HSBC Global Research tweaked its target price for AAG Energy (02686) to HK$1.92 from HK$1.93 and maintained its "buy" rating.
The research house said AAG is carrying on with its original mission - scaled development in its two Coal Bed Methane (CBM) concessions in China, with a new management team in place. Monetising gas in the ground should help the company to unlock the value of its extensive resources for shareholders.
The southern area in the Mabi concession has entered into the commercial development phase and is ready for large-scale development.
HSBC said AAG's 1H results were beyond its expectations with net profit at RMB339m, which is 70% of HSBC's full-year forecast of RMB482m. The very strong result is indicative of the earnings power of this business over the horizon as development proceeds.
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