[ET Net News Agency, 23 January 2018] HSBC Global Research cut its target price for
Towngas China (01083) to HK$7.4 from HK$8, and maintained its "buy" rating.
The research house said Towngas China has experienced less downside to its dollar margin
this winter during 2H 2017, because piped gas has been enjoying effective pass-through
with end-users and supply is being fulfilled so far. LNG imports only account for 5% of
its winter volume, while half of it fails to deliver a cost pass-through to customers.
HSBC believes less than 1% of its 2017 volume has been impacted by the recent gas
shortage.
It believes the shares' valuation remains significantly discounted at 12x PE and 1.0x PB
for 2018 compared to peers' 12-15x and 2.3-3.5x including China Gas (00384), hence
providing an attractive risk/reward proposition. (KL)