BofA Securities adjusted its outlook on China Resources Gas (01193.HK), projecting a modest 5% full-year profit decline while maintaining a Neutral rating. The firm revised down its 2025-2027 EPS forecasts by 6%-9%, citing reduced gas sales growth, slower integrated service expansion, and higher SG&A expenses. Consequently, the target price was lowered from HK$23.5 to HK$21, blending P/B and DCF valuation methodologies.

Post-earnings discussions revealed expectations of a 38% interim profit contraction to HK$2.15 billion, attributed to weak operational metrics and accelerated cost allocation from H2 to H1. Despite this, BofA noted positive catalysts including management's commitment to stable interim and full-year dividends, implying a 4.7% dividend yield, alongside plans for share buybacks covering approximately 3% of outstanding shares between September and December.

Operational data showed gas sales volume dipped 1% YoY during January-May, with residential consumption rising 4% while industrial and commercial segments fell 3%-4% and 2% respectively. Per-cubic-meter profit edged up RMB0.01 to RMB0.50. Connection volumes plunged 20% YoY, while integrated services revenue decreased 8%. Integrated energy revenue grew robustly in the low teens.

May gas sales mirrored the 1% YoY decline. Tariff-related emergency orders contributed minimally, and anti-corruption measures dampened catering sector demand. Property-linked industries, representing roughly 15% of sales mix, recorded the sharpest declines. Non-heating season gas costs dropped approximately RMB0.10 YoY, largely passed through to commercial and industrial clients.

Management maintained a cautious H2 outlook amid macroeconomic headwinds and resilient gas costs. Most expenses, excluding staff costs, are expected to remain stable on an annualized basis.