SGC(SH:601139) Guotai Junan Securities·2024-04-28 08:02Investment Rating - The investment rating for Shenzhen Gas (601139) is maintained at "Buy" with a target price of 9.86 CNY, unchanged from the previous rating [1][2]. Core Views - The report highlights that the company's gas supply is stable, and the gross margin is expected to recover. The improvement in performance is primarily attributed to the reduction in management expenses [1][2]. Summary by Sections Financial Performance - In Q1 2024, the company's net profit reached 280 million CNY, representing a year-on-year increase of 10.0%. Revenue grew by 6.7% year-on-year to 686 million CNY, aligning with the performance guidance [1][2]. - The management expense ratio improved to 1.2%, down by 0.5 percentage points year-on-year, contributing to the overall performance enhancement [1][2]. Gas Supply and Pricing - The company has a robust gas supply with a new long-term contract signed with PetroChina for 10 billion cubic meters in 2024. This is expected to enhance the company's gas procurement capabilities [1][2]. - The report anticipates that the recent price adjustments in Shenzhen will positively impact the company's gross margin, with an estimated annual contribution of approximately 260 million CNY to net profit [1][2]. Earnings Forecast - The projected EPS for 2024, 2025, and 2026 is 0.58 CNY, 0.65 CNY, and 0.74 CNY respectively, maintaining the target price of 9.86 CNY [1][2]. - The company's revenue is expected to grow from 30,929 million CNY in 2023 to 34,342 million CNY in 2024, reflecting a growth rate of 11% [5]. Valuation Metrics - The report provides various valuation metrics, including a PE ratio of 15.12 for 2023, which is projected to decrease to 12.97 in 2024, indicating an improving valuation outlook [5][6]. - The company's dividend yield is projected to increase from 1.7% in 2023 to 2.3% in 2024, reflecting a positive trend in shareholder returns [5][6].