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

• Market Cap: HK$679.17M
• Dividend Yield: 5.71%
• Average Volume (3M): 155.27K
• Price to Earnings (P/E): 3.4
• Beta (1Y): 0.43
• Revenue Growth: 6.42%
• 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 ▲(29.87% 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.

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: Neutral
• Last Price: 0.77
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:2281, the sentiment is Neutral. The current price of 0.77 is below the 20-day moving average (MA) of 0.79, below the 50-day MA of 0.78, and above the 200-day MA of 0.65, indicating a neutral trend. The MACD of <0.01 indicates Positive momentum. The RSI at 43.05 is Neutral, neither overbought nor oversold. The STOCH value of 4.76 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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$679.17M	3.40	6.36%	5.71%	6.42%	-4.80%
3768	69 Neutral	HK$926.20M	3.47	4.69%	―	-9.45%	-17.46%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
1542	47 Neutral	HK$67.50M	―	-9.98%	―	-8.34%	-13.24%
1129	46 Neutral	HK$505.76M	-0.83	-31.95%	―	-43.38%	-25.63%

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

Luzhou Xinglu Water Reports Increased Profits Despite Revenue Dip in H1 2025

Luzhou Xinglu Water (Group) Co., Ltd. reported its interim financial results for the first half of 2025, showing a slight decrease in operating revenue by 0.3% to RMB615.4 million compared to the previous year. However, the company achieved a net profit increase of 5.3% to RMB72.2 million, with net profit attributable to the owners rising by 12.0%. Despite these positive profit indicators, the Board decided not to distribute any interim dividend for this period.

Luzhou Xinglu Water Enters Key Service Contracts with Xinglu Property Management

Luzhou Xinglu Water (Group) Co., Ltd. has entered into two significant service contracts with Xinglu Property Management. The first contract involves property and cleaning services for eight wastewater treatment plants, while the second is for canteen outsourcing services. These contracts, classified as continuing connected transactions, are subject to specific reporting requirements under Hong Kong’s Listing Rules, impacting the company’s operational framework and stakeholder engagements.

Luzhou Xinglu Water Adjusts Depreciation Period to Enhance Financial Accuracy

Luzhou Xinglu Water (Group) Co., Ltd. has announced a change in its accounting estimates, specifically extending the depreciation period of its water supply pipeline network facilities from 20 years to 25 years. This adjustment, effective from August 1, 2025, aims to more accurately reflect the actual usage and lifespan of the assets, aligning with industry practices. The change is expected to reduce depreciation expenses by approximately RMB8.9 million in 2025, thereby increasing net assets and net profit attributable to shareholders by about RMB7.04 million. The supervisory and audit committees have approved the changes, ensuring compliance with relevant laws and regulations, and the company’s auditor will review the financial statements for 2025.

Luzhou Xinglu Water Announces Board Meeting for Interim Results

Luzhou Xinglu Water (Group) Co., Ltd. has announced a board meeting scheduled for August 29, 2025, to discuss and approve the interim results for the first half of the year and consider the payment of an interim dividend. This meeting is significant as it will impact the company’s financial disclosures and potential shareholder returns, reflecting its operational performance and strategic decisions for the period.