外文报告：HSBC-中华煤气(00003)Initiate OW：Expensive for good reasons-121016.pdfVIP

Company report Natural Resources Energy abc Gas Utilities Equity – Hong Kong Global Research Hong Kong China Gas (3 HK) Overweight Initiate OW: Expensive for good reasons Target China’s largest city-gas operator servicing 13.8m customers; price (HKD) 23.00 Share price (HKD) 20.15 Hong Kong operation provides the cash flow Potential return (%) 14.1 Note: Potential return equals the percentage Our positive view on HKCG is non-consensus and our TP is difference between the current share price and at the top of the consensus range the target price Dec 2011 a 2012 e 2013 e HSBC EPS 0.69 0.86 0.91 Initiate OW: TP of HKD23 is based on SOTP HSBC PE 28.5 23.0 21.6 Performance 1M 3M 12M Absolute (%) 6.4 16.1 31.8 Our positive view on Hong Kong China Gas (HKCG) is non-consensus: Our HKD23 Relative^ (%) 1.8 2.8 13.1 target price is at the top of the consensus range (HKD14-21) and our EPS forecasts are 5-10% Note: (V) = volatile (please see disclosure appendix) above consensus. Our TP implies the stock will return to its peak forward PE of 25x with a PE premium to pure gas companies of 6x; the premium has recently narrowed to 4-6x or 16 October 2012 lower. Despite having slower growth than its pure China gas distribution peers, we believe Jenny Cosgrove*, CFA