Citi issued a research report on Beijing Gas Blue Sky Holdings Limited ("the Company" or "Beijing Gas Blue Sky", together with its subsidiaries, the "Group", HKSE stock code: 6828) today, initiate it with a Buy rating and target price of HK$0.4.
Citi expects BGBS to complete at least five acquisitions in 2019-20E and will gain superior profit growth in expansion. It expects that, BGBS EPS will grow at 60% CAGR in 2018-20E, driven by profit contribution from its 29% owned Caofeidian LNG terminal, and gas sales volume growing at 145% 2018-20E CAGR.
With strong support from Beijing Gas Group, largest shareholder of BGBS, Citi expects more quality asset injections will happen in the future. It also expects that, Beijing Gas Group will consolidate BGBS as a subsidiary so that BGBS could obtain better financing terms with SOE connections. The report stated that, the recent share price volatility looks unrelated to its fundamentals. It is optimistic with BGBS's future development and expects the Company to issue a positive alert.