[ET Net News Agency, 26 July 2019] Credit Suisse raised its target price for China
Resources Gas (CRG)(01193) to HK$45 from HK$36 and upgraded its rating to "outperform"
from "neutral", given the reduced risk of connection fees.
With abated policy risk and sector liberalisation post the pipeline reform, the research
house expects further re-rating of CRG.
For 1H, Credit Suisse forecast 15% recurring earnings growth for CRG (slower than 21% in
FY2018) largely due to slower gas sales, which could come below the >20% growth guided
earlier given the industrywide slowdown. It also expects CRG to boost its new connections
given the slightly lower penetration rate to offset the gas volume slowdown.
Unlike China Gas's rural gas and ENN's integrated energy, there is a lack of new growth
drivers for CRG, Credit Suisse said. But as a result, the cash flow pressure could be much
smaller for CRG, which could allow the company to improve the dividend payout ratio.
Credit Suisse revised up its FY2019-21 EPS forecasts by 6-10% on our higher new
connection assumptions and it expects the company to raise dividend payout ratio over
time. (KL)