智通财经网·2026-01-08 07:10Core Viewpoint - Daiwa has upgraded the rating of Hong Kong and China Gas (00003) from "Hold" to "Outperform" based on higher free cash flow forecasts and has raised the 12-month target price from HKD 7.1 to HKD 7.7 [1] Group 1: Financial Projections - Earnings per share (EPS) forecasts for 2025 to 2026 have been increased by 2% due to improved profitability predictions for gas and green fuel businesses [1] - The company is expected to maintain its dividend commitment, with a projected annual dividend of HKD 0.35 per share in 2025, yielding approximately 4.9% [1] Group 2: Business Performance - The recovery in profitability from the green fuel business is expected to improve the fundamentals of Hong Kong and China Gas, alongside potential spin-off of Eco Ceres after 2026, which could enhance per-share dividends [1] - The net profit for the first half of last year was negatively impacted by a net loss of RMB 130 million from Eco Ceres, primarily due to weak prices of sustainable aviation fuel (SAF) [1] - It is anticipated that the company will turn profitable in the second half of 2025, driven by a rebound in sustainable aviation fuel prices and new production capacity [1] Group 3: Market Conditions - The green fuel business is expected to see a turnaround as sustainable aviation fuel prices rose in the second half of last year, with the potential for steady growth in the first half of this year due to a low base from the previous year [1]