In the first half of this year, net profit of Changjiang infrastructure (1038. HK) fell 52% year-on-year to HK $2.86 billion, 29% lower than the bank’s expectation. The decline was mainly due to the adjustment of one-time non cash deferred tax balance of $1.4 billion in the UK The permitted return of “water” project was lowered on April 1 this year, resulting in a continuous decline in profits; and a one-time expenditure caused by the new pneumonia epidemic reduced net profit by HK $370 million. In addition, although the net profit decreased, the group maintained a mid-term dividend payment of 0.68 yuan per share, and the dividend ratio increased by 31 percentage points to 60% year-on-year.
Citigroup lowered the target price of Changjian shares from HK $54.5 to HK $48.5, maintained its buy rating, and lowered the group’s profit forecast from this year to 2022 by 8% to 18% to reflect the decrease in returns. The bank said its long-term goal is not to cut dividends and expects the group’s dividend yield to remain at 6.1% of its attractiveness this year.