The company's mid-2016 results were lower than our estimates, mainly due to low connection revenue and exchange losses. Revenue fell 19 per cent year-on-year to HK $1.08 billion, while net profit for shareholders fell 20 per cent to HK $80.9 million.

Due to the slow growth of industrial customer demand, the natural gas sales forecast has been lowered. The company expects natural gas sales to grow by 24% in 2016, so we downgrade the 2016 natural gas sales assumption by 6.8% to reflect the company's new guidelines.

Keep the assumption of gas sales spread unchanged. We expect the company's gas sales spread to continue to improve and more stable in 2016. Raise the company connection income assumption. The company will connect several newly developed properties and expects new customers to grow in the second half of 2016.

Lower the target price to HK $3.54, but maintain the "buy" rating.