[ET Net News Agency, 4 April 2018] Goldman Sachs lifted its target price for Hong Kong
& China Gas (HKCG)(00003) to HK$11.9 from HK$11.8, and reiterated its "sell" rating mainly
due to its rich valuation (2018 P/E of 27x versus Hong Kong utilities peer average of 17x
and its 2018 P/B of 4x versus peer average of 2x).
The research house expects its Hong Kong business to remain a stable cash generator,
while its China business may also see robust gas demand growth, with likely further
recovery in its new energy business.
Goldman expects gas demand in China to grow at a 13% CAGR over 2017-2020 as supported by
government policy (e.g., through coal-to-gas substitution) to promote gas consumption for
environmental protection. It now expects HKCG's China gas sales growth to be 13% yoy (was
12%) and 11% yoy (was 10%) for 2018 and 2019, respectively. (KL)