

Investment Rating - The report maintains a "Buy" rating for Hong Kong and China Gas Company Limited [1] Core Views - The company's revenue for the first half of 2025 was HKD 27.514 billion, a year-on-year increase of 0.1%, while the net profit attributable to shareholders was HKD 2.964 billion, a decrease of 2.5%. Excluding foreign exchange losses, the net profit increased by 5% year-on-year, aligning with expectations [4][6] - The company proposed an interim dividend of HKD 0.12 per share, maintaining a stable annual dividend of HKD 0.35 per share, resulting in a dividend yield of 4.97% based on the closing price on August 20 [4][6] - The gas sales volume in Hong Kong remained stable, with a slight increase in residential gas usage offsetting the negative impact of residents consuming gas in mainland China. The company has strong pricing power in Hong Kong, with recent price adjustments enhancing profitability [6] - The mainland business showed a slight decline in gas sales volume, but the gross margin improved. The company effectively controlled the decline in connection business, minimizing its impact on overall performance [6] - The company's extended business segment saw a significant profit increase, and strategic investments are expected to support growth [6] - Renewable energy initiatives are gaining traction, with solar power generation increasing by 44% year-on-year. The company is also expanding its green fuel business, with expectations for future growth [6] Financial Data and Earnings Forecast - Revenue projections for 2023 to 2027 are as follows: HKD 56,971 million (2023), HKD 55,473 million (2024), HKD 54,725 million (2025E), HKD 56,732 million (2026E), and HKD 58,295 million (2027E) [5][7] - Net profit projections for the same period are: HKD 6,070 million (2023), HKD 5,712 million (2024), HKD 6,131 million (2025E), HKD 6,543 million (2026E), and HKD 6,912 million (2027E) [5][7] - The price-to-earnings ratio for 2025-2027 is projected to be 21.4, 20.1, and 19.0 respectively, indicating a stable valuation outlook [6]