Patricia Yeung, an analyst from DBS, maintained the Buy rating on China Gas Holdings (CGHOF – Research Report). The associated price target is HK$8.30.
Patricia Yeung has given China Gas Holdings a Buy rating due to a combination of factors that suggest a strong potential for the company’s business recovery. Yeung notes that despite the initial below-expectation performance in the first half of the financial year, there are clear indicators of a significant rebound. The forecast for the second half includes a more than doubling in core profit, underpinned by a substantial year-over-year increase in dollar margin. This increase is attributed to the successful passing through of costs in the residential market across more regions, government subsidies, and a decrease in gas costs due to falling prices.
Furthermore, Yeung highlights China Gas Holdings’ strategic financial moves, which have improved cash flow and reduced the debt ratio. A concerted effort to accelerate payment collection from rural operations has lowered accounts receivable, with full recovery expected within two years. Coupled with a capped capital expenditure for the fiscal year, the company is anticipated to remain free cash flow positive. The lowered target price to HK$8.30 reflects revised profit expectations but still maintains a Buy rating, based on the company’s favorable valuation compared to peers, expected benefits from new pricing mechanisms, and overall financial improvement.
According to TipRanks, Yeung is an analyst with an average return of -33.8% and a 0.00% success rate.
In another report released on November 27, Bernstein also maintained a Buy rating on the stock with a HK$12.30 price target.
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China Gas Holdings (CGHOF) Company Description:
China Gas Holdings Ltd. engages in the investment, construction, and management of city gas pipeline infrastructure and distribution of natural gas and liquefied petroleum gas (LPG). It operates through the following segments: Sales of Piped Gas, Gas Connection, Sales of LPG, Value-Added Services, and Zhongyu Gas. The company was founded by Ming Hui Liu and Yong Huang on August 22, 1995 and is headquartered in Hong Kong.
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