Gelonghui May 24 丨According to the Motong Development Research Report, when Towngas (0003.HK) and Ganghua Smart Energy (1083.HK) withdrew from Shanghai Gas investment, the cash figure of about 4.7 billion yuan received was a positive surprise. Although Shanghai Gas recorded a loss of 3.4 billion yuan in the 2021-22 fiscal year, the level of cash recovered above can fully make up for their initial investment. Motong gave Gas a “neutral” investment rating, with a target price of HK$6.5.

Towngas and Ganghua Smart Energy announced a joint announcement earlier to withdraw 25% of Shanghai Gas's interest at a cost of about RMB 4.663 billion. Towngas and Ganghua Smart Energy each anticipate an unaudited net income before tax of approximately RMB 613 million (equivalent to about HK$695 million) after deducting transaction costs and expenses on the exit matters.

Motong said that positive factors for gas's withdrawal include gas no longer being dragged down by Shanghai Gas's performance; gas's lower risk of dividend cuts; and renewable energy investments receiving more than 3 GW of cash support to reduce the pressure on the distributed PV installed capacity target of 8 GW in 2025. The bank's target price reflects the company's price-earnings ratio predicted to be 19.7 times in 2023; predicted market account ratio of 2 times; and predicted dividend rate of 5.4%.