J.P. 摩根-中国-天然气公用事业行业-中国天然气公用事业：有选择的购买机会-2019.4.28-28页.pdf

Asia Pacific Equity Research28 April 2019Equity Ratings and Price TargetsMkt CapPriceRatingPrice TargetCompanyTicker($mn)CCYPriceCurPrevCurEnd DatePrevEnd DateBeijing Enterprises Holdings Limited(0392)392 HK6,757.73HKD42.00Nn/c46.80Jun-2046.40Dec-19China Gas Holdings Limited(0384)384 HK16,324.91HKD25.20Nn/c28.00Dec-19n/cn/cChina Resources Gas Group Limited(1193)1193 HK10,420.01HKD36.75OWn/c46.00Jun-2034.70Dec-19ENN Energy Holdings Limited(2688)2688 HK10,711.74HKD74.75Nn/c84.50Jun-2071.00Dec-19Kunlun Energy Company Limited(0135)135 HK8,726.01HKD8.19OWn/c10.20Jun-2010.70Dec-19Source:Company data,Bloomberg,J.P.Morgan estimates.n/c=no change.All prices as of 26 Apr 19.China Gas UtilitiesBuying opportunities in selective namesChinaUtilities and EnvironmentalElaine Wu AC(852)2800-Bloomberg JPMA EWU Alicia Che(852)2800-Stephen Tsui,CFA(852)2800-J.P.Morgan Securities(Asia Pacific)LimitedSee page 23 for analyst certification and important disclosures,including non-US analyst disclosures.J.P.Morgan does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.China gas utilities have underperformed HSCEI YTD due to concerns on regulatory risks and investors flight to cyclical sectors amid looser macro policies.The pure play city-gas distributors are trading at an average P/E of 13x,vs their historical average of 15-16x.We believe the regulatory risks have been partly priced in,while upside could come from:1)better-than-expected volume growth amid an improvement in industrial activities and 2)clarity on connection fee policy and city-gate prices during non-peak season.We recommend names with company-specific growth catalysts,such as Kunlun Energy(beneficiary of closer gas procurement partnership with PetroChina)and China Resources Gas(further penetration into commercial and industrial customers).We expect pass-through of higher city-gate prices:PetroChina has increased city-gate prices(i.e.input cost for gas utilities)during non-peak season for the first time in some provinces.We believe this risk is manageable as this would only affect non-residential users in most cases and the hike should not be more than the winter gas price hike.We have factored in an Rmb0.02/m3 decline in gas sales dollar margin for our covered gas names in each of 2019-21 to account for this risk.Connection fee margin risks manageable:The central government has been consulting with the gas industry on regulating connection fees.A potential cap on connection margins,if there is one,would likely be on operation margins,which include overhead expenditure.Note that the reported gross margins of 50%by the gas utilities have not included overhead costs.We have assumed a gradual decline in connection margins in our models to factor in such risks.PT and EPS estimates changes:We lifted our PT for CR Gas to HKD46 and our EPS estimates to factor in higher gas volume growth and overhead cost savings.We reduced our PT and EPS estimates for Kunlun Energy to factor in the conversion of convertible bonds to shares(likely by July when the bonds expire).Our PTs for both names imply 25%upside to current price.We also revised up our PTs for ENN and Beijing Enterprises Holdings after factoring in their 2018 results and rolling over the period-end to June 2020.Upcoming catalysts:For Kunlun,we believe the next catalyst will be the expiration of its CBs in July,as the stock will have less shorting pressure then.We also expect the formation of the national pipeline company,possibly in mid-2019,to provide some clarity on Kunluns pipeline business.YTD share performance of gas utilitiesSource:Bloomberg1%-10%19%8%-1%14%-15%-10%-5%0%5%10%15%20%2Asia Pacific Equity Research28 April 2019Elaine Wu(852)2800-Table of ContentsGas utilities operation analysis.3Key stock ideas.6China Resources Gas.6Kunlun Energy.8Policy outlook.10City-gate price hikes during non-peak season.10Connection fee policies.11Potential M&A opportunities.12Beijing Enterprises Holdings Limited(0392).13China Gas Holdings Limited(0384).15China Resources Gas Group Limited(1193).17ENN Energy Holdings Limited(2688).19Kunlun Energy Company Limited(0135).21Table 1:JPM covered gas utilities comp sheetSource:JPM estimates,Bloomberg.*FY20/21 figures used for China Gas,fiscal year end 31 Mar.Figure 1:China natural gas demand yoy growthSource:NDRC,J.P.Morgan.Figure 2:China monthly natural gas demand yoy growthSource:NDRC,J.P.Morgan.(Note:Nov/Dec 17 yoy growth estimated by JPM)JPMJPM PTLast price UpsideMkt capAvg daily liquidityCompanyTicker Rating(HK$)(HK$)(%)(US$mn)(US$mn)FY19E FY20E FY19E FY20E FY19E FY20E FY19E FY20E FY19E FY20E FY19E FY20E FY19EFY20EBJE392 HK Neutral46.842.011.46,7577.9176.96.50.70.62.52.9575410.19.97.2 6.8 China Gas*384 HK Neutral28.025.211.116,30534.1121415.013.12.92.52.22.6636119.519.210.5 9.2 CR Gas1193 HKOW46.036.825.210,41916.4171415.413.42.92.62.63.3(5)(3)19.219.58.3 7.2 ENN2688 HK Neutral84.574.813.010,71124.0591515.713.62.92.62.02.5626718.718.99.4 8.1 Kunlun135 HKOW10.28.224.58,43922.830149.48.21.31.24.24.9272713.413.44.8 4.2 Average241312.511.02.21.92.73.2414116.216.28.07.1RoE(%)EV/EBITDA(x)EPS growth(%)P/E(x)P/B(x)Yield(%)Net debt/equity 24.1%11.6%13.9%9.6%5.7%6.6%15.2%18.1%13%0.0%5.0%10.0%15.0%20.0%25.0%30.0%201120122013201420152016201720182019E23%30%18%21%12%0%18%18%17%19%18%16%19%22%18%15%23%13%18%-5%0%5%10%15%20%25%30%35%Jul-17Aug-17Sep-17Oct-17Nov-17Dec-17Jan-18Feb-18Mar-18Apr-18May-18Jun-18Jul-18Aug-18Sep-18Oct-18Nov-18Dec-18Jan-193Asia Pacific Equity Research28 April 2019Elaine Wu(852)2800-Gas utilities operation analysisFigure 3:Gas volume sales in FY18(bcm)Source:J.P.Morgan estimates.(Note:FY19E for China Gas)Figure 4:City-gas volume growth yoySource:J.P.Morgan estimates.*FY19-21E for China Gas.Figure 5:City-gas penetration rateSource:Company reports.Figure 6:Unit gas sales dollar margin(Rmb/m3)Source:Company reports and J.P.Morgan estimates.*FY19-21E for China Gas.Figure 7:Proportion of operating earnings from connection fees in FY18Source:J.P.Morgan estimates.*FY19E for China Gas.Figure 8:Connection fee per household(Rmb/household)FY18Source:Company data16,830 14,969 24,279 17,370 21,994 -5,000 10,000 15,000 20,000 25,000 30,000BJ EnterprisesChina GasCR GasENNKunlun15%27%23%20%24%8%25%20%18%20%3%23%19%17%19%0%5%10%15%20%25%30%BeijingEnterprisesChina Gas*CR GasENNKunlun20182019E2020E59.8%50.3%58.8%45.0%50.0%55.0%60.0%65.0%China Gas(1H19)CR Gas(FY18)ENN(FY18)City gas penetration rate0.62 0.58 0.63 0.60 0.60 0.61 0.58 0.58 0.59 0.56 0.56 0.57 0.50 0.52 0.54 0.56 0.58 0.60 0.62 0.64China Gas*China Resources GasENN201720182019E2020E35%39%29%25%4%7%60%43%36%0%10%20%30%40%50%60%70%China Gas*CR GasENNUrbanRural2,8922,5222,5492,3002,4002,5002,6002,7002,8002,9003,000CR GasENNChina Gas(1H19)Average connection fee per household(Rmb/household)4Asia Pacific Equity Research28 April 2019Elaine Wu(852)2800-Gas utilities valuation band chartsFigure 9:BEH(392.HK)P/E BandSource:Bloomberg consensus estimates,J.P.Morgan.Figure 10:BEH(392.HK)P/B BandSource:Bloomberg consensus estimates,J.P.Morgan.Figure 11:China Gas(384.HK)P/E BandSource:Bloomberg consensus estimates,J.P.Morgan.Figure 12:China Gas(384.HK)P/B BandSource:Bloomberg consensus estimates,J.P.Morgan.Figure 13:CR Gas(1193.HK)P/E BandSource:Bloomberg consensus estimates,J.P.Morgan.Figure 14:CR Gas(1193.HK)P/B BandSource:Bloomberg consensus estimates,J.P.Morgan.5x9x14x19x23x0.020.040.060.080.0100.0120.0140.0160.0180.0Jan-08Jul-08Jan-09Jul-09Jan-10Jul-10Jan-11Jul-11Jan-12Jul-12Jan-13Jul-13Jan-14Jul-14Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19HK$0.6x0.8x1.2x1.5x0.020.040.060.080.0100.0120.0140.0Jan-08Jul-08Jan-09Jul-09Jan-10Jul-10Jan-11Jul-11Jan-12Jul-12Jan-13Jul-13Jan-14Jul-14Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19HK$1.8x4x9x15x21x27x0.05.010.015.020.025.030.035.040.045.050.0Jan-11Jul-11Jan-12Jul-12Jan-13Jul-13Jan-14Jul-14Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19HK$0.6x1.5x2.4x3.3x4.2x0.05.010.015.020.025.030.035.040.0Jan-11Jul-11Jan-12Jul-12Jan-13Jul-13Jan-14Jul-14Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19HK$9x12x16x19x23x0.05.010.015.020.025.030.035.040.045.050.0Jan-08Jul-08Jan-09Jul-09Jan-10Jul-10Jan-11Jul-11Jan-12Jul-12Jan-13Jul-13Jan-14Jul-14Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19HK$1.3x2.4x3.4x4.5x0.010.020.030.040.050.060.0Jan-08Jul-08Jan-09Jul-09Jan-10Jul-10Jan-11Jul-11Jan-12Jul-12Jan-13Jul-13Jan-14Jul-14Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19HK$5Asia Pacific Equity Research28 April 2019Elaine Wu(852)2800-Figure 15:ENN(2688.HK)P/E BandSource:Bloomberg consensus estimates,J.P.Morgan.Figure 16:ENN(2688.HK)P/B BandSource:Bloomberg consensus estimates,J.P.Morgan.Figure 17:Kunlun Energy(135.HK)P/E BandSource:Bloomberg consensus estimates,J.P.Morgan.Figure 18:Kunlun Energy(135.HK)P/B BandSource:Bloomberg consensus estimates,J.P.Morgan.10 x13x16x20 x23x0.020.040.060.080.0100.0120.0Jan-08Jul-08Jan-09Jul-09Jan-10Jul-10Jan-11Jul-11Jan-12Jul-12Jan-13Jul-13Jan-14Jul-14Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19HK$2.1x2.7x3.3x3.9x0.020.040.060.080.0100.0120.0Jan-08Jul-08Jan-09Jul-09Jan-10Jul-10Jan-11Jul-11Jan-12Jul-12Jan-13Jul-13Jan-14Jul-14Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19HK$1.5x4x18x32x46x0.05.010.015.020.025.030.035.040.045.0Jan-08Jul-08Jan-09Jul-09Jan-10Jul-10Jan-11Jul-11Jan-12Jul-12Jan-13Jul-13Jan-14Jul-14Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19HK$0.6x1.1x1.7x2.2x0.05.010.015.020.025.0Jan-08Jul-08Jan-09Jul-09Jan-10Jul-10Jan-11Jul-11Jan-12Jul-12Jan-13Jul-13Jan-14Jul-14Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19HK$2.8x6Asia Pacific Equity Research28 April 2019Elaine Wu(852)2800-Key stock ideasChina Resources GasWe are maintaining our OW rating despite its 5%outperformance vs HSCEI YTD because we believe the market has not fully priced in the stocks earnings growth potential.We are estimating EPS growth of 17%in 2019 and 14%in 2020,which are 4-8%higher than consensus estimates.CR Gass current valuation of 13x 1-year forward P/E is attractive as it is 20%lower than its historical average of 16x.Revised PT of HKD46 with 25%potential upsideWe have lifted our PT for CR Gas after rolling over our period end to June 2020 and taking into account our EPS revisions and future growth outlook for the company.We lifted our EPS estimates for 2019-21 by 4-10%to factor in the companys 2018 results beat and managements higher volume growth guidance of 20%for 2019 vs our previous estimate of 17%.The growth will be partly driven by increased penetration into commercial and industrial users.Management also expects further operational efficiency improvement from better control of selling,general and administrative expenses.Strong gas volume growth from C&I usersChina Resources Gas has seen strong volume growth of 23%in the past year and is likely to continue the trend in 2019.Management has guided to at least 20%gas sales volume growth for 2019.We think the 20%full-year target is achievable because the company still has many new commercial and industrial users it could connect to within its existing city-gas projects.In addition,it has plans to acquire new city-gas projects,and has guided for HKD1-2B of M&A capex in 2019 vs HKD1.5Bn spent in 2018.Figure 19:CR Gas gas volume yoy growth Source:Company reports;J.P.Morgan estimates.Figure 20:CR Gas gas volume sales breakdown by customer type,FY2018Source:Company reports;J.P.Morgan estimates.3%15%21%23%20%19%17%0%5%10%15%20%25%FY15FY16FY17FY18FY19EFY20EFY21EGas volume sales yoy growthResidential 23%Industrial 47%Commercial22%Vehicle8%7Asia Pacific Equity Research28 April 2019Elaine Wu(852)2800-Table 2:Major provinces of city gas operation for CR GasTop 5 provinces%of total number of projectsGuangdong11%Jiangsu9%Shandong8%Zhejiang8%Sichuan7%Total43%Source:Company financials,JPM estimatesHigher margins from C&I usersCR Gas saw impressive gas volume growth from industrial sales at 32%in 2018,while commercial sales volume grew by 23%.Since C&I customers contribute significantly higher dollar margin of Rmb0.80/m3,vs residential users dollar margin of Rmb0.30-40/m3,we view this as a positive trend and a partial mitigation against potential pressure on margin from policy uncertainties this year.Table 3:CR Gas sales volume breakdown and growth rates,FY2018Share of total vol.soldGrowth rateResidential 23%16%Commercial22%23%Industrial47%32%CNG6%5%LNG2%6%Source:Company presentation,JPM estimatesRising free cash flow with net cash positionCR Gas has observed strong cash flow and a stable liquidity position despite continued capex ramp-up.We estimate the company will continue stable free cash flow growth of 26-30%in 2019 and 2020.It is currently in a net cash position,with total gross debt/asset ratio of 15.8%.We hence view the company to have plenty of room to flex its balance sheet and to continue to increase its dividend payout ratio.Table 4:CR Gas cash flow and liquidity positionHKD MM201720182019E2020EOperating cash flow7,7968,3429,2849,789Growth7%11%5%Capex6,0696,9617,5507,534Free cash flow1,7271,3811,7342,255 Growth-20%26%30%Net gearing5%-7%-5%-3%Source:company financials,JPM research;2019E and 2020E represent JPM estimatesDividend payout rising by 3-5 ppts paCR Gas has consistently increased its payout ratio by 3-5ppts p.a.in the last five years,with payout currently at 38%,roughly in-line with peer average.Management has not set a specific payout target,but has indicated its intention on multiple occasions to gradually grow its payout ratio.We currently model dividend growth of 26%and 23%in 2019E and 2020E,representing a payout of 41%and 44%,respectively.Table 5:CR Gas dividend information201720182019E2020EDPS(HKD)0.550.770.971.19Growth40%26%23%Payout ratio33%38%41%44%Implied current yield2.1%2.6%3.2%Source:Company financials,JPM research;2019E and 2020E are JPM estimates;priced as of Apr 26th close 8Asia Pacific Equity Research28 April 2019Elaine Wu(852)2800-Kunlun EnergyNext catalyst:Expiration of CBsKunlun Energy currently has about RMB3300MM of convertible bonds outstanding with a conversion price of HKD6.80(and a fixed HKDCNY exchange rate of 0.8625).Since the bond is in the money with current share price of HKD8.19,we believe the bondholders will likely convert the bonds to shares.As of end-March,8MM shares have been issued from bond conversions.We believe there will be an overhang on the stock until the bond expiration date of July 25th,2019.Thereafter,we believe the stock should see less shorting pressure.We have lowered our PT on Kunlun from HKD10.7 to HKD10.2 after factoring in full conversion of the CBs,with the issuance of 563MM new shares on top of current shares outstanding.Our EPS estimates were revised down for the same reason.Despite t