中国燃气：盈利稳定度仍有待提高，维持中性

Investment Rating - The report maintains a neutral rating for China Gas (384 HK) with a target price adjusted down to HKD 6.82, indicating a potential downside of 4.5% from the current closing price of HKD 7.14 [1][11]. Core Insights - The core profit for the fiscal year 2024 is expected to decline by 4.3% year-on-year, which is approximately 10% lower than previous expectations. This is primarily due to lower-than-expected gross margins from retail gas sales and increased financial costs from non-RMB loans [2][4]. - Despite the weak profit levels, the company has improved its free cash flow to HKD 4.3 billion, a 70% increase year-on-year, and has maintained a final dividend of HKD 0.40 [2][4]. - The company anticipates further improvement in gas sales margins in fiscal year 2025, projecting a retail gas margin increase to RMB 0.53 per cubic meter, driven by cost optimization and higher pricing for residential gas [2][7]. Financial Performance Summary - For fiscal year 2023, the company reported revenues of HKD 91,988 million, which is expected to drop to HKD 81,410 million in fiscal year 2024, reflecting an 11.5% decline. The net profit is projected to decrease from HKD 4,293 million in 2023 to HKD 3,185 million in 2024 [4][12]. - The company’s core profit is expected to recover in fiscal year 2025, with a projected increase of 10% year-on-year, supported by improved gas sales margins and a stabilization in new connection volumes [2][4]. - The retail gas volume is expected to grow by 4.2% year-on-year in fiscal year 2025, with management maintaining a conservative outlook on new residential connections, estimating a range of 1.2 to 1.4 million new connections [2][6]. Operational Overview - The report indicates that the retail gas volume for fiscal year 2024 is projected at 23,513 million cubic meters, with a slight increase from the previous year. The gross margin for gas sales is expected to improve to RMB 0.50 per cubic meter [6][12]. - The company has seen a significant drop in new residential connections, down 28% year-on-year to 1.66 million, which is higher than previous expectations [2][6]. - The operational profit margin for the gas sales segment has stabilized at around 47%, while the connection segment accounts for approximately 20% of the profit structure [2][4].