Citi released a research report stating that maintaining the “buy” rating of Xinao Energy (02688) is mainly due to the fact that 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 ratio. The target price was lowered from HK$75 to HK$72.
The bank pointed out that the company is guiding business recovery this year. After deducting the core profit from liquefied natural gas trading revenue, it is estimated that the year-on-year increase will not be less than 10%. 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.