【003 Major Brokerage Report】Hui Zheng Raises CLP Target Price by 1% to HK$6.8, Maintains Hold Rating - Limited Upside for Dividend Yield

SocialAnxietyStaker · 2026-03-24T10:16:49+00:00

HSBC Global Investment Research raised the target price for China Gas Holdings to HK$6.8, with a "Hold" rating. The firm expects stable growth in Hong Kong gas in 2026, with an attractive dividend yield of 4.8%, and a payout ratio of 115%. Company management maintains a positive outlook on future prospects, with green fuel business expected to develop rapidly.

SocialAnxietyStaker

2026-03-24 10:16:49

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HSBC Global Investment Research raises China Gas (00003) target price by 1% to HKD 6.8, maintains Hold rating. HSBC expects Hong Kong gas sales to remain stable in 2026, with basic charges experiencing single-digit growth, and green fuel business continuing to expand rapidly. The broker states that China Gas’s 2026 dividend yield is projected at 4.8%, attractive compared to Hong Kong utility peers, but free cash flow is not expected to fully cover dividends. Additionally, the payout ratio remains above 100%, limiting upside potential for the dividend yield.

Dividend per share remains at HKD 0.35, payout ratio at 115%

HSBC indicates that China Gas’s net profit for 2025 is HKD 5.7 billion, in line with expectations. During the period, Hong Kong natural gas sales grew, offsetting declines in new connections and renewable energy businesses. Losses in green energy businesses such as EcoCeres and green methanol narrowed year-on-year. The dividend per share stays at HKD 0.35, implying a payout ratio of 115%.

The broker also notes that management holds a constructive outlook for China Gas’s prospects through 2026. Since the beginning of the year, crude oil prices have remained high, which should support pricing for sustainable aviation fuel (SAF). As mandatory SAF blending targets come into effect, demand is expected to be supported. EcoCeres’s new SAF plant in Malaysia was commissioned at the end of 2025 and is nearing completion of capacity expansion. Regarding green methanol, sales reached 17,000 tons in 2025, and management expects full-year sales to reach 40,000 tons in 2026. China Gas also plans to increase green methanol capacity to 150,000 tons per year in 2026, and further to 500,000 tons annually by 2028.

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