The 2018 interim results of the Company were higher than marketconsensus and our expectations. Total revenue of the Company increased24.7% yoy to HK$ 19.24 billion; net profit attributable to shareholdersincreased 7.1% yoy to HK$ 4.79 billion.
Maintain operating profit assumptions contributed by Hong Kong gasbusiness unchanged. We expect total sale of gas and cooking sets in HongKong to remain stable in the second half of 2018. Hong Kong’s gasdistribution market is a highly mature and stable market with a stablecustomer group alongside stable gas consumption.
Revise up natural gas sales assumptions. We expect total sales of naturalgas of the Company to increase by 15%-20% in 2018. We expect natural gasconsumed by residential customers to grow by 10%-12%; natural gasconsumed by industrial customers is expected to grow at a faster speed.
Maintain gas dollar margin assumptions unchanged. We expect gasdollar margin of the Company to remain stable in 2018. We believe that gasprocurement costs will be more stable in 2018 and customer mix change willonly have limited impact.
Revise up the TP to HK$ 19.11 and maintain "Buy".