[ET Net News Agency, 4 February 2021] HSBC Global Research lowered its target price for
Towngas China (TCCL) (01083) to HK$3.6 from HK$4.6 and downgraded its rating to "buy" from
"hold" on the back of lower operating efficiency (ROE) versus domestic peers in mainland
China.
The research house said its "buy" thesis on TCCL was based on its attractive valuation,
but the stock has underperformed despite proposing M&A with Shanghai Gas. This leads HSBC
to believe that the stock deserves to trade at lower valuation multiples given the lower
investment return from assets and less chance of further corporate action or M&A now.
HSBC increased its 2020-22 net profit forecasts by 0-1%, while its EPS numbers were cut
by 2% due to a higher share count. (KL)