CHINA GAS HOLD(00384) 东吴证券·2024-11-22 05:46Investment Rating - The report initiates coverage with a "Buy" rating for China Gas Holdings Limited (00384.HK) [1]. Core Views - China Gas is positioned as a leading urban gas provider in China, with a strong market share and potential for profit recovery. The company has diversified its operations to include liquefied petroleum gas (LPG) and value-added services, transitioning into a comprehensive energy service provider [1][2]. - The company is expected to benefit from the implementation of natural gas pricing policies across various regions, which will enhance its profitability. The gross margin is projected to recover, with a forecasted increase in net profit for FY2025 to FY2027 [4]. Summary by Sections 1. Company Overview - Established in 2002 and listed in the same year, China Gas has developed a robust urban gas distribution network, accounting for approximately 5.9% of national consumption with a sales volume of 23.5 billion cubic meters in FY2023/24 [1][3]. - The company has shifted from being solely a gas supplier to a comprehensive energy service provider, integrating various energy solutions including LPG, LNG, and renewable energy services [3][4]. 2. Energy Business - The report highlights a recovery in urban gas pricing, with the company’s gross margin increasing by 0.08 CNY per cubic meter in FY2023/24. The company has signed long-term contracts for LNG at lower prices, enhancing its cost advantages [2][4]. - The company has improved its customer penetration rate to 71% among existing clients, with a total of 54.4 million urban users as of FY2023/24 [2]. 3. Value-Added Services and Comprehensive Energy Solutions - China Gas is actively expanding its value-added services, including the "Yipinhui" initiative, which aims to leverage its existing customer base for new revenue streams. The company has signed contracts with over 50 external gas clients [3]. - The company is also focusing on green energy solutions, including distributed solar energy projects and carbon management services, positioning itself as a green city operator [3]. 4. Profit Forecast and Investment Rating - The report forecasts net profits of 4.017 billion HKD, 4.464 billion HKD, and 4.914 billion HKD for FY2025, FY2026, and FY2027 respectively, with year-on-year growth rates of 26%, 11%, and 10% [4]. - The price-to-earnings ratio is projected to be 8.73, 7.86, and 7.14 for FY2025, FY2026, and FY2027 respectively, indicating a favorable valuation for potential investors [4].