The company's 2018 annual results exceeded agreed market expectations and our estimates. The company's revenue increased 20.3% year over year to HK$39.07 billion, and shareholders' net profit increased 13.2% year over year to HK$9.31 billion.

We expect gas and stove sales in Hong Kong to remain stable in 2019. The Hong Kong gas market is a highly mature and stable market, making its consumer groups and natural gas consumption very stable.

We expect the company's gas sales to grow 15%-20% in 2019. We expect China's natural gas consumption to benefit from the restructuring of energy consumption and environmental pressure over the long term. We expect the gas consumption of residential users to increase by about 10%-12% in 2019, but the gas consumption of industrial users is expected to grow even faster.

We expect the company's gas price spread to remain stable in 2019. We believe gas purchase prices will remain stable in 2019, and the impact of changes in customer structure will be limited.

The target price was raised to HK$22.40 to maintain the “buy” rating.