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China Gas Holdings Ltd 00384

Rating as of

Morningstar’s Analysis

Valuation
Currency in HKD
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Disappointing First-Half Results for China Gas Holdings; Shares Remain Undervalued

Chokwai Lee, CFA Senior Equity Analyst

Analyst Note

| Chokwai Lee, CFA |

Narrow-moat China Gas Holdings’, or CGH’s, first-half fiscal 2022 (ending March) core net profit of HKD 4.2 billion, down 18.6% year on year, was below our expectation due to lower-than-expected new residential connections. We cut our fair value estimate to HKD 28.00 from HKD 36.50, after taking the weak results into account. We think the shares remain attractive, but CGH will need to deliver consistent results improvement before the firm deserves a rerating. Management guided that future core earnings could grow at more than 15% per year in the next few years, but we are more conservative and forecast five-year net income CAGR of 7.7%, mainly due to lower new residential connections.

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Company Profile

Business Description

China Gas Holdings is involved in the wholesale and retail businesses of natural gas and liquefied petroleum gas in China. As of fiscal 2021 (ended March 31, 2021), the group had secured a total of 642 piped gas concessions, 557 compressed natural gas/liquefied natural gas refilling stations for vehicles, and 113 LPG distribution projects in China. In total, CGH has connected 40.2 million residential households and achieved a penetration rate of 60.8%.

Contact
151 Gloucester Road, Room 1601, 16th Floor, Capital Centre
Hong Kong, Hong Kong
T +852 28770800
Sector Utilities
Industry Utilities - Regulated Gas
Most Recent Earnings
Fiscal Year End Mar 31, 2022
Stock Type
Employees 59,462