Guoyuan Securities2·2025-10-24 03:40Investment Rating - The report assigns a "Buy" rating to China Resources Gas (1193.HK) with a target price of HKD 26.6 per share, indicating a potential upside of 24% from the current price of HKD 21.5 [1][6]. Core Insights - The report highlights an expected improvement in natural gas demand due to early heating season in northern China, driven by a significant drop in temperatures [2][9]. - It anticipates a low single-digit growth in gas sales volume for 2025, with a continuous recovery in gas sales margin [3][10]. - The company is strategically investing in the hydrogen energy sector and exploring green fuel business opportunities amid a broader shift towards low-carbon energy [4][11]. - The report indicates that the company's dividend payout will not decrease in 2025, with a 20% increase in interim dividends and ongoing share buybacks to boost shareholder confidence [5][12]. Summary by Sections Market Conditions - Northern China has experienced a "rapid freeze" drop in temperatures, leading to early heating in regions like Taiyuan and Inner Mongolia. Predictions suggest fluctuating winter temperatures influenced by El Niño and La Niña phenomena, which may lead to increased natural gas consumption during the heating season [2][9]. Sales and Margins - In the first half of 2025, the company's retail natural gas volume was 20.76 billion cubic meters, a slight decline of 0.69% year-on-year. However, the gas sales margin improved to HKD 0.55 per cubic meter, with expectations for a low single-digit growth in sales volume for the full year [3][10]. Strategic Initiatives - The company is focusing on developing a hydrogen energy supply chain and advancing green fuel injection services, as well as conducting research on ammonia fuel technology to create new growth points in green energy [4][11]. Financial Outlook - The company plans to maintain its total dividend payout for 2025, with a 20% increase in interim dividends. The share buyback program is expected to enhance market confidence in the coming months [5][12]. Valuation Metrics - The report updates the earnings forecast and sets a target price of HKD 26.6 per share, corresponding to a price-to-earnings ratio of 16 times for 2025 and 14.6 times for 2026, indicating a favorable valuation compared to peers [6][13].