|作者：||Scully TSOI,Tommy WONG,Eric SIU|
|摘要：||Report title:China Gas (384 HK) - Shanghai NDR takeaways
Analyst:Scully TSOI,Tommy WONG,Eric SIU
■ Gas sales vol. growth reached >17% YoY in Apr-May 19. Mgmt. maintains +25% gas sales vol. growth guidance in FY20
■ Sees ample market opportunities for rural coal-to-gas conversion beyond FY21
■ Maintain BUY and TP HK$38.3
Gas sales vol. growth stood at >17% YoY in Apr-May 19
Investors’ worried about the slowdown in the gas consumption; the national gas consumption further slowed from 10.7% YoY in Apr 19 to 8.1% YoY in May 19 (vs 17.5% YoY in May 18). However, mgmt. addressed that the slower national gas consumption growth in this period was mainly due to lower demand from non-city gas customers, e.g. chemical manufacturers, who were sensitive to economic condition. City-gas sales remained intact; the co.’s gas sales vol. grew >17% YoY in Apr-May 19. Mgmt. remains confident to achieve its full year gas sales vol. growth target of >25% YoY as the co. plans to supply gas to another 2mn rural households in FY20 and the gas sales to rural households is expected to account for 5-7% out of 25% YoY gas sales vol. growth.
Ample market chances for rural coal-to-gas conversion
China Gas targets to connect 10mn rural households in total by FY21. Mgmt. foresees that rural coal-to-gas conversion will continue beyond FY21 as the market size in Northern China reaches >50mn rural households. However, the co. will only eye on those regions with economic condition and sufficient gas supply potential.
Aim for 80% of A/R collection in FY20
As of Mar 2019, the co. still had ~RMB4.8bn of A/R (related to rural connection) outstanding. The co. intends to supply gas to another 2mn rural household in FY20 and aims to collect 80% of the A/R by then. Mgmt. explains that the 20% of A/R collection delay is mainly due to local govt.’s slow verification of connection work. However, the payment collection would be improved gradually as the central govt. is urging local govt. to meet its own environmental target.
Does not expect connection fee to be cut dramatically
Regarding the recent connection fee reform policy, mgmt. holds similar view as us (please refer to our previous report: link); no significant connection fee cut from its current level is expected and impact from opening market is also limited.