Citi Research lowered its target price for Towngas China (01083) to HK$6.05 from HK$6.7 and maintained its "neutral" rating, noting its 9.8x 2020 PER looks fairly valued versus around 10% recurring net profit CAGR in 2018-21.
The research house said TCCL's operating profit before finance cost was up 4% to HK$950m in 1H, dragged down by the dollar margin cut and a 5.7% Rmb/HK$ depreciation in the period. TCCL hopes its dollar margin will rise HoH in 2H; whether this could be achieved will depend on winter natural gas price hike in the period.
Citi trimmed its 2019-21 net profits forecasts by 13-14% mainly for lower dollar margins.
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