[ET Net News Agency, 6 March 2020] Morgan Stanley lowered its target price for Hong
Kong & China Gas (00003) to HK$14.5 from HK$16.3 and maintained its "equal-weight" rating.
The research house expects its Chinese gas projects' volume growth to slow to 10% in
2020 from 13% last year due to a slowdown in coal-to-gas conversion and the impact from
COVID-19.
It also expects the cost advantage of HK towngas will widen versus electricity in the
next 3 years, due to an estimated 11-16% rise in electricity tariffs, while towngas' price
may fall with feedstock naphtha price's fall of 12% year-to-date. That should drive market
share gains of towngas in industrial and commercial segments.
Meanwhile, weak coal and oil prices will likely drag down its new energy businesses,
which are coal-based projects and a Thai oil field. Morgan sees no more property
revaluation gains and a decline in recurring rental income from its IFC hotel operation.
(KL)
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00003 HK & CHINA GAS
Nominal 
5.660 -0.030 (-0.527%) Research Report
06/03/2020 17:21
{I-bank focus}Morgan cuts HK & China Gas (00003) to HK$14.5
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