Towngas China Co (1083) AI Stock Analysis

• Market Cap: $13.73B
• Dividend Yield: 6.42%
• Average Volume (3M): 2.27M
• Price to Earnings (P/E): 8.0
• Beta (1Y): 0.39
• Revenue Growth: 3.86%
• EPS Growth: 30.34%
• Country: HK
• Employees: 24,455
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Gas
• EPS (TTM): 0.22
• Shares Outstanding: 3,671,690,200
• 10 Day Avg. Volume: 1,755,300
• 30 Day Avg. Volume: 2,270,946
• PEG Ratio: 0.57
• Price to Book (P/B): 0.47
• Price to Sales (P/S): 0.51
• P/FCF Ratio: -7.34
• Enterprise Value/Market Cap: 2.38
• Enterprise Value/Revenue: 1.54
• Enterprise Value/Gross Profit: 6.07
• Enterprise Value/Ebitda: 11.67
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 61 Neutral
• Price Target: HK$4.00 ▲(6.95% Upside)

Towngas China Co's overall stock score is driven by strong financial performance in revenue growth and operational efficiency, despite challenges in cash flow and net profitability. The stock's valuation is attractive, with a low P/E ratio and reasonable dividend yield. Technical analysis indicates neutral market momentum, reflecting balanced investor sentiment.

Positive Factors

Revenue Growth

Consistent revenue growth indicates expanding market reach and effective business strategies, supporting long-term financial stability.

Operational Efficiency

Improved margins reflect effective cost management and operational efficiency, enhancing profitability and competitive positioning.

Market Position

Strong market position in the regulated gas industry provides a stable revenue base and opportunities for growth in a vital sector.

Negative Factors

Cash Flow Challenges

Persistent negative cash flow can hinder financial flexibility and limit the company's ability to invest in growth opportunities.

Net Profit Margin Decline

A declining net profit margin indicates potential issues in cost control or pricing power, affecting overall profitability.

Financial Flexibility Risks

Moderate leverage may constrain financial flexibility, impacting the company's ability to respond to market changes or invest in new projects.

Towngas China Co Business Overview & Revenue Model

Company Description

Towngas Smart Energy Company Limited, an investment holding company, sells and distributes piped gas in the People's Republic of China. The company operates through two segments, Sales and Distribution of Piped Gas and Related Products, and Gas Connection. It engages in the provision of natural gas and related services; construction of gas pipelines; operation of urban pipeline gas network; sale of gas related household appliances; and other value-added services. The company also offers financing services; provides engineering works services; and operates vehicle gas refilling stations, as well as smart energy solutions. It serves approximately 15.09 million customers. The company was formerly known as Towngas China Company Limited and changed its name to Towngas Smart Energy Company Limited in December 2021. The company was founded in 1998 and is headquartered in North Point, Hong Kong. Towngas Smart Energy Company Limited is a subsidiary of The Hong Kong and China Gas Company Limited.

How the Company Makes Money

Towngas China Co generates revenue primarily through the distribution of natural gas to its customers. The company earns income from the sale of natural gas to residential, commercial, and industrial sectors, which constitutes its main revenue stream. Additionally, Towngas benefits from ancillary services such as the sale of gas appliances, equipment installation, and maintenance services. The company has established significant partnerships with local governments and enterprises, which enhance its market presence and operational efficiency. Furthermore, Towngas invests in infrastructure development to expand its network, thereby increasing its customer base and revenue potential. Overall, the combination of gas sales and supplemental services forms a robust revenue model for Towngas China Co.

Towngas China Co Financial Statement Overview

Summary

Towngas China Co shows strong revenue growth and operational efficiency with improved gross and EBIT margins. However, challenges in net profitability and negative free cash flow indicate financial risks. The balance sheet is stable but could benefit from better cash flow management.

Income Statement

Towngas China Co has demonstrated strong revenue growth, with total revenue increasing by 7.4% from 2023 to 2024. The gross profit margin improved to 25.65% in 2024, indicating effective cost management. However, the net profit margin slightly decreased to 7.54%, suggesting some challenges in maintaining profitability at the net level. The EBIT margin increased to 18.98%, highlighting operational efficiency improvements.

Balance Sheet

The company's debt-to-equity ratio stands at 0.75, reflecting a moderate level of leverage. The equity ratio is 44.21%, indicating a solid equity base relative to total assets. Return on equity is at 6.85%, showing a modest return for shareholders. Overall, the balance sheet is stable but shows room for improvement in leveraging equity more effectively.

Cash Flow

The cash flow analysis reveals challenges, with free cash flow remaining negative in recent years. The lack of operating cash flow data for 2024 prevents a detailed analysis, but the consistent negative free cash flow indicates issues in cash generation and capital management. This poses a risk to financial flexibility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	21.25B	21.31B	19.84B	20.07B	17.13B	12.83B
Gross Profit	5.38B	5.47B	4.72B	2.32B	2.72B	2.32B
EBITDA	2.80B	2.91B	2.73B	2.53B	2.73B	2.69B
Net Income	1.62B	1.61B	1.57B	964.86M	1.25B	1.45B
Balance Sheet
Total Assets	55.24B	53.04B	53.46B	52.94B	54.24B	42.89B
Cash, Cash Equivalents and Short-Term Investments	3.33B	2.73B	4.11B	4.08B	4.08B	2.34B
Total Debt	18.38B	17.47B	18.56B	19.83B	19.54B	11.58B
Total Liabilities	28.59B	27.28B	28.23B	29.08B	29.06B	20.24B
Stockholders Equity	24.21B	23.45B	22.85B	21.50B	22.90B	20.72B
Cash Flow
Free Cash Flow	-586.24M	-1.49B	-3.42B	-1.57B	-177.88M	343.03M
Operating Cash Flow	2.63B	2.35B	1.30B	1.80B	2.61B	2.71B
Investing Cash Flow	-2.46B	-2.77B	635.96M	-3.57B	-8.14B	-2.95B
Financing Cash Flow	-1.09B	-862.84M	-1.75B	2.04B	7.31B	463.39M

Towngas China Co Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 3.74
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:1083, the sentiment is Negative. The current price of 3.74 is below the 20-day moving average (MA) of 3.89, below the 50-day MA of 3.88, and above the 200-day MA of 3.69, indicating a neutral trend. The MACD of -0.01 indicates Positive momentum. The RSI at 36.61 is Neutral, neither overbought nor oversold. The STOCH value of 3.51 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HK:1083.

Towngas China Co Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2688	76 Outperform	$77.56B	12.12	13.36%	4.37%	-3.19%	-2.68%
1193	75 Outperform	HK$51.58B	17.06	7.17%	4.40%	-4.37%	-41.14%
0384	66 Neutral	HK$42.66B	15.03	4.98%	6.39%	-2.28%	-9.61%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
1083	61 Neutral	$13.73B	8.01	6.98%	6.42%	3.86%	30.34%
1635	59 Neutral	HK$18.97B	20.94	5.32%	1.16%	-6.02%	―
3633	48 Neutral	HK$7.70B	50.45	2.04%	0.71%	-7.82%	-38.06%

Towngas China Co Corporate Events

Towngas China Co Announces Phase 3 Disposal in ABS Program

Towngas China Co has announced the Phase 3 Disposal as part of its Asset-Backed Securities (ABS) Program. The company has entered into agreements to sell its equity interests in subsidiaries involved in rooftop photovoltaic power generation and energy storage projects in China. This move involves a series of transactions, including the sale of equity interests and debts, with the company also subscribing to a portion of the ABS issued. The disposal is classified as a discloseable transaction under the Hong Kong Stock Exchange’s Listing Rules, highlighting its significance in the company’s strategic financial maneuvers.

Towngas Smart Energy Adjusts Convertible Bond Conversion Price

Towngas Smart Energy Company Limited announced an adjustment to the conversion price of its convertible bonds due to the issuance of scrip shares under a dividend scheme. This adjustment slightly decreases the conversion price, allowing for an increase in the maximum number of shares issued upon full conversion of the bonds. The company plans to apply for the listing of these additional shares on the Stock Exchange, maintaining its strategic financial flexibility and shareholder engagement.

Towngas Smart Energy Announces Interim Dividend with Scrip Option

Towngas Smart Energy Company Limited announced an interim cash dividend of HKD 0.05 per share for the six months ending June 30, 2025, with a scrip option available at HKD 3.998 per share. This update provides shareholders with flexibility in dividend receipt and may impact the company’s cash flow and shareholder satisfaction.