The 2020 interim results of the Company were lower than marketconsensus and our expectations, mainly due to loss from the propertysector and reduced sales of gas. Total revenue of the Company decreased10.4% yoy to HK$18.24 billion; net profit attributable to shareholdersdecreased 31.4% yoy to HK$2.67 billion.
Revise down gas sales assumptions in Hong Kong. The retail, hotel andtourism industry is expected to be badly hit by the COVID-19 pandemic in2020. We expect total sales of gas in Hong Kong to decrease by about3%-6% in 2020.
Revise down gas sales assumptions in mainland China. We expect totalsales of natural gas of the Company in mainland China to decrease by about1%-3% in 2020.
Maintain gas dollar margin assumptions unchanged. Gas dollar marginof the Company was stable in 1H20 and is expected to remain stable in2H20.
Revise down the TP to HK$10.40, and downgrade to "Reduce".