CICC released a research report stating that considering CHINA GAS HOLD's (00384) improving cash flow and stable dividend distribution prospects, the company plans to maintain an interim dividend of HK$0.15 per share for 1HFY26, unchanged year-on-year. The firm reiterated an Outperform rating and a target price of HK$10, implying FY26/FY27 P/E multiples of 18.4x/17.3x (5% dividend yield) and 16.3% upside potential from the current price. The current share price reflects FY26/FY27 P/E ratios of 15.8x/14.9x.

For 1HFY26, CHINA GAS HOLD reported revenue of HK$34.5 billion, net profit attributable to shareholders of HK$1.33 billion, and natural gas retail sales volume of 9.19 billion cubic meters (including 4.89 billion for industrial use and 1.55 billion for commercial use). The retail gas gross spread stood at RMB 0.58 per cubic meter. The company added 676,000 new residential connections, while value-added business operating profit remained stable at HK$1 billion year-on-year.

Free cash flow improved to HK$2.6 billion in 1HFY25 (up HK$380 million YoY), primarily due to the disposal of some inefficient assets. In 1HFY26, investment cash outflow decreased by HK$940 million YoY to -HK$520 million.

Looking ahead, management expects marginal improvement in gas sales growth during 2HFY26, anticipating normalized temperatures in the 2025/2026 heating season. Full-year gas sales growth is projected to recover to 0-2% YoY. The company maintains its full-year gross spread guidance of RMB 0.55 per cubic meter (up RMB 0.01 YoY), supported by higher residential price pass-through ratios.