Chongqing Water Group released its 1Q26 results:revenue reached RMB1,689mn(+0.55%YoY,-13.66%QoQ),attributable net profit came to RMB269mn(+10.63%YoY,+818.13%QoQ),slightly exceeding the upper end of our forecast range(RMB237-261mn),and recurring net profit was RMB237mn(+14.24%YoY).Factoring in the expansion of water capacity and treatment volumes,we see astable earnings growth trajectory for the company over 2026-2028.The company's core assets are its wastewater treatment and water supply operations in Chongqing.Its dividend payout ratio remained above 59%from 2010 to 2025,reflecting steady water operations and astrong commitment to shareholder returns.Maintain BUY.
Water operations delivered steady growth in 2025
In 2025,wastewater treatment revenue reached RMB4,488mn(+8.79%YoY),with settled volume of 1,828mt(+5.53%YoY),implying aunit price of RMB2.46(+3.09%YoY);gross margin stood at 33.25%(+1.14pp YoY).Tap water sales revenue came to RMB1,861mn(+3.46%YoY),with sales volume of 682mt(+4.10%YoY),implying aunit price of RMB2.73(-0.18%YoY);gross margin was 12.96%(-0.62pp YoY).The company has been steadily advancing the acquisition and leasing of water supply and drainage projects.In 2025,it completed equity acquisitions of Yujiang Water and the quality-differentiated water supply company,and took an equity stake in apipe network company.By year-end,daily designed wastewater treatment/water supply designed capacity was 5,989.45k/3,437.2k cbm,up 676.5k/148.1k cbm YoY.As capacity expands and water tariffs in select regions may be raised,we expect both volume and price to improve in the company's water operations,driving earnings growth.
FCF turned positive,supporting high dividend payout ratio
In 2025,net operating cash flow reached RMB1,770mn(-24%YoY),mainly due to aYoY decline in settlement proceeds received for wastewater treatment.Capex(cash paid for the acquisition of fixed assets,intangible assets and other long-term assets;same below)totaled RMB1,272mn(-55%YoY).Free cash flow came to RMB499mn(vs.-RMB495mn in 2024,turning positive YoY).For 2025,the company’s DPS was RMB0.127(vs.RMB0.131 in 2024),with apayout ratio of 75.37%(vs.80.09%in 2024),extending the high-payout policy maintained since the company's 2010 listing.In 1Q26,net operating cash flow reached RMB646mn(vs.RMB46mn in 1Q25),capex was RMB631mn(vs.RMB305mn in 1Q25),and free cash flow came to RMB15mn(vs.-RMB260mn in 1Q25,turning positive YoY).We believe the improving free cash flow trajectory will underpin the company's high dividend payout.
Earnings forecasts and valuation
We largely maintain our 2026/2027/2028 attributable net profit forecasts of RMB864/904mn,and project 2028E attributable net profit of RMB940mn,implying EPS of RMB0.18/0.19/0.20.Comparable companies trade at an average 2026E PB of 1.06x on Wind consensus.Given the company's sustained high dividend payout—the payout ratio has exceeded 59%every year since its 2010 listing—we assign a2026E PB of 1.46x,yielding atarget price of RMB5.30(previous:RMB5.52,based on 2025E 1.53x PB).Maintain BUY.
Risks:Demand fluctuations leading to declines in water sales volume and wastewater treatment volume,inability to adjust water tariffs in atimely manner,slower collection of receivables than we expect,reduction in dividend payout.

　　重庆水务发布一季报，2026年Q1实现营收16.89亿元（yoy+0.55%、qoq-13.66%），归母净利2.69亿元（yoy+10.63%、qoq+818.13%），略超我们此前预测区间（2.37~2.61亿元）上限，扣非净利2.37亿元（yoy+14.24%）。考虑公司水务产能和处理量提升，我们认为2026-28年公司业绩有望稳定增长。公司核心资产为重庆市污水处理和供水业务，2010-2025年派息比例均维持59%以上，水务业务运营稳健且注重股东回报。维持“买入”评级。
　　2025年水务业务稳健增长，资产收购有望驱动业绩成长
　　2025年公司污水处理收入44.88亿元（yoy+8.79%），结算水量18.28亿吨（yoy+5.53%），对应单价2.46元（yoy+3.09%），毛利率33.25%（yoy+1.14pp）；自来水销售收入18.61亿元（yoy+3.46%），售水量6.82亿吨（yoy+4.10%），对应单价2.73元（yoy-0.18%），毛利率12.96%（yoy-0.62pp）。公司有序推进供排水项目收购、租赁工作，2025年完成渝江水务、分质供水公司等股权收购，参股管网公司，年末日污水处理/日供水设计能力为598.945/343.72万立方米，同比+67.65/14.81万立方米。随着产能增加和部分区域水价或可上调，我们预计公司水务经营量价均有望提升，驱动业绩增长。
　　2025年/1Q26自由现金流同比转正，有力支撑高比例派息
　　2025年公司经营现金流净额17.70亿元（yoy-24%），主因收到污水处理结算资金同比减少，资本开支（购建固定资产、无形资产和其他长期资产支付的现金，后同）12.72亿元（yoy-55%），自由现金流达4.99亿元（2024年-4.95亿元，同比转正）。2025年DPS0.127元（2024年0.131元），分红比例75.37%（2024年80.09%），延续2010年上市以来高比例派息传统。1Q26公司经营现金流净额6.46亿元（1Q25为0.46亿元），资本开支6.31亿元（1Q25为3.05亿元），自由现金流达0.15亿元（1Q25为-2.60亿元，同比转正），我们认为自由现金流向好将支撑公司高比例派息。
　　盈利预测与估值
　　我们基本维持公司2026-27年归母净利润预测8.64/9.04亿元，预计2028年归母净利润为9.40亿元，对应EPS为0.18/0.19/0.20元。可比公司2026年预期PB均值为1.06倍，考虑公司2010年上市以来派息比例均超59%，持续高分红，给予公司2026年1.46倍PB，目标价5.30元（前值5.52元，对应2025年1.53倍PB），维持“买入”评级。
　　风险提示：需求波动致售水量和污水处理量下滑，水价不能及时调整，回款不及预期，分红金额下降。