Beijing Enterprises Water’s （00371 HK, "BEWG", or the "Company"） 2020 revenue decreased 10.0% YoY to HK$25.4 billion. Shareholders’ net profit decreased 15.1% YoY to HK$4.2 billion. Results slightly missed expectation. Gross margin increased 2.3 ppts YoY to 38.4%. Administrative expense ratio was up 1.1 ppts YoY to 10.0%. Finance costs ratio was up 1.5 ppts YoY to 10.1%. During 2020, net increase in daily design capacity was 2,735,854 tons. As at 31 December 2020, total daily designed capacity was at 42,124,736 tons.
　　We expect sewage and reclaimed water treatment services revenue to increase at a CAGR of 12.6% in 2020-2023, and water distribution services revenue to increase at a CAGR of 9.2% in 2020-2023. We expect construction services revenue for comprehensive renovation projects to increase at a CAGR of 19.7% and BOT projects to remain stable in 2020-2023. We expect technical services and machinery sales revenue to increase at a CAGR of 15% in 2020-2023. Overall revenue should increase at a CAGR of 9.9% in 2020-2023.
　　Our EPS estimates are HK$0.531, HK$0.579 and HK$0.641 for 2021/ 2022/ 2023, respectively. The Company’s high-growth stage has passed and top line and bottom should post only high single-digit to low double-digit growth in the future. We lower the TP to HK$4.00, representing 9.6x/ 9.6x/ 9.5x 2021/ 2022/ 2023 EV/EBITDA. Maintain "Buy".