[ET Net News Agency, 26 March 2018] HSBC Global Research trimmed its target price for
China Resources Gas (01193) to HK$26 from HK$27, and reiterated its "hold" rating.
The research house said CRG reported 2017 profit of HK$3,654m, +11% YoY, in line with
HSBC's estimates. However, dollar-margin shrunk to RMB0.58/cm - compared to 2016
(RMB0.71/cm), 1H 2017 (RMB0.64/cm), and 2H 2017 (RMB0.52/cm).
In 2018, CRG guided gas volume to grow 15-20%, but dollar-margin may continue to face
pressure although it has stabilised at RMB0.59/cm during 2-month 2018.
HSBC appreciates CRG's quality operation, with a pure exposure in gas distribution in
the downstream. However, it views CRG's footprint as more focused in relatively more
mature areas (e.g. tier 1-2 cities), hence volume growth lags behind peers. Dollar-margin
also faces greater pressure with lack of upstream exposure for cost advantage. (KL)