China Resources Gas Earnings: Raising Fair Value by 3% After Good Results; Higher Interim Dividend

After fine-tuning our model, we marginally raise narrow-moat China Resources Gas’ fair value estimate to HKD 31 per share from HKD 30. CRG’s first-half gas margin is tracking above our full-year assumption. Coupled with better cost control, this led to a 21% year-on-year rise in interim core net profit (which excludes a one-off gain in first half 2023) to HKD 2.86 billion. The 67% rise in the interim dividend is also a surprise, but we keep our full-year dividend payout at 50% as CRG did not commit to a higher payout. Although we think CRG presents decent share price upside, our preferred pick for the sector is ENN Energy, given its larger discount to our valuation and more diversified earnings streams.