[ET Net News Agency, 19 July 2018] UBS Global Research lifted its target price for
China Gas Holdings (00384) to HK$29.3 from HK$22.5, and reiterated its "sell" rating.
The research house thinks the company's strong growth, driven by rural coal-to-gas
switching, has been fully factored in by the market. The share price has increased by 172%
over the past 12 months. Both 12-month forward PE (19.7x) and P/BV (4.5x) are at
historical high levels and a premium to peers.
While some may argue that the valuation is supported by the company's higher growth and
ROE, UBS thinks it is largely due to its higher proportion of connection fee income and
higher gearing. UBS raised its FY2019 earnings forecast by 8% and FY2020 earnings estimate
by 9%, mainly to reflect stronger gas sales volume growth. It also increased FY2018-21
city gas sales volume CAGR from 23% to 27%, in expectation of higher contribution from
rural coal-to-gas switching users. (KL)
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00384 CHINA GAS HOLD
Nominal 
6.560 +0.090 (+1.391%) Others
19/07/2018 14:23
[I-bank focus]UBS lifts China Gas (00384) to HK$29.3
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