20230921-招银国际-华润燃气_一百_-01193.HK-Sound_operating_data_in_Aug_with_steady_growth_outlook_5页_949kb

Summary of CR Gas (1193 HK) Equity Report

Company Performance: CR Gas demonstrated strong operating data in August 2023, with year-over-year growth in retail/residential/industrial/commercial gas sales (up by 10%/13%/10%/17% YoY respectively). For January-August 2023, retail gas sales grew by 7.1% YoY, and the company expects to achieve its full-year gas sales target of 8% YoY due to factors including continued monthly recovery, improved economic demand, low base from 2H22, and structural optimization towards higher-margin commercial sales.

Dollar Margin: The average dollar margin per cubic meter (cbm) improved to RMB 0.58/cbm in August and is projected to reach RMB 0.50/cbm for the year, boosted by price pass-through measures. Despite potential winter price pressures, CR Gas is expected to slightly exceed its target margin through active implementation of cost adjustments.

Strategic Partnerships: CR Gas secured a long-term gas supply agreement with CNPC, covering 40bn cbm over 10 years, which will enhance supply stability and support business expansion.

Comprehensive Service Business (CSB): Anticipated stable growth in gas connections and strong CSB performance, expected to maintain revenue growth above 18% YoY, supported by opening trends in household connections and favorable business conditions.

Rating and Target Price: CMBIGM maintains a BUY rating with an unchanged target price of HK$35.48 and an upside potential of 57.7%. The valuation (9x FY23E PE) is considered attractive relative to the company's three-year average PE of 10x. Key assumptions include steady gas sales growth, margin improvements, and solid CSB development.

Financial Highlights: Projected revenue and net profit show steady growth for 2023-2025, with key metrics like ROE and P/E indicating a favorable outlook amid risks such as seasonality and macroeconomic factors.