Main points of investment

2023H1's profit was RMB14.39, down 10.97% from the same period last year:

The company's income in the first half of the year was 10.047 billion yuan, down 1.74% from the same period last year; the net profit attributable to shareholders was 1.439 billion yuan, down 10.97% from the same period last year; and basic earnings per share was 0.34 yuan. The net profit of the natural gas business in the first half was 310 million yuan, down 47.7% from the same period last year, while the net profit of the new energy business was 13.33 yuan, down 7.9% from the same period last year.

Natural gas sales are expected to recover gradually in the second half of the year:

In the first half of the year, the total gas delivery volume of the company's natural gas business was 2.385 billion cubic meters, down 2.9 percent from the same period last year, and gas sales were 2.059 billion cubic meters, down 5.8 percent from the same period last year, of which retail gas volume was 912 million cubic meters, down 6.3 percent from the same period last year. The decline in the company's natural gas sales in the first half of the year was mainly affected by the overall macroeconomic environment, resulting in a decline in demand from end-industrial users. In July, the company's gas sales increased by 13.23% compared with the same period last year, of which retail gas volume increased by 32.58% year-on-year, and natural gas sales are expected to gradually resume growth in the second half of the year as the macro-economy improves.

Tangshan LNG is expected to handle and unload 1.5 million tons next year, making a positive profit contribution:

In the first half of the year, the first phase of the Tangshan LNG project and the supporting export pipeline project (Caofeidian-Baodi section and Baodi-Yongqing section) were officially put into operation; the comprehensive progress of the eight storage tanks in the second phase of the Tangshan LNG project completed more than 50%. Two ships of LNG,9 were imported in July and will enter the third ship every month, with an annual handling capacity of about 40-500000 tons and a handling capacity of 1.5 million tons next year. The fair opening of Caofeidian Wharf to third parties and attracting third-party leasing will help to improve the company's LNG terminal gas storage turnover and achieve the production target. Preliminary estimates, this year Tangshan LNG Terminal Phase I project is expected to break even this year, next year to achieve positive profit contribution.

Maintain the buy rating with a target price of HK $3.96:

Combined with industry valuations, we give the company a target price of HK $3.96, equivalent to 6 times and 4.7 times PE in 2023 and 2024, with 45 per cent room to rise from the current price and maintain its buy rating.