China Resources Gas (HKSE:01193) (“CR Gas”) is the biggest gas distributor in China in terms of gas sales volume. With its state-owned background and flexible mechanism, the company has great advantage in mergers and acquisitions (M&A). With a corruption investigation against its ex-Chairman casted a shadow over the company’s M&A activities, CR Gas’s recent acquisitions of two large prefecture-level projects, Qingdao and Qinhuangdao, are good indications that the company has come out from the negative haze of the incident. Meanwhile, demand may recover in 2015 with China’s first gas price cut in the first quarter, and CR Gas is well-positioned to benefit from the potential rise in gas usage over the long term.
From Value Partners (Trades, Portfolio)’ Classic Fund Q1 2015 Commentary.
