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2007-4-23 02:06:00 p.m. HKT, XFNA
BROKER CALL China's Panva Gas kept 'neutral' - Merrill Lynch
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BEIJING (XFN-ASIA) - Merrill Lynch said it is maintaining its ""neutral""
recommendation on China's Panva Gas Holdings Co as there is room for
longer-term improvement of Panva's low earnings and margin base.
In a note, the brokerage said the rebranding of Panva under the name
""Towngas China Co Ltd"" is an important milestone over the coming months as
management looks to give the company a new identity amid integration efforts
and cost-cutting.
""As indicated by the company, there is a high degree of operational
leverage in the business and there are a number of favorable data points set
to emerge in 2007,"" the brokerage said.
Post-transaction, Panva Gas will have 35 piped gas projects in 32 cities,
with a coverage of 1.7 mln users, Merrill Lynch added.
It said that Panva's valuations are more demanding than those of its
peers.
""However, given its clear business profile and a stated commitment by
Hong Kong to restore its financial profile, we maintain our 'neutral'
recommendation,"" the brokerage said.
sean.mangieri@xfn.com xfnsm/xfntm
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