The 2019 annual results of the Company was 12.3% and 28.5% lower than market consensus and our expectations, respectively. Total revenue of the Company increased 4.0% yoy to HK$40.63 billion; net profit attributable to shareholders decreased 25.2% yoy to HK$6.97 billion.
We expect total sales of gas in Hong Kong to decline slightly in 2020 due to the coronavirus pandemic outbreak around the world. The Hong Kong tourism industry is expected to be further hit in 2020 and we expect total sales of gas in Hong Kong to record single-digit decline in 2020.
We expect total sales of natural gas of the Company in mainland China to increase by about 10% in 2020. The external operating environment of the Company changed in 2020. Although favorable policy environments and strong natural gas consumption demand remain unchanged, the outbreak of the coronavirus will impact gas demand.
Gas dollar margin of the Company is expected to remain stable in 2020.We expect natural gas supply status of China to be more stable in 2020. We expect gas dollar margin of gas distribution companies to be more stable under the new price mechanism.
Revise down the TP to HK$11.20, and downgrade to "Neutral".