Citigroup maintains a "neutral" rating on HK & China Gas (00003) with a target price of 6.3 Hong Kong dollars.

Citigroup's research report shows that based on a 12-month period, it maintains a "neutral" rating for HK & CHINA GAS (00003), with a target price of 6.3 Hong Kong dollars. It is expected that its core net profit last year will be relatively flat compared to the previous year (58.94 billion yuan), with a forecasted dividend yield of 5.9% this year, higher than the current yield of 4.6% for US 10-year Treasury bonds. The report states that HK & CHINA GAS will pay out 6.5 billion yuan in dividends annually from 2022 to 2023, partially driven by debt. The company hopes to generate more cash through emerging businesses in the long term to maintain dividends per share, such as sustainable aviation fuel and green methanol production and sales. The capital expenditure for developing these related businesses mainly comes from operating partners rather than the gas company. Citigroup appreciates the above strategy as it not only mitigates investment risks but also increases cash flow.