GAS [SELL -21.5%] - Lower output price to industrial parks undermines earnings - Update
We issue a SELL recommendation with -21.5% total return on a 22% YoY decline in TTM EPS. We lower 2016F reported EPS growth from -17.0% to -27.2% due to a ~12.1% decrease in output price to industrial parks and weak expected Q4 volume. We increase 2017F reported EPS growth from 13.1% YoY to 17.0% YoY off 2016’s low base. USD2.0 billion of cap-ex over the next five years will not generate any revenue until 2020. GAS is trading at a high ttm P/E of 26.1x, a 28.4% premium over peers.