By Clarence Leong
Shares of China Gas Holdings Ltd. plunged to their lowest level in more than four years after the company missed earnings estimates, while analysts slashed profit forecasts and target prices.
The stock was 20% lower at HK$14.06 on Tuesday afternoon, taking year-to-date losses to 54%.
The Hong Kong-headquartered gas distributor late Monday posted a 19% decline in first-half net profit to 4.11 billion Hong Kong dollars (US$526.9 million), well short of the HK$5.44 billion expected by a FactSet poll of analysts. China Gas attributed the decline in part to narrower gross-profit margins.
Bocom International cut its fiscal 2022-2024 earnings estimates for the company by 25%-33%, noting a 39% year-on-year decline in new gas connections in the first half. A decline had been anticipated due to safety incidents, including a serious gas explosion in China's Hubei province, "but the magnitude was much bigger than expected," Bocom said.
The brokerage cut its target price by 26% to HK$15.90, maintaining a neutral rating.
Daiwa Capital Markets reduced its net-profit forecasts for China Gas by 31% for fiscal 2022 and 32.5% for fiscal 2023, noting that first-half earnings came in at only 34% of the brokerage's original full-year forecast. It also lowered its forecasts for residential installations by around half to 2.6 million in fiscal 2022 and 2.9 million in fiscal 2023, noting the company said a property sector meltdown in China was partly to blame for the weakness.
Daiwa kept a hold rating on China Gas but trimmed its target price by 26% to HK$18.40.
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(END) Dow Jones Newswires