一百萬元基金倉

Tuesday, July 6, 2010

Xinao Gas (2688.HK)

Sorry that I haven't written for months.  I will try to be a bit more diligent and at least post an idea or two every month.
HERE'S THE LATEST IDEA:  Recommend "Buy" on Xinao Gas (2688.HK)
+ China's energy consumption will continue to grow in the foreseeable future
+ Natural gas is increasingly used instead of coal and this trend will continue in the foreseeable future
+ PRC gov't is incentivized to see the sector develop due to its strategic importance
+ Sector has high barrier to entry, being a) relationship with upstream gas providers such as PetroChina, b) capex, c) ability to obtain license from gov't on gas projects, among others
+ Xinao Gas is a leading player that has demonstrated ability to grow revenue and achieve decent margins in the past 10 years
+ Earnings is projected to grow by 20-25% CAGR from 2010 to 2012
+ Valuation is attractive at 17x P/E (based on 2010 analyst consensus earnings estimate), representing 20-30% discount to peers
+ Recent price weakness was due to alleged fraud but there has been no proof nor further development to the story, and price has started to recover
+ Morgan Stanley had reported recently that Xinao Gas may announce 6-7 new gas projects in the next few weeks
+ A peer company, China Gas, will report its earnings this week and the results should be very favorable, which reflect that sector fundamentals is good
Posted by at 1 comment:
Labels:
Subscribe to: Posts (Atom)