投资之家-股票-港股-美股-三板-研报-行业-概念

加为桌面|设为首页|收藏本站|意见建议

行业研究

全部

China gas sector:Buy during X’mas sale

研究机构:麦格理证券 研究员:Gary Chiu,Alan Hon,James Hubbard,Aditya Suresh,Tho 发布时间:2014-12-16

Event

We remain bullish on China’s gas sector as it is a big beneficiary of thegovernment’s 2020 energy mix target which would drive more gasconsumption in 2014-20E (12% CAGR). With more catalysts to emerge aswell as the sector’s PER now close to the trough level of 2013 anddiscounting most of the concerns, we recommend investors to revisit thesector. Our preferred picks are CR Gas, BEH, China Gas and ENN.

Impact

Positive 1 – Gas demand should remain robust. The recent decline in gasconsumption growth was due to a slowdown in industrial activity; rising gasprices and a slower roll-out of consumer subsidies; and regional supplyshortfall on midstream bottlenecks. As we expect the government to introducestimulus measures to revive the economy, cut incremental gas prices toreflect lower oil prices, and continue promoting natural gas to achieve its 2020energy mix target, our 2020 gas demand forecast of 340bcm implies a gassales volume CAGR of 12% in 2014-20E vs single-digit growth in Aug-Oct 14.

Positive 2 – Pass-through of higher gas cost largely completed, with 50-100% of affected gas projects already having been allowed to fully passthroughhigher gas costs. Management expects negotiations with remainingaffected projects to be finalized before end-2014 (>90% pass-through) andprofit margin to be maintained.

Positive 3 – Potential gas price cut to reflect lower oil prices a catalyst.Given the divergence in prices of natural gas (+18% in Sep) and oil (-30%since July), we see potential for a cut in incremental gas volume prices inorder to maintain natural gas’s price competitiveness and drive more gasconsumption to achieve the 2020 energy mix target.

Positive 4 – Rate of new household connections to be maintained onrapid urbanization (a long way for gas penetration to rise from the current~45% to developed markets’ 70%) and potential shift in customer mix fromnew buildings to old buildings and economic housing.

Outlook

We believe city gas operators’ underperformance (down 9-28% since mid-Augvs +2% for the HSCEI) not only discounted concerns of a margin squeezeafter the gas price hike but also the slowdown in gas sales volume growth.With the sector’s PER now close to the trough level in 2013 after the gas costincrease, we see this as a good entry level for city gas operators.

Our pecking order is: CR Gas (strong capacity for M&A), BEH (benefiting fromBeijing’s efforts to turn into a ‘clean city’), China Gas (company guidanceimplies strong earnings growth) and ENN (deep valuation but adopt a waitand-see approach for the overseas business to turn around).

声明:投资之家免费提供的研究报告及其他资料均来自互联网,仅作为用户获取信息之目的,并不构成投资建议,市场有风险,投资需谨慎。