Net profit in 1H2021 increased 16.6%% YoY to HK$2,763 mn. The operating results of the Company in 1H2021 was basically in line with our expectation and its net profit in the first half of 2021 was approximately 47.5% of our full-year earnings forecast for 2021. Revenue from all business segments in 1H2021 experienced significant growth as a result of the recovery from the COVID-19 pandemic. Sales from water resources, property investment & development, and road & bridge business segments made up 58.8% (-0.1ppt YoY), 24.2% (-6.5ppt YoY) and 8.0% (+6.2ppt YoY) of the total revenue in 1H2021, respectively. The Company declared an interim dividend of HK$0.1817 (+3.0% YoY) per share, implying a payout ratio of approximately 43.0%.
We trim our earnings estimates from 2021 to 2023 under new assumptions. Total revenue from water business is set to increase YoY by 28.2%/ 15.7%/ 12.1% from 2021 to 2023, respectively. Water business revenue accounted for 56.1% of GDI’s total revenue in 2020 and is projected to further rise to 58.4%/ 63.1%/ 65.8% from 2021 to 2023, respectively. Given China’s recently tightened regulatory environment on the real estate industry, we expect GDI to re-focus and prioritize the development of its water business in the future. We expect total revenue of GDI to grow YoY by 23.1%/ 7.0%/ 7.6% from 2021 to 2023, respectively. Our revised EPS estimates from 2021-2023 are HK$0.843/ HK$0.957/ HK$1.047, respectively.
We maintain the investment rating of "Accumulate" but adjust our TP to HK$15.70. We remain positive on the outlook of GDI and expect a dividend payout ratio of no less than 75% per year. The new TP corresponds to 18.6x/ 16.4x/ 15.0x 2021-2023 PER or 2.3x/ 2.2x/ 2.1x 2021-2023 PBR.