Beijing Enterprises 0392

[winston]

Beijing Enterprises upbeat on first half

Beijing Enterprises (0392) forecasts its first half earnings will jump 80 percent, from a year earlier, as profit contribution from the newly injected natural gas business is set to rise "substantially.''

Owned by the Beijing city government, the company recorded HK$638 million, or diluted earnings per share of 82 HK cents, last year.

Beijing Enterprises shares rebounded to HK$28.7 when it resumed trading un the afternoon session after being suspended at 11.38am.

STAFF REPORTER

[winston]

Beijing Enterprises to buy assets from parent

Beijing Enterprises Holdings (0392) plans to buy natural gas pipelines and related assets in Beijing from its parent for 120.8 million yuan (HK$137.05 million).

The mainland conglomerate said its subsidiary Beijing Gas Group will acquire 68,677 meters of pipelines, pressure regulation facilities and control systems from Beijing Beiran, a unit of Beijing Enterprises Group.

[winston]

Not vested. From Dr. Check:-

Beijing Enterprises (0392) is the flagship of the capital's municipal government. Its focus has shifted from department stores and tourism to utilities and infrastructure.

It has a healthy cash flow from Beijing Capital Airport Expressway, Yanjing Brewery, BE Water Supplies, Beijing Development (0154) and, most importantly, Beijing Gas.

Goldman Sachs is bullish on BE's core gas business, expecting a stable cash flow and seeing huge growth potential. It regards it as the best defensive play and maintains a target price of HK$39.

Experts see BE's lower stream output capacity rising from 3.8 billion cubic meters to 6 billion in 2010.

Beijing Enterprises will have a net cash position of HK$2.4 billion by 2008, allowing for investments without needingfresh share offers.

Earnings are forecast to grow at a compound annual growth rate of 21 percent between 2008 and 2010.

The stock has fluctuated between HK$20 and HK$40.05 in the past year and closed at HK$31.30 yesterday. It looks attractive around HK$28.

[winston]

DJ MARKET TALK: Beijing Enterp Likely Firm; Solid FY,Utility Play

0813 [Dow Jones] Beijing Enterprises (0392.HK) likely firm today after reporting 54% on-year jump in FY08 net profit to HK$2.28 billion vs HK$2.02 billion tipped by Thomson Reuters, boosted mainly by higher-than-expected jump in natural gas sales, to lesser extent by rising beer sales.

Beijing Gas, which company bought in June 2007, became main earnings driver with first full year of contributions. Final dividend 40 HK cents/share vs 30 HK cents year-earlier, there's also special dividend of 5 HK cents vs 10 HK cents. Stock mostly becoming utility play, with FY09-10 P/E at 14.9X, 13.1X based on Thomson Reuters consensus EPS, while yielding 2.6%, 2.9%, which pales in comparison to HK utility plays but likely justified by higher growth potential as China encourages use of natural gas instead of coal to reduce air pollution. Stock ended off 5.2% at HK$29.85 yesterday

[winston]

DJ MARKET TALK: Beijing Enterp +3.9%; MS Tips Quality Earnings

1007 [Dow Jones] Beijing Enterprises (0392.HK) +3.9% at HK$31.00 on better-than-expected 54% jump in FY08 net profit to HK$2.28 billion; may revisit recent peak of HK$32.50 hit Friday in short term. Morgan Stanley says if excluding exceptional items, recurring earnings at HK$1.96 billion, 9% ahead of forecast; notes gas business recorded total profit of HK$1.48 billion, +67% on-year, due to 33%, 38% gas demand growth in downstream, midstream businesses respectively, highlighting gas pipeline business "enjoys huge operating leverage."

House keeps stock as Overweight though target price of HK$33.00 not far away. "We continue to view Beijing Enterprises as a large-cap, quality earnings utility with highly visible growth profile, underpinned by the price competitiveness of natural gas among energy fuels."

[winston]

DJ MARKET TALK: GS Ups Beijing Enterprises Target To HK$28.20

1328 [Dow Jones] STOCK CALL: Goldman Sachs ups Beijing Enterprises (0392.HK) target price to HK$28.20 from HK$25.00 after raising 09 NAV to HK$35.29 from HK$31.21 due to inclusion of new Shaanxi-Beijing pipeline project. Keeps stock at Neutral as house thinks valuation looks full on NAV basis.

Says although its new pipeline project could provide longer-term growth potential, house does not foresee significant core EPS growth during FY09-11 due to capacity constraint and interest costs related to new project. Stock last +2.6% at HK$33.15.

[winston]

DJ MARKET TALK:Beijing Enterprises Hldgs Off 1.9%;GC Cuts To Hold

1450 [Dow Jones] Beijing Enterprises Holdings (0392.HK) down 1.9% at HK$32.75, on profit-taking after stock's 11.9% rise over past 2 sessions post-results (FY08 net profit +54% on-year); 10-day moving average of HK$31.07 likely a strong support for now. GuocoCapital tips future growth drivers for Beijing Enterprises will be natural gas and brewery operations.

"We assume revenue from both natural gas and brewery segments will achieve 10% on-year growth, with limited growth in expressway and toll road operations, as well as stable return in sewage and water treatment," says GuocoCapital.

Downgrades stock to Hold from Buy, due to pricey valuation, while raising target to HK$30.60 vs HK$29.00 based on 15X 2009 earnings

[winston]

Not vested. From Dr. Check, The Standard HK:-

As a defensive play, you may consider Beijing Enterprises Holdings (0392).

BEH has become the mainland's best gas utility play since the successful injection of natural gas assets from its parent in 2007. This business contributed 75.5 percent of BEH's operating income. Net profit soared 54 percent to HK$2.28 billion in 2008. Its unit, Beijing Yanjing Brewery, also fared well last year.

BEH's water and sewage treatment business is set to expand via another unit - Beijing Enterprises Water (0371).

JPMorgan has an "overweight" on the stock and targets HK$42.80 after raising its earnings estimates for the next two years. Below HK$35, the stock should garner focus.

[winston]

DJ MARKET TALK:Beijing Enterprises 1H Recurring Pft To Rise 9%-GC

1612 [Dow Jones] GuocoCapital expects Beijing Enterprises' (0392.HK) 1H09 recurring profit to rise 9% on-year to HK$1.135 billion, excluding gains from sale of assets and investment income of HK$312 million in 1H08; results expected Sept. 16.

Notes its earnings from gas operation should be higher in 1H09 given stronger demand from natural gas cogeneration plants and residential users; expects both gas distribution and transmission to rise 15% in 1H09, while its brewery business expected to book net profit of HK$160 million given improved product mix and strong volume growth.

Keeps at Buy, targets HK$46.20 based on FY10 NAV. Stock ends +5.9% at HK$42.75.

Contact us in Singapore. 65 64154 140; [email protected]

[winston]

Capital flagship earns $1.4b

Higher income from gas and beer sales has pushed up Beijing Enterprises's (0392) first-half net profit by 11 percent to HK$1.4 billion.

Revenue for the Beijing government's listed conglomerate surged 21 percent to HK$11.62 billion. An interim dividend of 20 HK cents was declared.

Beijing Enterprise gained HK$451 million from natural gas distribution and HK$587 million from its stake in PetroChina Beijing Pipeline, up 11.4 percent and 32 percent, respectively, year-on-year. Net profit from its Beijing Yanjing Brewery surged 39 percent to HK$172 million.

"The natural gas business performs well when it's cold in Beijing, while the beer unit brings handsome profits when it's hot in Beijing," said vice chairman Zhou Si yesterday. "So the two segments complement each other well."

Net profit from its toll roads - the Capital Airport Expressway and Shenzhen Shiguan Road - contributed 4.6 percent to profit. The firm said it will end its investment in the highway.

KATHY WANG, The Standard HK

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