Congratulations to everyone that has entered based on our estimate entry price of HKD$24.80.
You would have already made approximately +14.78% on this trade.
Kindly refer to our post dated 1st June 2019 (Link attached below)
Current Price: $29.10
We would like to maintain a BUY action on this counter with a few factors to highlight below.
On 21 June 2019, China Gas released its results for financial 2019. As expected and according to our forecase, revenue and core attributable net profit has increased. We are of the opinion that the Company growth will be in line with street’s expectations as they have also reported an increase in household connections, which the firm profits from the connections, design and construction in the near-term. In the further term, China Gas will also profit as these rural areas will rely on their infrastructure for gas consumption.
The gas sales for the said rural areas are poised to contribute to the Company’s profits in the near future as they have secured more than 170 township coal-to-gas (CTG) projects. With an increase in gas-consuming household, the government has also announced that CTG projects will be accelerated as well come FY20. According to China Gas, its rural CTG receivables and contract assets amounted to HKD$4.8b (close approximate) at March 2019 as compared to HKD$1.5b in March 2018. We expect CTG-related receivables to continue to increase as the government will be expected to avoid delay payments to enterprises.
As such, we would like to revise our target price from HKD$34 to HKD$35.
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