华润燃气 20250312 摘要 Q&A 为什么在当前时点推荐华润燃气作为投资标的？ 当前市场主要炒作科技股和成长股，部分投资经理希望通过哑铃策略配置一些 红利资产。复盘成人行业的发展阶段后发现，成长股逐渐转变为红利股，进入 红利价值释放阶段。2018 年后，尽管受到地产接驳下滑和气价上涨的影响，但 随着这些阴影逐渐退去，成人行业进入了红利价值释放阶段。华润燃气在五大 城燃公司中接驳利润占比相对较小，并且其综合能源和综合服务业务提供了业 绩支撑，使其红利价值不被业绩风险敞口因素压制。 • 华润燃气作为全国性城镇燃气龙头，零售气量市占率居行业首位，正从接 驳业务驱动转向售气利润增长，2024 年上半年售气业务占比达 70%，接驳 利润降至 17%。 • 公司现金流充裕，资产负债率适中，具备提升分红能力。派息率从 2016 年 的 30%增至 2023 年的 50%，美股派息年均复合增速达 25%，高于归母净利 润增速。 • 受地产下滑和气价上涨影响，成人行业曾面临双重风险。华润燃气通过综 合能源与综合服务新业务（贡献 11%税前利润）抵消接驳业绩下滑，逐步 走出阴影。 • 公司主要布局一二线城市，项目优质，20 ...

Investment Rating - The report assigns a "Buy" rating to the company with a current price of HKD 26.75 and a target value of HKD 34.20 [4][248]. Core Insights - The company is a leading urban gas provider in China, with a strong focus on city gas operations and a significant market share, achieving a compound annual growth rate (CAGR) of 25% in gas sales from 2008 to 2023 [9][39]. - The company is expected to benefit from the recovery of LNG prices and the implementation of pricing policies that will enhance profitability [9][248]. - The report highlights the company's robust financial health, with a return on equity (ROE) consistently above 10% and a dividend payout ratio increasing to 50.3% in 2023, indicating strong shareholder returns [9][94]. Summary by Sections 1. Company Overview - The company is backed by China Resources Group and has been deeply involved in the urban gas sector for over 20 years, ranking among the top three in gas sales nationwide [21][23]. - As of 2024H1, the company operates 276 urban gas projects across 25 provinces, with a coverage of 97.08 million users [31][39]. 2. Pricing and Profitability - The company has seen a recovery in profitability due to the stabilization of gas prices and the implementation of a pricing mechanism that aligns sales prices with procurement costs [9][160]. - The average selling price of gas in 2023 was HKD 3.50 per cubic meter, with a gross margin of HKD 0.51 per cubic meter, showing improvement from previous years [160][248]. 3. Business Segments - Gas sales accounted for 82% of total revenue in 2023, with a significant contribution from the connection business, which, despite its smaller share, has a high profit margin [55][241]. - The comprehensive service segment has been growing rapidly, with revenues reaching HKD 40.45 billion in 2023, driven by kitchen and heating services [202][204]. 4. Financial Projections - The company is projected to achieve net profits of HKD 50 billion, HKD 57 billion, and HKD 63 billion for the years 2024 to 2026, respectively, with corresponding earnings per share (EPS) of HKD 2.17, HKD 2.44, and HKD 2.73 [9][243]. - The report anticipates a gradual recovery in gross margins, with expected improvements in the gas sales segment due to favorable pricing policies [239][240]. 5. Market Dynamics - The urban gas market in China is expected to continue growing, driven by increasing urbanization and the demand for cleaner energy sources [97][106]. - The company is well-positioned to capitalize on these trends, with a strategic focus on expanding its service offerings and enhancing customer engagement through innovative service models [207][212].

Investment Rating - The report maintains a "Buy" rating for the company, with a target PE of 12x for 2025 and a dividend yield of 4.5% [106] Core Views - The company's profitability has gradually recovered in recent years, with the main gas sales business accounting for 71% of profits in the first half of 2024 [7] - The global natural gas market is rebalancing after the supply shocks of 2022-2023, but geopolitical conflicts and extreme weather continue to cause price volatility [9] - China's natural gas import dependency has increased to 42% in 2023, with LNG accounting for 61% of imports, making international gas prices more influential on domestic pricing [12] - The company is gradually building its own natural gas resource pool, which is expected to optimize its gas source structure and reduce procurement costs [36] - The company's dividend payout ratio has steadily increased from 18% in 2011 to 50% in 2023, with further room for growth as capital expenditures shrink and operating cash flow improves [45] Financial Performance - The company's operating income is expected to grow from HKD 101.3 billion in 2023 to HKD 112.8 billion in 2026, with a CAGR of 3.6% [1] - Net profit attributable to shareholders is projected to increase from HKD 5.2 billion in 2023 to HKD 6.4 billion in 2026, with a CAGR of 6.8% [1] - Gross margin is forecast to rise from 18.2% in 2023 to 19.2% in 2026, while ROE remains stable around 11% [1] - EPS is expected to grow from HKD 2.30 in 2023 to HKD 2.81 in 2026, with a forward PE ratio declining from 13.4x to 11.0x [1] Industry Analysis - Natural gas accounted for 8.5% of China's primary energy consumption in 2023, significantly lower than the global average of 23%, indicating substantial growth potential [22] - China's natural gas consumption is expected to reach 600 billion cubic meters by 2030, with a CAGR of 6.2% from 2023 [52] - The global LNG trade volume is projected to increase from 400 billion cubic meters in 2023 to 500 billion cubic meters by 2025 [8] - China's natural gas consumption structure is shifting, with industrial and residential consumption accounting for 40% and 30% respectively in 2023 [23] Company Strategy - The company is focusing on distributed photovoltaic, distributed energy, and transportation charging businesses, with comprehensive energy service revenue reaching HKD 1.64 billion in 2023, up 73% YoY [78] - The company is actively participating in urban village renovation projects and "pingji liangyong" infrastructure construction, which could boost its penetration rate in existing projects [28] - The company is optimizing its gas source structure through its own LNG receiving station, which is expected to reduce procurement costs and improve flexibility [36] - The company is expanding its integrated services business, with revenue from this segment growing 125% YoY to HKD 2.7 billion in 2023 [69]

Investment Rating - Buy (First Coverage) [1] Core Views - The company is the largest city gas operator in China, with stable cash flow matching capital expenditures and steadily increasing dividends [1] - The gas sales business benefits from high-quality projects and improved profitability due to market-oriented reforms [1] - The company is rapidly expanding its comprehensive service and comprehensive energy businesses, creating new growth points [1] - The company's city gas projects are of high quality, with price adjustments driving profit recovery, and the dual-comprehensive business growing faster than the industry [1] Business Overview City Gas Operations - The company is the largest city gas operator in China, with 276 city gas projects across 25 provinces as of 2024H1 [1] - Retail gas sales reached 387.80 billion cubic meters in 2023, accounting for 10% of national consumption [1] - The company's retail gas volume grew at a CAGR of 9.8% from 2018 to 2023, with a 5.3% YoY increase in 2024H1 [1] - The company's gas sales gross margin improved to 0.54 yuan/cubic meter in 2024H1, up 0.04 yuan/cubic meter YoY [1] Comprehensive Services - The company has 55.808 million urban residential users as of 2023, with 72.9% located in tier 1-3 cities [1] - Comprehensive service segment profit grew 18.99% YoY to 1.37 billion HKD in 2023, and further increased 22.12% YoY to 760 million HKD in 2024H1 [1] - The company's market share in kitchen appliances and insurance businesses reached 8.6% and 23.0% respectively in 2023 [1] Comprehensive Energy Business - The company focuses on distributed photovoltaic, distributed energy, and transportation energy sectors [1] - Energy sales volume increased 84.9% YoY to 2.94 billion kWh in 2023, with a gross profit of 270 million HKD, up 125% YoY [1] - In 2024H1, energy sales volume grew 54.6% YoY to 1.49 billion kWh, with a gross profit of 160 million HKD, up 84.3% YoY [1] Financial Performance - The company's operating revenue is expected to reach 98.882 billion HKD in 2024, with a YoY decrease of 2.83% [1] - Net profit attributable to shareholders is forecasted to be 5.722 billion HKD in 2024, with a YoY increase of 9.5% [1] - EPS is expected to be 2.47 HKD in 2024, with a P/E ratio of 11.5x [1] Valuation and Peer Comparison - The company's net profit is expected to grow at a CAGR of 9.1% from 2023 to 2026, faster than its peers [87] - The company's P/E ratio is 12.6x for 2023, 11.5x for 2024, 10.5x for 2025, and 9.7x for 2026, lower than the industry average [87]

Investment Rating and Target Price - The report initiates coverage on Huarong Gas with a "Buy" rating and a target price of HKD 37.05, based on a 15x PE multiple for 2024 [2] - The target price is derived from a combination of relative and absolute valuation methods, including PE, PB, and DDM models [11][14][16] Core Investment Thesis - Huarong Gas is expected to see steady profit growth driven by optimized business structure, improved operating cash flow, and reduced capital expenditures [1][7] - The company's free cash flow is improving, and its dividend per share (DPS) is entering an upward trajectory, enhancing its dividend value [1][2][7] - Key catalysts include margin improvement, dividend increases, and declining market interest rates [2][7] Business Segments and Growth Drivers Retail Gas Sales - Retail gas sales volume is expected to grow steadily, supported by policies like "coal-to-gas" and "bottle-to-pipeline" conversions [2][7][36] - The company's gas margin is expected to recover due to price adjustments and cost reductions, with a projected margin of RMB 0.53/0.55/0.56 per cubic meter for 2024-2026 [8][9] - Huarong Gas benefits from a higher proportion of residential gas sales, which allows it to capture more price adjustment benefits [7][42] Connection Business - Despite a slowdown in new connections due to the real estate downturn, the company still has room for growth, with an estimated 298/268/241 thousand new residential connections for 2024-2026 [8][54] - The company's contract liabilities remain high, providing a buffer for future connection business [7][55] Comprehensive Services and Energy Business - The comprehensive services business, including gas appliances and insurance, is expected to grow at a CAGR of 24.0%/22.0%/20.0% from 2024-2026 [8][58] - The comprehensive energy business, including distributed energy and EV charging, is projected to grow rapidly, with a target revenue of HKD 5 billion by 2025 [60][61] Financial Projections - Revenue is expected to grow at a CAGR of 5.0%/4.9%/3.9% from 2024-2026, reaching HKD 106.4/111.6/116.0 billion [9][10] - Net profit is projected to grow at a CAGR of 9.5%/11.3%/8.9% over the same period, with EPS of HKD 2.47/2.75/3.00 [9][10] Valuation - Relative valuation using PE and PB multiples suggests a fair value of HKD 37.05, based on a 15x PE and 2.0x PB for 2024 [11][12][13] - The DDM model estimates an intrinsic value of HKD 42.95 per share, based on a two-stage growth model and a cost of equity of 6.6% [14][15][16] Industry and Market Position - Huarong Gas is one of the largest city gas operators in China, with a strong presence in economically developed regions like the Yangtze River Delta and the Greater Bay Area [17][54] - The company benefits from its stable gas supply, with 87.7% of its gas sourced from pipelines, and long-term contracts with major suppliers like CNPC and Sinopec [42][43] Operational Efficiency and Cash Flow - The company has improved its working capital management, with positive cash flow contributions from prepayments and receivables in 2023 [7][51] - The gap between accounts receivable turnover days and prepayment turnover days has narrowed, indicating better cash flow efficiency [51][52]

Investment Rating - The report maintains an "OUTPERFORM" rating for China Resources Gas with a target price of HK$37.94, up from the previous target [3][10]. Core Insights - The company has experienced steady growth in gas sales driven by residential and commercial users, with total retail gas sales volume increasing by 5.3% year-on-year to 20.9 billion cubic meters in the first half of 2024 [8][9]. - Revenue for the first half of 2024 reached HK$20.08 billion, a 7.7% increase from the previous year, while operating profit rose by 18.3% to HK$5.56 billion [7][9]. - The integrated energy business has shown comprehensive growth, enhancing revenue and profitability through diversification into kitchen appliances, insurance, and home products [9][10]. Financial Summary - The company reported a net profit of HK$3.46 billion for the first half of 2024, a decrease of 2.5% year-on-year, with gross margin at 18.6% and operating profit margin at 10.7% [7][8]. - For FY24-26, the main operating revenue is adjusted to HK$102.65 billion, HK$108.36 billion, and HK$114.39 billion, with corresponding net profits of HK$5.43 billion, HK$5.70 billion, and HK$5.98 billion [10]

Investment Rating - The report maintains a "Buy" rating for China Resources Gas (01193) [3][4] Core Views - The company announced a share repurchase plan, demonstrating confidence in its long-term development [3][4] - Plans to repurchase at least 45,797,384 shares (1.98% of total issued shares) and potentially more [3][4] - The repurchase will be funded by internal cash resources, with minimal financial pressure [4] - Stable and increasing dividends highlight long-term investment value [4] - Dividend per share grew from HKD 0.45 in 2016 to HKD 1.1569 in 2023 [4] - Interim dividend for 2024 increased to HKD 0.25 per share, a record high [4] - Residential gas price linkage mechanism continues to benefit the company [4] - Price adjustments in Hefei (a joint venture project) and nationwide implementation expected to enhance operational stability [4] Financial Performance and Projections - Revenue and profit growth projections [5][6] - 2024E revenue: HKD 107,041 million (+5.7% YoY) [5] - 2024E net profit attributable to shareholders: HKD 6,248 million (+19.6% YoY) [5] - 2026E net profit attributable to shareholders: HKD 7,809 million (+14.64% YoY) [5] - Key financial metrics [5][6] - 2024E EPS: HKD 2.75 [5] - 2024E ROE: 15.5% [5] - 2024E PE ratio: 11.4x [5] - Strong cash position and low leverage [4] - Cash and bank deposits: HKD 11.57 billion as of mid-2024 [4] - Interest-bearing debt ratio: 30.3% [4] - Overall financing cost: 2.4%, among the best in the industry [4] Industry and Market Context - The company operates in the utilities sector, with a focus on gas distribution [1] - Market data as of September 26, 2024 [1] - Closing price: HKD 31.30 - 52-week range: HKD 19.50 - HKD 31.95 - Market capitalization: HKD 72.429 billion - Outstanding H-shares: 2,314.01 million

Gas Sales and Market Performance - CR Gas achieved a total gas sales volume of approximately 20.901 billion cubic meters in the first half of 2024[9] - Total natural gas sales volume increased by 5.3% year-on-year to 20.9 billion cubic meters, with revenue rising 7.7% to HK$52.08 billion[18][19] - Industrial gas sales reached 9.66 billion cubic meters, up 3.7%, accounting for 46.2% of total gas sales[20][22] - Commercial gas sales grew 8.1% to 5.01 billion cubic meters, representing 24.0% of total gas sales[20][22] - Residential gas sales increased 7.0% to 5.76 billion cubic meters, making up 27.6% of total gas sales[20][22] - The Group developed 25,000 new industrial and commercial users and 1.031 million new residential users, including 882,000 new house connections[21][24] - Gas penetration rate in China increased from 58.4% to 59.6% year-on-year[21][24] - Annual gas contract coverage rate increased to 99.7%, with 1.75 billion cubic meters procured, up 30% year-on-year[20][22] - Supplemental unconventional gas resources exceeded 200 million cubic meters, improving gas supply security and cost optimization[20][22] Business Expansion and Operations - CR Gas operates 276 city gas projects across 25 provinces in China, including 15 provincial capitals and 76 prefecture-level cities[13] - The company continues to expand through organic growth, leveraging favorable industry fundamentals and execution competency[13] - The Group signed 2 new projects and registered 3 projects, bringing total registered city gas projects to 276 across 25 provinces[25][27] - The Group's grid-based customer service model now covers 32.61 million users, with 19.86 million users on enterprise WeChat[26] - The Group's distributed photovoltaic projects reached a total of 208, with energy sales volume of 1.49 billion kWh, a 54.6% year-on-year increase[30][32] - The Group's distributed energy projects totaled 211, with 28 new projects signed and 31 newly put into operation in H1 2024[30][32] - The Group's transport charging business expanded to 263 charging stations, an increase of 86, with electricity sales of 180 million kWh, up 20% year-on-year[30][33] - The Group's comprehensive energy consumption per RMB10,000 operating revenue decreased by 7.8%, and per RMB10,000 value added decreased by 10.9% in H1 2024[35] - The Group's Gas Butler service model now covers 32.61 million users, with 19.86 million WeChat Business users[28] Financial Performance - The Group achieved a revenue of HK$52.08 billion in the first half of 2024, representing a year-on-year increase of 7.7%[36][38] - The overall gross profit margin of the Group was 18.6%, an increase of 0.4 percentage points compared to the same period last year[36][38] - The proportion of revenue from gas connection business decreased from 8.8% in 2023 to 5.8% in the first half of 2024[36][38] - The Group's operating cash flow in the first half of 2024 was HK$4.25 billion, maintaining high-quality management[36][39] - Revenue increased by 7.7% to HK$52,075.59 million in 2024 compared to HK$48,369.60 million in 2023[97] - Gross profit rose by 9.7% to HK$9,671.18 million in 2024 from HK$8,818.87 million in 2023[97] - Profit attributable to the owners of the company decreased by 2.5% to HK$3,456.74 million in 2024 from HK$3,545.26 million in 2023[97] - Net cash from operating activities (after tax payments) declined by 10.6% to HK$4,252.98 million in 2024 from HK$4,756.32 million in 2023[97] - Basic EPS decreased by 2.6% to 152 HK cents in 2024 from 156 HK cents in 2023[97] - Total assets grew by 1.3% to HK$139,687.37 million in 2024 from HK$137,871.09 million in 2023[99] - Bank balances and cash increased by 15.9% to HK$11,568.36 million in 2024 from HK$9,978.47 million in 2023[99] - Total borrowings rose by 6.2% to HK$28,161.15 million in 2024 from HK$26,528.72 million in 2023[99] - Gross profit margin improved to 18.6% in 2024 from 18.2% in 2023[100] - Net profit margin (attributable to owners of the company) decreased to 6.6% in 2024 from 7.3% in 2023[100] - Revenue for the six months ended 30 June 2024 increased to HK$52,075.59 million, up 7.66% compared to HK$48,369.60 million in the same period of 2023[111] - Gross profit rose to HK$9,671.18 million in 2024, a 9.67% increase from HK$8,818.87 million in 2023[111] - Profit before taxation grew by 2.22% to HK$5,716.43 million in 2024, compared to HK$5,592.07 million in 2023[111] - Profit for the period slightly decreased to HK$4,493.42 million in 2024, down 1.41% from HK$4,557.55 million in 2023[111] - Total comprehensive income for the period increased by 20.18% to HK$4,001.83 million in 2024, compared to HK$3,329.99 million in 2023[111] - Earnings per share (Basic) for 2024 stood at HK$1.52, a slight decrease from HK$1.56 in 2023[116] - The company's share of results from joint ventures increased by 44.73% to HK$286.26 million in 2024, compared to HK$197.78 million in 2023[111] - Exchange differences arising on translation improved significantly, with a loss of HK$492.67 million in 2024 compared to a loss of HK$1,226.47 million in 2023[111] - Net movement in fair value reserve (non-recycling) turned positive at HK$1.08 million in 2024, compared to a negative HK$1.09 million in 2023[111] - Profit attributable to owners of the company decreased by 2.50% to HK$3,456.74 million in 2024, compared to HK$3,545.26 million in 2023[111] - Non-current assets increased to HK$103,213,990,000 from HK$102,417,286,000, reflecting growth in property, plant, and equipment[118] - Current liabilities rose to HK$57,056,620,000 from HK$51,108,934,000, driven by higher bank and other borrowings[118] - Total equity grew to HK$64,904,354,000 from HK$63,383,682,000, with equity attributable to owners increasing to HK$41,616,168,000[120] - Bank and other borrowings under non-current liabilities decreased to HK$11,592,572,000 from HK$17,279,384,000[120] - Net current liabilities worsened to HK$(20,583,243,000) from HK$(15,655,135,000)[118] - Total comprehensive income for the period was HK$3,127,803,000, with dividends paid amounting to HK$2,283,866,000[123] - Reserves increased to HK$41,384,767,000 from HK$40,540,830,000, reflecting retained profits and other adjustments[120] - Investment properties decreased slightly to HK$888,658,000 from HK$913,030,000[118] - Loans to a joint venture stood at HK$1,896,389,000, showing a minor decline from HK$1,909,907,000[118] - Deposits for acquisition of assets reduced to HK$300,724,000 from HK$413,073,000[118] - Exchange differences arising on translation resulted in a loss of HK$1,025,978,000[127] - Total comprehensive income for the period was HK$2,518,688,000[127] - Dividends paid amounted to HK$2,126,341,000 for the six months ended 30 June 2024, compared to HK$2,041,394,000 in the same period last year[128][129] - Net cash from operating activities was HK$4,252,981,000 for the six months ended 30 June 2024, down from HK$4,756,323,000 in the same period last year[133] - Proceeds from redemption of other deposits were HK$20,732,105,000, up from HK$19,670,681,000 in the same period last year[133] - Payments for acquisition of property, plant and equipment were HK$2,265,949,000, compared to HK$2,105,301,000 in the same period last year[133] - Net cash used in investing activities was HK$3,861,284,000, up from HK$3,357,131,000 in the same period last year[133] - Proceeds from new bank and other loans were HK$21,806,890,000, compared to HK$18,969,893,000 in the same period last year[133] - Repayments of bank and other loans were HK$16,352,769,000, significantly higher than HK$2,647,796,000 in the same period last year[133] - Net cash from financing activities was HK$835,665,000, down from HK$10,964,476,000 in the same period last year[133] - Net increase in cash and cash equivalents for 2024 was HK$1,227,362,000, compared to HK$12,363,668,000 in 2023[135] - Cash and cash equivalents at the end of the period for 2024 were HK$11,127,977,000, down from HK$18,600,688,000 in 2023[136] - The Group's current liabilities exceeded its current assets by approximately HK$20,583,243,000 as of 30 June 2024[142] - The Group has capital commitments of approximately HK$127,738,000 as of 30 June 2024[142] - Total bank and other borrowings, and medium-term notes amounted to approximately HK$28,161,145,000 as of 30 June 2024, with HK$16,020,738,000 classified as current liabilities[142] - Unutilised banking facilities stood at HK$37,579,135,000 as of 30 June 2024[142] - The Group's bank balances and cash in the consolidated statement of financial position were HK$11,568,360,000 for 2024, down from HK$18,600,688,000 in 2023[136] - The effect of foreign exchange rate changes resulted in a net decrease of HK$77,853,000 in 2024, compared to a net decrease of HK$200,459,000 in 2023[135] - The Group's cash and cash equivalents at the beginning of the period were HK$9,978,468,000 for 2024, up from HK$6,437,479,000 in 2023[135] - Deposits with banks with more than three months to maturity when placed amounted to HK$440,383,000 for 2024, with no comparable figure for 2023[136] - Revenue from external sales reached HKD 52.08 billion, with the largest contribution from gas fuel and related products at HKD 45.92 billion[149] - Segment results showed a profit before taxation of HKD 5.72 billion, with the gas fuel and related products segment contributing HKD 4.65 billion[149] - Gas connection segment revenue was HKD 3.02 billion, contributing HKD 1.12 billion to segment results[149] - Comprehensive services segment generated HKD 1.77 billion in revenue, with segment results of HKD 761.12 million[149] - Design and construction services segment revenue was HKD 335.50 million, contributing HKD 33.96 million to segment results[149] - Gas stations segment revenue was HKD 1.04 billion, with segment results of HKD 93.89 million[149] - Share of results from joint ventures and associates amounted to HKD 286.26 million and HKD 158.90 million respectively[149] - Unallocated income and expenses were HKD 567.93 million and HKD 1.43 billion respectively[149] - Finance costs, excluding interest on lease liabilities, totaled HKD 539.54 million[149] - The Group's operating segments include gas fuel sales, gas connection, comprehensive services, design and construction services, and gas stations[145] - Total revenue for the six months ended 30 June 2023 was HK$48,369,601 thousand, with external sales contributing HK$41,236,701 thousand from gas fuel and related products[151] - Segment results for the period were HK$5,879,439 thousand, with the largest contribution from gas fuel and related products at HK$3,509,041 thousand[151] - Share of results from joint ventures and associates amounted to HK$197,782 thousand and HK$230,292 thousand, respectively[151] - Unallocated income and expenses were HK$1,143,112 thousand and HK$(1,433,073) thousand, respectively, impacting the overall profit before taxation of HK$5,592,066 thousand[151] - Segment assets as of 30 June 2024 totaled HK$139,687,367 thousand, with the largest portion attributed to the sale and distribution of gas fuel and related products at HK$84,716,768 thousand[155] - Segment liabilities as of 30 June 2024 were HK$74,783,013 thousand, with the sale and distribution of gas fuel and related products accounting for HK$18,528,181 thousand[155] - Current tax for the six months ended 30 June 2024 was HK$1,357,984 thousand, primarily from PRC Enterprise Income Tax[159] - Deferred taxation for the same period resulted in a credit of HK$(134,977) thousand, reducing the total tax expense to HK$1,223,007 thousand[159] - No provision for Hong Kong Profits Tax was made as the company and its subsidiaries in Hong Kong had no assessable profits for the period[160] - Net profit attributable to owners of the company for the six months ended 30 June 2024 was HK$3,456,742,000, compared to HK$3,545,256,000 in the same period last year[166] - The company declared an interim dividend of 25 HK cents per share for the six months ended 30 June 2024, totaling HK$567,054,000, an increase from 15 HK cents per share (HK$340,232,000) in the same period last year[163][164] - Total depreciation and amortization expenses for the six months ended 30 June 2024 were HK$1,901,466,000, including HK$1,548,538,000 for property, plant and equipment, and HK$203,590,000 for right-of-use assets[162] - The company incurred HK$2,513,240,000 in construction in progress costs for the six months ended 30 June 2024, compared to HK$1,965,553,000 in the same period last year[171][174] - Additions to prepaid land lease payments and other right-of-use assets totaled HK$47,130,000 and HK$77,673,000 respectively for the six months ended 30 June 2024[172][175] - Interest expenses on bank and other borrowings increased to HK$522,932,000 for the six months ended 30 June 2024 from HK$399,895,000 in the same period last year[162] - The company provided unsecured loans to a joint venture at an interest rate of 5-year Loan Prime Rate floating downward 20% with a five-year term[173][176] - Trade receivables decreased to HK$11,192,821,000 as of June 30, 2024, from HK$11,435,927,000 on December 31, 2023, with an impairment of HK$446,444,000[178] - Amounts due from joint ventures increased significantly to HK$1,012,318,000 as of June 30, 2024, compared to HK$433,893,000 on December 31, 2023[178] - Amounts due from associates rose to HK$290,694,000 as of June 30, 2024, from HK$150,100,000 on December 31, 2023[178] - Trade payables decreased to HK$13,382,458,000 as of June 30, 2024, from HK$14,435,105,000 on December 31, 2023[183] - Receipts in advance dropped to HK$8,973,043,000 as of June 30, 2024, from HK$10,134,560,000 on December 31, 2023[183] - Other payables and accruals increased to HK$7,983,966,000 as of June 30, 2024, from HK$6,786,984,000 on December 31, 2023[183] - The ageing analysis of trade receivables shows that 0-90 days receivables decreased to HK$7,151,121,000 as of June 30, 2024, from HK$7,599,525,000 on December 31, 2023[181] - Over 365 days receivables increased to HK$2,314,724,000 as of June 30, 2024, from HK$2,141

Investment Rating - The report maintains a "Buy" rating for China Resources Gas (1193) with a target price of HKD 32.60, representing a potential upside of 16% from the current price of HKD 28.15 [1]. Core Insights - The company has significantly improved its gross margin, leading to a substantial increase in interim dividends. The gross margin rose to HKD 0.54 per cubic meter, up from HKD 0.50 per cubic meter in the same period last year [1]. - For the first half of 2024, the company reported a year-on-year increase of 21.2% in core net profit attributable to shareholders, amounting to HKD 34.6 billion, despite a 2.5% decline when excluding one-time gains from the previous year [1]. - The total revenue for the first half of 2024 reached HKD 52.08 billion, reflecting a year-on-year growth of 7.7% [1]. Summary by Sections Financial Performance - The company achieved a total revenue of HKD 52.08 billion in the first half of 2024, with contributions from gas sales, connection fees, and comprehensive services [1]. - The overall gross margin improved to 18.6%, marking the first increase since 2020 [1]. - The natural gas sales volume reached 209 billion cubic meters, a year-on-year increase of 5.3% [1]. Business Segments - The comprehensive services segment saw a revenue increase of 20.0% to HKD 17.6 billion, with segment profit rising by 22.1% to HKD 7.6 billion [1]. - The comprehensive energy business generated revenue of HKD 8.3 billion, a year-on-year growth of 38.0% [1]. Future Outlook - The company is expected to maintain a stable capital expenditure, which will support ongoing shareholder returns. Revenue projections for 2024 to 2026 are estimated at HKD 105.9 billion, HKD 111.8 billion, and HKD 119.0 billion, respectively [1]. - The net profit attributable to shareholders is projected to be approximately HKD 57 billion, HKD 62 billion, and HKD 71 billion for the years 2024 to 2026 [1].

Investment Rating - The report assigns an investment rating of "X-xx" to the company [3] Core Views - The company's gas distribution business performed well, with segment profit increasing by 31.3% YoY [1] - The company's free cash flow surged by 562.3% YoY to HKD 1.9 billion in the first half of 2024 [1] - The company's interim dividend per share increased by 66.7% to 25 HK cents [2] - The company's core gas sales business showed good growth, while the dual-comprehensive business grew rapidly [1] Business Performance Gas Sales - Retail gas sales volume reached 20.9 billion cubic meters, up 5.3% YoY [1] - Residential users: 5.76 billion cubic meters, up 7% YoY [1] - Industrial users: 9.66 billion cubic meters, up 3.7% YoY [1] - Commercial users: 5.01 billion cubic meters, up 8.1% YoY [1] - Vehicle users: 470 million cubic meters, down 8.4% YoY [1] - Gas sales gross margin improved to 0.54 yuan/cubic meter, up 0.04 yuan/cubic meter YoY [1] - Gas sales segment profit reached HKD 4.75 billion, up 31.3% YoY [1] Comprehensive Services - Comprehensive service revenue reached HKD 1.77 billion, up 20% YoY [2] - Segment profit reached HKD 760 million, up 22.1% YoY [2] - Market share of kitchen appliances and water heaters increased from 8.7% to 9.0% [2] - Insurance agency market share increased from 25.6% to 25.8% [2] - Average revenue per household for Anju business increased from 54.2 yuan to 55.1 yuan [2] Comprehensive Energy - Comprehensive energy revenue reached HKD 830 million, up 38% YoY [2] - Gross profit reached HKD 160 million, up 84.3% YoY [2] Connection Business - New residential connection users reached 1.031 million, down 23.1% YoY [2] - The connection business continues to be affected by the real estate market [2] Financial Performance - Revenue reached HKD 52.08 billion, up 7.7% YoY [1] - Net profit attributable to shareholders reached HKD 3.46 billion, down 2.5% YoY [1] - Excluding one-time gains, net profit attributable to shareholders increased by 21.2% YoY [1] - Free cash flow reached HKD 1.9 billion, up 562.3% YoY [1] - Interim dividend per share increased by 66.7% to 25 HK cents [2] Market Position - The company is a leading gas distributor in China with strong market position [2] - The company has developed a natural gas spot trading platform and gas source network [1] - Over 160 project companies and 190 suppliers have registered on the platform [1] - Transaction volume exceeded 45 million cubic meters with transaction amount of RMB 150 million in the first month [1] Shareholder Structure - China Resources Group holds 61.46% of shares [5] - Other shareholders hold 38.54% of shares [5] Historical Data - Historical gas sales volume and gross margin trends are shown in charts [7] - Historical new residential connection numbers and dividend payout ratios are shown in charts [8]