Nomura raised its target price for China Resources Gas (CRG)(01193) to HK$42.9 from HK$36 and maintained its "neutral" rating.
The research house lifted its 2019/20 earnings forecasts for CRG by 1% for each year, as it factored in 1H's lower-than-expected sales and administrative costs.
Nomura said investors already seem well aware of slower gas volume growth. Thus, CRG's two near-term catalysts are likely to be (1) a dollar margin recovery in 2H; and (2) a dividend hike.
Nomura thinks CRG's typical utility profit structure - with a higher percentage being derived from gas sales - will, in the long run, make it the biggest beneficiary relative
to peers if it can successfully source cheaper gas after National Pipeline Company commences operation.
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