Goldman Sachs maintained its target price for China Resources Gas (CRG)(01193) at HK$37.8 unchanged but upgraded its rating to "neutral" from "sell".
The research house said CRG's underperformance of 11% since 12 July, coupled with its high-quality gas distribution assets as well as its strong balance sheet and healthy cash flow are factors in the upgrade.
With the stock's valuation now having re-rated to near its long-term average at 16.5x P/E (12-mth rolling forward) versus the long-term historical average of 16.3x P/E, Goldman thinks it deserves an upgrade.
As of June, CRG has a total of 249 city gas projects, mostly located in economically developed cities, including 14 provincial capital cities. Its balance sheet is less leveraged than peers, said the research house.
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