Citi Lowers Earnings Outlook for HK & CHINA GAS (00003.HK), Predicts 2025 Profit Will Fall Short While DPS Remains Steady
Earnings Forecast Revision: Citi Research has lowered its earnings forecasts for HK & CHINA GAS for 2025-2027 by 2-5%, primarily due to reduced contributions from its subsidiary TG SMART ENERGY and anticipated foreign exchange losses.
Target Price and Rating: Despite the earnings forecast revision, Citi maintains a target price of $7 for HK & CHINA GAS and rates it as Neutral, noting that its 2025 earnings forecast is 8% below market consensus.
Dividend Concerns: The broker estimates that HK & CHINA GAS will maintain its dividend per share at $0.35, resulting in a dividend yield of 5%, which is a key concern for investors.
Sector Preferences: In the Hong Kong utilities sector, Citi Research prefers GUANGDONG INV, rating it as Buy with a projected 2025 dividend yield of 4.9%.
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HK & China Gas Collaborates with Sinopec Group Companies to Investigate Hydrogen Energy, Green Fuels, and More
Strategic Partnership Announcement: HK & CHINA GAS has signed a memorandum of understanding (MOU) with Sinopec (Hong Kong) and Xinxing to form a strategic partnership focused on clean energy initiatives.
Collaboration Areas: The partnership will target key areas including hydrogen energy business promotion, construction of hydrogen fueling stations, liquid hydrogen storage and transportation, and the development of sustainable aviation fuel (SAF).
HSI Jumps 54 Points at Midday, Weighed Down by TENCENT and KUAISHOU; Banks and Homebuilders Rise
Market Overview: The HSI rose by 54 points (0.2%) to 26,830, while the HSCEI fell by 19 points (0.2%) to 9,060, and the HSTECH dropped by 72 points (1.3%) to 5,453, with a total half-day turnover of $195.285 billion.
Tech Sector Performance: Major tech stocks like TENCENT and BIDU-SW saw significant declines of 4.1% and 3.8%, respectively, with TENCENT's turnover nearing $26 billion, while other tech companies also experienced losses.
Banking Sector Gains: Banks such as HSBC and BOC HONG KONG reported gains of 2.3% and 2.5%, respectively, contributing to a positive trend in the banking sector, alongside notable increases in Chinese insurers.
Commodity and Real Estate Stocks: Commodity prices rose, with companies like ZIJIN GOLD INTL and CMOC increasing by over 4%, while Hong Kong homebuilders also saw gains, with HENDERSON LAND and SHK PPT rising by 2.1% and 1.7%.
BofAS Begins Coverage of HK & CHINA GAS with Underperform Rating; Earnings Outlook Better, Yet Insufficient to Support Dividend
BofA Securities Coverage: BofA Securities has initiated coverage on HK & CHINA GAS with an Underperform rating and a target price of HKD6.5, despite an improved earnings outlook due to lower gas costs.
Cash Flow Concerns: The report indicates that HK & CHINA GAS' free cash flow is insufficient to cover dividends, which are expected to remain stable in the coming years.
HSBC Research Lowers Earnings Projections for TG SMART ENERGY and HK & CHINA GAS, Anticipates Strong Gas Sales in Hong Kong
Urban Gas Utility Sector Challenges: The urban gas utility sector is experiencing a slowdown in gas sales growth and a decline in new users, although profit margin expansion has mitigated some negative impacts, according to HSBC Research.
Sales and User Projections: HSBC Research anticipates stable retail gas sales in the second half of 2025, but expects a 16% year-over-year decrease in new users for TG SMART ENERGY in 2025, with gas prices likely increasing due to a hike in August 2024.
Broker Ratings and Target Price Adjustments: Daiwa has upgraded the CN gas industry rating to Neutral and HK & CHINA GAS to Outperform, while maintaining a Buy rating on TG SMART ENERGY but lowering its target price from HKD4.7 to HKD4.
Earnings Forecast Revisions: HSBC Research has revised down its earnings forecasts for TG SMART ENERGY by 6-7% and for HK & CHINA GAS by 7-8% due to reduced contributions from the renewable energy sector.
EcoCeres, Backed by HK & China Gas, Reportedly Hires Investment Banks for HK IPO Targeting Up to US$1 Billion
Company Listing Plans: EcoCeres, a renewable fuel company backed by HK & CHINA GAS, is preparing for a potential Hong Kong listing with Deutsche Bank, HSBC, Morgan Stanley, and UBS assisting in the process, aiming for a listing within this year.
Previous Listing Considerations: Earlier reports indicated that EcoCeres was considering a European listing, specifically targeting the London Stock Exchange, with plans to raise between US$500 million to US$1 billion and achieve a valuation of US$5 billion.
Daiwa Raises HK & CHINA GAS Rating to Outperform as Green Fuel Business Shows Earnings Recovery and Strengthens Fundamentals
Earnings Recovery: HK & CHINA GAS has shown improvement in its fundamentals due to a recovery in earnings from its green fuel business, as noted in a Daiwa research report.
Subsidiary Restructuring: The potential spin-off of its subsidiary EcoCeres after 2026 may lead to increased dividends per share, despite EcoCeres reporting a significant net loss last year.
Rating Upgrade: Daiwa has upgraded HK & CHINA GAS's rating from Hold to Outperform, with a revised 12-month target price increased from HKD7.1 to HKD7.7.
Market Outlook: The recovery of sustainable aviation fuel prices and new capacity additions are expected to contribute to HK & CHINA GAS's turnaround in the second half of 2025.
HK & China Gas Collaborates with Sinopec Group Companies to Investigate Hydrogen Energy, Green Fuels, and More
Strategic Partnership Announcement: HK & CHINA GAS has signed a memorandum of understanding (MOU) with Sinopec (Hong Kong) and Xinxing to form a strategic partnership focused on clean energy initiatives.
Collaboration Areas: The partnership will target key areas including hydrogen energy business promotion, construction of hydrogen fueling stations, liquid hydrogen storage and transportation, and the development of sustainable aviation fuel (SAF).
HSI Jumps 54 Points at Midday, Weighed Down by TENCENT and KUAISHOU; Banks and Homebuilders Rise
Market Overview: The HSI rose by 54 points (0.2%) to 26,830, while the HSCEI fell by 19 points (0.2%) to 9,060, and the HSTECH dropped by 72 points (1.3%) to 5,453, with a total half-day turnover of $195.285 billion.
Tech Sector Performance: Major tech stocks like TENCENT and BIDU-SW saw significant declines of 4.1% and 3.8%, respectively, with TENCENT's turnover nearing $26 billion, while other tech companies also experienced losses.
Banking Sector Gains: Banks such as HSBC and BOC HONG KONG reported gains of 2.3% and 2.5%, respectively, contributing to a positive trend in the banking sector, alongside notable increases in Chinese insurers.
Commodity and Real Estate Stocks: Commodity prices rose, with companies like ZIJIN GOLD INTL and CMOC increasing by over 4%, while Hong Kong homebuilders also saw gains, with HENDERSON LAND and SHK PPT rising by 2.1% and 1.7%.
BofAS Begins Coverage of HK & CHINA GAS with Underperform Rating; Earnings Outlook Better, Yet Insufficient to Support Dividend
BofA Securities Coverage: BofA Securities has initiated coverage on HK & CHINA GAS with an Underperform rating and a target price of HKD6.5, despite an improved earnings outlook due to lower gas costs.
Cash Flow Concerns: The report indicates that HK & CHINA GAS' free cash flow is insufficient to cover dividends, which are expected to remain stable in the coming years.
HSBC Research Lowers Earnings Projections for TG SMART ENERGY and HK & CHINA GAS, Anticipates Strong Gas Sales in Hong Kong
Urban Gas Utility Sector Challenges: The urban gas utility sector is experiencing a slowdown in gas sales growth and a decline in new users, although profit margin expansion has mitigated some negative impacts, according to HSBC Research.
Sales and User Projections: HSBC Research anticipates stable retail gas sales in the second half of 2025, but expects a 16% year-over-year decrease in new users for TG SMART ENERGY in 2025, with gas prices likely increasing due to a hike in August 2024.
Broker Ratings and Target Price Adjustments: Daiwa has upgraded the CN gas industry rating to Neutral and HK & CHINA GAS to Outperform, while maintaining a Buy rating on TG SMART ENERGY but lowering its target price from HKD4.7 to HKD4.
Earnings Forecast Revisions: HSBC Research has revised down its earnings forecasts for TG SMART ENERGY by 6-7% and for HK & CHINA GAS by 7-8% due to reduced contributions from the renewable energy sector.
EcoCeres, Backed by HK & China Gas, Reportedly Hires Investment Banks for HK IPO Targeting Up to US$1 Billion
Company Listing Plans: EcoCeres, a renewable fuel company backed by HK & CHINA GAS, is preparing for a potential Hong Kong listing with Deutsche Bank, HSBC, Morgan Stanley, and UBS assisting in the process, aiming for a listing within this year.
Previous Listing Considerations: Earlier reports indicated that EcoCeres was considering a European listing, specifically targeting the London Stock Exchange, with plans to raise between US$500 million to US$1 billion and achieve a valuation of US$5 billion.
Daiwa Raises HK & CHINA GAS Rating to Outperform as Green Fuel Business Shows Earnings Recovery and Strengthens Fundamentals
Earnings Recovery: HK & CHINA GAS has shown improvement in its fundamentals due to a recovery in earnings from its green fuel business, as noted in a Daiwa research report.
Subsidiary Restructuring: The potential spin-off of its subsidiary EcoCeres after 2026 may lead to increased dividends per share, despite EcoCeres reporting a significant net loss last year.
Rating Upgrade: Daiwa has upgraded HK & CHINA GAS's rating from Hold to Outperform, with a revised 12-month target price increased from HKD7.1 to HKD7.7.
Market Outlook: The recovery of sustainable aviation fuel prices and new capacity additions are expected to contribute to HK & CHINA GAS's turnaround in the second half of 2025.
