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 Utilities:Revisiting our positive sector call

研究机构:摩根大通(亚太) 研究员:Elaine Wu,Boris Kan 发布时间:2015-09-18

In late July, we called the inflection point of China gas utilities. Shareperformance has been mixed since then, with all but China ResourcesGas underperforming the HSCEI. So, where did we go wrong? It's mainlythe later-than-expected gas cost cut and continued drag on volume growth.

However, we remain positive on the sector on the potential improvementin demand after the expected price cut in November. What’s more, broadernatural gas market reform may lead to more frequent price adjustments in2016. We stay positive on the sector. Top picks: China Gas and CR Gas.

Shares did not react much to interim results. Gas utilities (except Kunlunand Towngas) delivered 1H15 earnings meeting or beating estimates, but theshares did not react much to the bottom-line growth, as we expected, because itfocused more on the top line. We have turned more positive on CR Gas postresultsbecause it’s proven to be a strong operator that should continue to benefitfrom economies of scale and M&A.

Price adjustment likely in Nov now. NDRC will likely announce a gas cost cutby mid-Oct of Rmb0.4-0.6/m3 (15-25%). At the same time, residential pricesmay be hiked by ~Rmb0.3/m3 as part of the central government's effort to alignresidential prices more closely with those for commercial and industrial users.

This will be a net positive for the sector, in our view.

What’s in the price? Current share prices have factored in: 1) weak oil prices(which makes natural gas less competitive), 2) weak national gas demandgrowth of 2% this year, and 3) a smaller-than-needed gas cost cut of ~Rmb40cents, in our view.

What’s the upside? Shares would move up on 1) a bigger-than-expected gascost cut of >Rmb50 cents, 2) more frequent price adjustments from semi-annualto quarterly, 3) improvement in volume growth, which may start in Feb 2016,when demand growth was a only 3% the prior year.

Risks to our call: Slower economic growth, which could weaken gas demandfrom industrial users; weakening of oil prices; and further delay in and/or alower-than-expected natural gas price cut.

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。