Guoyuan International: CHINA RES GAS (01193) rated as "buy" with a target price of HK$26.6.

Guoyuan International released a research report, giving a "buy" rating to CHINA RES GAS (01193), updating profit forecasts and giving the company a target price of HK $26.6 per share, corresponding to a PE ratio of 16 times in 2025 and 14.6 times in 2026, with a 24% potential upside from the current price. The company's dividend payout ratio in 2024 is 53%, with a 20% year-on-year increase in the mid-term dividend payout in 2025. The full-year dividend guidance indicates that the dividend amount will not decrease. According to the company's annual share buyback plan, the next 2 months will be an important window for share repurchases. The company aims to enhance shareholder returns through dividends and boost market confidence through buybacks. Since October 18th, there has been a "rapid freeze" in the north, with cities like Taiyuan and Inner Mongolia starting heating earlier. According to the World Meteorological Organization and the US Climate Prediction Center, from November 2025 to March 2026, China's climate will be affected by both El Nino and La Nina phenomena, leading to sudden changes in winter temperatures and overall warmer spring temperatures. The probability of extreme events with strong temperature fluctuations is high. Meanwhile, with multiple gas sources supporting gas supply in China in 2025, the uncertainty of the climate will have a significant impact on urban gas and power generation gas. Compared to a 0.1% year-on-year decrease in apparent natural gas consumption in the first 8 months of 2025, it is expected that national natural gas consumption during the heating season in 2025 will quickly rebound. In the first half of 2025, the company's retail natural gas volume was 207.6 billion cubic meters, a year-on-year decrease of 0.69%; the gross margin on gas sales rose to 0.55 yuan/cubic meter (up by 0.01 yuan/cubic meter year-on-year). The company expects a low single-digit growth in annual gas sales volume in 2025, with a year-on-year increase of 1 cent in gross margin on gas sales. Overall, international natural gas prices remain relatively low, and new policies in China in 2025 will promote effective linkage between intra-provincial and inter-provincial gas transmission pricing mechanisms. The company continues to promote price harmonization efforts in regions like Henan and Hunan, with expectations of continued improvement in gas sales margins. Additionally, influenced by the overall economic downturn, the company's comprehensive services and comprehensive energy business are experiencing varying degrees of decline and slowdown. In the context of the large-scale green and low-carbon transition, the company is expanding its hydrogen energy industry chain, promoting green fuel refueling services, conducting research and development of ammonia fuel technology, and actively cultivating new growth points in green energy.