[ET Net News Agency, 27 July 2020] Nomura maintained its target price for China
Resources Gas (CRG)(01193) unchanged at HK$44 but upgraded its rating to "buy" from
"neutral".
The research house said CRG has underperformed China Gas (00384) by 3% and ENN Energy
(02688) by 23% over the past three months. This underperformance is unwarranted, given
CRG's gas sales-dominant profit structure, which should enable CRG to recover faster than
peers following a recovery in gas demand.
Given its higher profit contribution from gas sales, Nomura believes CRG is
better-placed than its peers to benefit if the establishment of PipeChina allows gas
distributors to source cheaper gas supplies.
Nomura said its sensitivity analysis shows that a 10% increase in gas dollar margin will
translate into an 11% increase in 2021 EPS for CRG, higher than 9%/5% for ENN/China Gas,
given CRG's higher profit contribution from gas sales. (KL)