Due to reduced profits and lower gas price spreads contributed by the real estate industry, the company's 2019 interim results fell short of market expectations and our estimates. The company's revenue increased 5.8% year over year to HK$20.35 billion, and shareholders' net profit decreased 18.8% year over year to HK$3.89 billion.

Maintain the assumption that the Hong Kong gas business contributes to operating profit unchanged. We expect gas and stove sales in Hong Kong to remain stable in the second half of 2019. The Hong Kong gas market is a highly mature and stable market, making its consumer groups and natural gas consumption very stable.

Keep the gas sales assumption unchanged. We expect the company's natural gas sales in mainland China 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.

Lower the company's gas price spread assumption. The company's profitability of selling natural gas was seriously eroded in the first half of 2019 due to higher gas procurement costs. We expect the company's gas price spread to improve in the second half of 2019.

The target price was lowered to HK$20.16, but the “buy” rating was maintained.