www.jpmorganmarkets.comAsiaPacificEquityResearch28April2019EquityRatingsandPriceTargetsMktCapPriceRatingPriceTargetCompanyTicker($mn)CCYPriceCurPrevCurEndDatePrevEndDateBeijingEnterprisesHoldingsLimited(0392)392HK6,757.73HKD42.00Nn/c46.80Jun-2046.40Dec-19ChinaGasHoldingsLimited(0384)384HK16,324.91HKD25.20Nn/c28.00Dec-19n/cn/cChinaResourcesGasGroupLimited(1193)1193HK10,420.01HKD36.75OWn/c46.00Jun-2034.70Dec-19ENNEnergyHoldingsLimited(2688)2688HK10,711.74HKD74.75Nn/c84.50Jun-2071.00Dec-19KunlunEnergyCompanyLimited(0135)135HK8,726.01HKD8.19OWn/c10.20Jun-2010.70Dec-19Source:Companydata,Bloomberg,J.P.Morganestimates.n/c=nochange.Allpricesasof26Apr19.ChinaGasUtilitiesBuyingopportunitiesinselectivenamesChinaUtilitiesandEnvironmentalElaineWuAC(852)2800-8575elaine.wu@jpmorgan.comBloombergJPMAEWUAliciaChe(852)2800-8593alicia.che@jpmorgan.comStephenTsui,CFA(852)2800-8592stephen.tsui@jpmorgan.comJ.P.MorganSecurities(AsiaPacific)LimitedSeepage23foranalystcertificationandimportantdisclosures,includingnon-USanalystdisclosures.J.P.Morgandoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.ChinagasutilitieshaveunderperformedHSCEIYTDduetoconcernsonregulatoryrisksandinvestors'flighttocyclicalsectorsamidloosermacropolicies.Thepureplaycity-gasdistributorsaretradingatanaverageP/Eof13x,vstheirhistoricalaverageof15-16x.Webelievetheregulatoryriskshavebeenpartlypricedin,whileupsidecouldcomefrom:1)better-than-expectedvolumegrowthamidanimprovementinindustrialactivitiesand2)clarityonconnectionfeepolicyandcity-gatepricesduringnon-peakseason.Werecommendnameswithcompany-specificgrowthcatalysts,suchasKunlunEnergy(beneficiaryofclosergasprocurementpartnershipwithPetroChina)andChinaResourcesGas(furtherpenetrationintocommercialandindustrialcustomers).Weexpectpass-throughofhighercity-gatepri...
