Luzhou Xinglu Water (Group) Co., Ltd. Class H (2281) AI Stock Analysis

• Market Cap: HK$627.59M
• Dividend Yield: 6.03%
• Average Volume (3M): 155.27K
• Price to Earnings (P/E): 3.1
• Beta (1Y): 0.46
• Revenue Growth: 4.85%
• EPS Growth: -4.80%
• Country: HK
• Employees: 867
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Water
• EPS (TTM): 0.09
• Shares Outstanding: 214,940,000
• 10 Day Avg. Volume: 85,100
• 30 Day Avg. Volume: 155,266
• PEG Ratio: -0.22
• Price to Book (P/B): 0.17
• Price to Sales (P/S): 0.36
• P/FCF Ratio: 2.64
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 75 Outperform
• Price Target: HK$1.00 ▲(36.99% Upside)

The stock of Luzhou Xinglu Water (Group) Co., Ltd. scores well due to its strong valuation metrics, including a low P/E ratio and high dividend yield, which suggest it is undervalued. Technical indicators show a positive trend, supporting a bullish outlook. Financial performance is solid, though there are areas for improvement in cash flow conversion and cost management.

Positive Factors

Revenue Growth

Consistent revenue growth indicates the company's ability to expand its market presence and maintain demand for its products, supporting long-term business stability.

Leverage Management

Improved leverage management enhances financial stability, reducing risk and providing more flexibility for future investments and growth opportunities.

Cash Flow Generation

Strong cash flow generation provides the company with the ability to reinvest in business operations, pay down debt, and return capital to shareholders, supporting long-term financial health.

Negative Factors

Cost Pressures

Declining margins suggest rising costs, which could impact profitability if not managed effectively, posing a risk to long-term financial performance.

Cash Conversion Challenges

Challenges in cash conversion can strain liquidity, limiting the company's ability to fund operations and growth initiatives, affecting long-term sustainability.

Profitability Margins

Cost pressures impacting profitability margins could hinder the company's ability to maintain competitive pricing and invest in growth, affecting future earnings potential.

Luzhou Xinglu Water (Group) Co., Ltd. Class H Business Overview & Revenue Model

Company Description

Luzhou Xinglu Water (Group) Co., Ltd., together with its subsidiaries, operates as an integrated municipal water service provider in in Sichuan Province, the People's Republic of China. The company operates in two segments, Tap Water Supply and Wastewater Treatment. It is involved in the water supply; trading; construction; software research, development, and sale; and pipeline installation activities, as well as provision of technology services. As of December 31, 2021, the company owned and operated twelve tap water plants with a daily supply capacity of approximately 774,000 tons; and 9 wastewater treatment plants with an daily treatment capacity of 397,000 tons per day. It serves urban and rural residents, industrial and commercial users, local governments, and other institutions. The company was founded in 1958 and is headquartered in Luzhou, the People's Republic of China. Luzhou Xinglu Water (Group) Co., Ltd. is a subsidiary of Luzhou City Xinglu Investment Group Co., Ltd.

How the Company Makes Money

The company generates revenue primarily through the sale of bottled water products, which includes both retail and bulk sales to distributors and retailers. Key revenue streams also include water treatment services and environmental management solutions offered to municipal and industrial clients. Additionally, Luzhou Xinglu Water has established significant partnerships with local governments and organizations, allowing them to secure long-term contracts for water supply and management services, thus ensuring a steady flow of income. The company also invests in marketing and brand development to enhance its market presence and expand its customer base.

Luzhou Xinglu Water (Group) Co., Ltd. Class H Financial Statement Overview

Summary

Luzhou Xinglu Water (Group) Co., Ltd. demonstrates a solid financial position with improving revenue growth and leverage management. While profitability margins are generally healthy, there are signs of cost pressures. Cash flow generation is improving, but further enhancements in cash conversion are needed to strengthen financial resilience.

Income Statement

The company shows a stable revenue growth rate of 5.32% in the latest year, recovering from a previous decline. Gross profit margin remains healthy at 34.79%, and net profit margin is solid at 13.32%. However, there is a slight decline in EBIT and EBITDA margins compared to previous years, indicating potential cost pressures.

Balance Sheet

The debt-to-equity ratio has improved to 0.69, indicating better leverage management. Return on equity is moderate at 6.05%, showing room for improvement. The equity ratio is stable, reflecting a balanced asset structure.

Cash Flow

Free cash flow growth is strong at 48.57%, indicating improved cash generation. However, the operating cash flow to net income ratio has decreased, suggesting potential challenges in converting income to cash. The free cash flow to net income ratio is improving but still indicates room for enhancement.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.33B	1.33B	1.29B	1.35B	1.37B	1.21B
Gross Profit	464.60M	462.82M	444.33M	494.02M	568.59M	528.75M
EBITDA	343.54M	322.28M	670.95M	695.89M	721.51M	619.83M
Net Income	184.81M	177.24M	209.90M	203.22M	241.93M	247.22M
Balance Sheet
Total Assets	7.29B	7.19B	7.05B	7.14B	7.07B	7.22B
Cash, Cash Equivalents and Short-Term Investments	634.03M	447.18M	390.51M	609.76M	871.74M	1.04B
Total Debt	3.00B	2.03B	2.09B	2.40B	1.63B	2.88B
Total Liabilities	4.10B	4.04B	4.04B	4.30B	4.41B	4.89B
Stockholders Equity	2.97B	2.93B	2.80B	2.64B	2.48B	2.18B
Cash Flow
Free Cash Flow	93.12M	183.72M	86.54M	-81.15M	-217.16M	-640.44M
Operating Cash Flow	233.83M	536.25M	609.19M	597.24M	537.20M	-42.86M
Investing Cash Flow	-132.20M	-344.01M	-477.04M	-678.33M	-750.76M	-563.33M
Financing Cash Flow	-152.68M	-135.56M	-351.40M	-180.90M	49.12M	567.41M

Luzhou Xinglu Water (Group) Co., Ltd. Class H Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 0.73
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:2281, the sentiment is Negative. The current price of 0.73 is below the 20-day moving average (MA) of 0.74, below the 50-day MA of 0.76, and above the 200-day MA of 0.68, indicating a neutral trend. The MACD of >-0.01 indicates Negative momentum. The RSI at 41.57 is Neutral, neither overbought nor oversold. The STOCH value of 33.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HK:2281.

Luzhou Xinglu Water (Group) Co., Ltd. Class H Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2281	75 Outperform	HK$627.59M	3.14	6.36%	6.03%	4.85%	-4.80%
3768	69 Neutral	HK$761.54M	2.89	4.69%	―	-9.45%	-17.46%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
1542	43 Neutral	HK$57.00M	-2.66	-9.98%	―	-8.34%	-13.24%
1129	43 Neutral	HK$192.82M	-0.31	-31.95%	―	-43.38%	-25.63%

Luzhou Xinglu Water (Group) Co., Ltd. Class H Corporate Events

Luzhou Xinglu Water Unanimously Passes Key Resolutions at 2025 EGM

Luzhou Xinglu Water (Group) Co., Ltd. held its 2025 first extraordinary general meeting (EGM) where all proposed resolutions were unanimously approved by shareholders. The resolutions included amendments to the Articles of Association, abolition of the Supervisory Committee, and adoption of new rules for the General Meeting and the Board of Directors. This unanimous approval reflects strong shareholder support and may enhance the company’s governance structure, potentially impacting its operational efficiency and strategic direction.

Luzhou Xinglu Water Announces 2025 Extraordinary General Meeting

Luzhou Xinglu Water (Group) Co., Ltd. has announced its 2025 first extraordinary general meeting scheduled for November 28, 2025, in Luzhou, Sichuan Province, China. The meeting will address several key resolutions, including amendments to the Articles of Association, the abolition of the Supervisory Committee, and the adoption of new rules for both the General Meeting and the Board of Directors. These changes could significantly impact the company’s governance structure and operational protocols, potentially influencing its strategic direction and stakeholder engagement.

Luzhou Xinglu Water Announces Register Closure for 2025 EGM

Luzhou Xinglu Water (Group) Co., Ltd. has announced the closure of its register of members in preparation for its first extraordinary general meeting (EGM) of 2025, scheduled for November 28. This closure, from November 24 to November 28, is to determine the shareholders eligible to attend and vote at the meeting, potentially impacting shareholder engagement and decision-making processes.

Luzhou Xinglu Water Enters Landscaping and Cleaning Service Contract

Luzhou Xinglu Water (Group) Co., Ltd. has entered into a two-year landscaping and cleaning service contract with Xinglu Property Management, a subsidiary of its controlling shareholder. The contract, valued at approximately RMB1.4223 million per annum, covers services for the company’s office premises and water facilities. This transaction is classified as a continuing connected transaction under Hong Kong’s Listing Rules, requiring reporting and announcement but exempt from circular and independent shareholders’ approval due to its size.

Luzhou Xinglu Water Proposes Governance Overhaul

Luzhou Xinglu Water (Group) Co., Ltd. has announced several proposed changes to its corporate governance structure, including amendments to its Articles of Association, the abolition of its Supervisory Committee, and the adoption of new rules for its General Meeting and Board of Directors. These changes aim to align with national laws and regulatory requirements, enhancing the company’s operational and procedural systems. The proposed changes will be subject to approval by the company’s shareholders at a general meeting, signifying a strategic shift in the company’s governance model to potentially streamline operations and improve oversight.