International banks are showing optimism in a Guangdong company that has secured a new deal to supply water to Hong Kong for the next nine years.

Both Morgan Stanley and HSBC Global Research displayed confidence in the Hong Kong-listed Guangdong Investment by adjusting its target prices upward to HK$16.18 and HK$15.80 (US$2.09 and US$2.04) respectively.

Guangdong Investment on Wednesday closed at HK$13.82, having fallen 2.1% after a 10% surge the day before.

Hong Kong imports 70% to 80% of its water from Guangdong province and gets the rest from local rainwater.

Its new deal with Guangdong Investment, announced on Monday, would save Hong Kong up to HK$324 million over the nine-year contract period, which would translate into less than 1% in savings each year compared with the current agreement.

Guangdong Investment, which currently supplied up to 820 million cubic meters per year to Hong Kong, would retain that ceiling for three years, the company said in a report. The annual ceiling water prices for 2021 to 2023 were HK$4.89 billion, HK$ 4.95 billion and HK$5.02 billion respectively.

The terms in the new agreement were better than expected, Morgan Stanley said.

Click here for Chinese version

---------------------------------

Apple Daily’s all-new English Edition is now available on the mobile app: bit.ly/2yMMfQE

To download the latest version,

iOS: bit.ly/AD_iOS

Android: bit.ly/AD_android

Or search Appledaily in App Store or Google Play