The company's 2019 annual results were 12.3% and 28.5% lower than the market's unanimous expectations and our estimates, respectively. The company's revenue increased 4.0% year over year to HK$40.63 billion, while net shareholder profit decreased 25.2% year over year to HK$6.97 billion.

Due to the global spread of COVID-19, we expect gas sales in Hong Kong to drop slightly in 2020. Hong Kong's tourism industry is expected to take a further hit in 2020, and we expect gas sales in Hong Kong to record a decline in units in 2020.

We expect the company's natural gas sales in mainland China to increase by about 10% in 2020. The external environment in which the company operates changed in 2020. Although the favorable policy environment and strong consumer demand for natural gas remain unchanged, the novel coronavirus outbreak will affect demand for natural gas.

The company's gas sales spread is expected to remain stable in 2020. We expect China's gas supply situation to be more stable in 2020. We expect the gas sales spread of gas distribution companies to be more stable under the new pricing mechanism.

The target price was lowered to HK$11.20 and lowered to a “neutral” rating.