[ET Net News Agency, 27 August 2020] Credit Suisse cut its target price for China
Resources Gas (CRG)(01193) to HK$38 from HK$40 and maintained its "neutral" rating.
The research house said CRG reported an 18% net profit drop in 1H (or down 14% in RMB
terms), below market expectation (largely flat or small drop) and mainly affected by
larger-than-expected COVID-19 on commercial gas volume (down 19%) and new connections
(down 32%).
On the positive side, gas dollar margin improved from Rmb0.58/c.m. to Rmb0.60 in 1H (in
line with peers), and management expect 2 cents of expansion for FY2020.
New connections were heavily impacted by construction suspension during COVID-19. As a
result, full-year new connection guidance was slightly revised down to 2.6-2.8mn (versus
2.8-3.0mn guided previously).
Credit Suisse cut its FY2020-22 EPS forecasts by 4-7% mainly due to weaker-than-expected
1H results and lower new connections and gas sales volume assumptions. (KL)