BOCOM International·2025-08-28 07:11Investment Rating - The report assigns a "Buy" rating to the company, New Energy (2688 HK), with a target price of HKD 73.66, indicating a potential upside of 17.0% from the current closing price of HKD 62.95 [4][17]. Core Insights - The company's performance in the first half of the year was weak, with core profit slightly declining by 1% year-on-year to RMB 3.2 billion, aligning with market expectations. Retail gas sales increased by 1.9%, with commercial and residential sales growing by 2.4% and 1.3%, respectively [2][7]. - The company is progressing smoothly with its privatization plans, having completed consultations with regulatory bodies and is expected to hold a shareholders' meeting to seek approval for the privatization scheme in the fourth quarter of this year [7]. - The company anticipates a slight recovery in operational performance in the second half of 2025, driven by normal winter heating demand, projecting a 2.2% year-on-year increase in retail gas volume for the full year [7]. Financial Overview - Revenue projections for the company are as follows: RMB 113.86 billion in 2023, RMB 109.85 billion in 2024, RMB 112.65 billion in 2025, RMB 117.57 billion in 2026, and RMB 122.69 billion in 2027, with a compound annual growth rate of approximately 4% from 2024 to 2027 [3][19]. - Net profit is expected to be RMB 6.82 billion in 2023, decreasing to RMB 5.99 billion in 2024, and then recovering to RMB 7.17 billion in 2025, with a projected growth rate of 3.2% in 2025 [3][19]. - The company’s earnings per share (EPS) are forecasted to be RMB 6.71 in 2023, RMB 6.14 in 2024, and RMB 6.34 in 2025, reflecting a slight decline in 2024 before a recovery [3][19]. Segment Performance - The company’s revenue from various segments is projected as follows: - Natural gas connection: RMB 5.34 billion in 2023, decreasing to RMB 3.93 billion in 2025 - Natural gas retail: RMB 60.61 billion in 2023, increasing to RMB 63.49 billion in 2025 - Energy business: RMB 14.51 billion in 2023, expected to grow to RMB 15.56 billion in 2025 [10][19]. - The gross profit margin is expected to improve slightly, with the overall gross profit projected to be RMB 14.34 billion in 2023 and RMB 14.48 billion in 2025 [10][19].