation

Drivers of Valuation

The market expects 371-HK to maintain the median rates of return it generates currently.

The market expects 371-HK to grow at about the same rate as its chosen peers (PE of 32.08 compared to peer median of 32.56) and to maintain the peer median return (ROE of 8.48%) it currently generates.

The company’s current Price/Book of 2.35 is about median in its peer group.

Valuation Drivers

371-HK has moved towards a median ROE and PE from an Harvesting profile at the prior year-end.

ROE % (On Common Equity)
Price To Earnings

Peer Analysis

A complete list of valuation metrics is available on the company page.

Company Profile

Beijing Enterprises Water Group Ltd. is an investment holding company, which engages in the construction of sewage and reclaimed water treatment and seawater desalination plants. It is also involved in the provision of construction services for comprehensive renovation projects, sewage and reclaimed water treatment services, technical and consultancy services that are related to sewage treatment, construction of renovation projects, the licensing of technical know-how that is related to sewage treatment, and the sale of piped water. The company was founded on November 23, 1992, and is headquartered in Hong Kong.


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