Tianlun Gas has completed the introduction of Zhuhai Port (000507 CH, unrated) as a strategic shareholder. After the completion of the war, the company immediately announced the signing of a strategic cooperation agreement with Zhuhai Port, showing the company's broader development prospects on the road to carbon neutralization in the future. we believe that short-term cooperation will focus on the development of distributed photovoltaic projects at the county level in Henan Province. For the recent torrential rain and extreme weather in Henan Province, the company said that at present, the gas supply is business as usual, and closely follow the development to ensure business operation and safety. Based on the initial business operations in the first half of the year, we expect the company to achieve more than 30% growth in retail volume sales and more than 20% year-on-year profit growth. We maintain our buy rating on the company and keep the target price unchanged at HK $9.90 per share.
Carry out strategic cooperation with Zhuhai Port. With the landing of the equity transfer of the controlling shareholder, the company has completed the introduction of Zhuhai Port as a strategic investor, with a shareholding ratio of 11.9%. The company and Zhuhai Port immediately announced the signing of a strategic cooperation agreement that plans to jointly explore new energy business opportunities in the next five years, including photovoltaic, energy storage, and hydrogen energy.
According to management, the details of the cooperation with Zhuhai Port are still under discussion, but we can still see exciting potential new business development opportunities that will help raise Tianlun Gas's valuation.
Distributed photovoltaic will become the main development direction in the near future. Through the development of rural gas projects in recent years, Tianlun Gas has accumulated more than 1.5 million rural gas users. In view of the county-wide distributed photovoltaic development policy recently issued by the National Energy Administration, we believe that these rural user resources will become valuable assets for the company to jointly develop rural distributed solar energy projects with Zhuhai Port. Based on the expectation that the competition for county-level distributed projects will be fierce in the short term, we believe that the company will cooperate with Zhuhai Port on distributed photovoltaic projects as soon as possible.
The quality of profit in the first half of the year is better. We expect the company to achieve retail gas growth of more than 30% in the first half of the year, significantly faster than the 21.2% national average gas consumption growth rate released by the Chongqing Oil and Gas Exchange.
Based on the more conservative gas sales margin and gas connection expectations, we estimate that the company will make a profit of 463 million yuan in the first half of the year, an increase of 23.1% over the same period last year. Supported by new mergers and acquisitions beginning in February 2021, we believe that the company's natural gas sales performance will remain strong and continue to exceed the national average, indicating the sustainability of the company's profits and the improvement of earnings quality.
Maintain the buy rating and keep the target price unchanged at HK $9.90. The company is currently valued at 6.5pm 5.7 times 22-year price-to-earnings ratio of 2021max, while the ROE and dividend yields are 19% and 4.6% respectively, which is very attractive.
With the support of strategic shareholder Zhuhai Port, we believe that the company's future development path is significantly broadened, and there are more options for future development. The company will report first-half results at the end of August, and we believe that interim results may be a catalyst for valuation improvement in the near future. Reiterate the buy rating and keep the target price unchanged at HK $9.90.