According to a report published by Citigroup, Xinao Energy will guide business recovery this year. After deducting the core profit from liquefied natural gas trading revenue, it is estimated that it will increase by no less than 10% year-on-year. A new Chief Executive Officer and Chief Financial Officer were appointed in the fourth quarter of last year. The gradual implementation of the new strategy will improve basic factors. The bank expects the company's net profit to drop moderately by 3.6% this year and 1.3% next year, mainly due to falling liquefied natural gas prices, and less profit from overseas transactions.
The bank lowered its target price from HK$75 to HK$72, maintaining a “buy” rating, mainly because mainland gas sales will resume growth this year and profit margins will increase; the rapid development of new business and value-added business; and the company's strong financial situation, which has positive cash flow and increased dividend payout ratio. The current price is equivalent to the predicted price-earnings ratio of 8.8 times this year, market account ratio 1.4 times, dividend rate of 5.2%, and return on equity of 16.3%, which is attractive for valuations.