EASTW – Good dividend yield of 7-9% supported by secured earnings

We initiate coverage on EASTW with a rating of Outperform and a DCF based target price of Bt8.80. It is our top pick due to its strong dividend yield of 7-9% on our FY12-13F supported by strong earnings growth of 11-23% for FY12-13F from its concession business, increasing net profit margin driven by its effective cost control program (from 28% in 2010 to 33% on our 2013 forecast), and its focus on growth in its existing business. We see potential share price catalyst from winning new major tap water concessions, which will add another Bt0.2/share to its fair value for every new contract of 20K cum/day.