[ET Net News Agency, 18 May 2018] Daiwa Research raised its target price for Beijing
Enterprises (BEH)(00392) to HK$45.6 from HK$44.2, and upgraded its rating to "outperform"
from "hold".
Despite its declining DPS payout and still-vague long-term strategic positioning, the
research house believes that at the current valuation (7x 2018 PER), BEH looks attractive
in light of an 11% 2017-20 EPS CAGR, hence the upgrade.
Despite forecasting low-to-mid-teens YoY transmission volume growth in 2018 upon the
opening of the Shaanxi-Beijing (SJ IV) pipeline, Daiwa expects the transmission earnings
contribution for BEH to decline 30% YoY to HK$1.5bn.
However, on the back of strong heating and residential gas demand during the cold
2017-18 winter, Daiwa expects 13% YoY distribution volume growth in 2018, leading to 18%
distribution earnings growth to HK$2.3bn and hence partially offsetting the drop in
transmission earnings. (KL)