[ET Net News Agency, 24 April 2020] Daiwa Research lowered its target price for Hong
Kong & China Gas (HKCG)(00003) to HK$14.4 from HK$16.2 and maintained its "hold" rating.
The research house expects earnings for all of HKCG's business segments to remain weak
until 3Q under the global COVID-19 pandemic, given its HK and China gas sales volumes and
HK rental income are closely correlated to hospitality, which will continue to be affected
in 2Q-early 3Q by the drop in inbound/outbound tourism caused by the global lockdown.
Meanwhile, its new energy segment is also being affected by the current distressed oil
prices. In 3Q, Daiwa does not see HK towngas volumes fully recovering if the protests
resume ahead of the LegCo elections in September.
Daiwa revised down its 2020-21 EPS forecasts by 17-24% on lower assumptions for (1) HK
towngas sales volumes, (2) China gas sales volumes and dollar margin, (3) commodity
price-driven new energy earnings, and (4) rental income in Hong Kong. (KL)