Daiwa Research cut its target price for Towngas China (TCCL)(01083) to HK$6.25 from HK$6.45 but upgraded its rating to "outperform" from "hold".
The research house said TCCL's share price has fallen by 6% year-to-date, underperforming peers' 13-26% rise. TCCL's 1H recurring net profit was flat at HK$764m, representing 50% of Daiwa's full-year forecast.
Daiwa believes the share-price correction has reflected the weak industrial gas sales expectation amid a slowing economy in China, while its 0.85x 2019-20 average PBR is appealing for 9% 2019-20 average ROE, versus peers' 2.9-3.6x PBR for 19-23% ROE.
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