The Zhitong Finance App learned that Bank of America Securities released a research report saying that Xinao Energy (02688)'s performance in the third quarter was weak, but it is expected that the increase in shareholder returns will narrow the relative interbank discount and reaffirm the “buy” rating. The target price was lowered from HK$63 to HK$62, and continues to be listed as one of the bank's defensive preferences.

Xinao Energy's profit for the third quarter may fall by about 10% year-on-year, mainly due to weak gas retail sales and a decline in the comprehensive energy business. However, the bank believes that the market has already anticipated this and believes that weak stock prices after the quarterly results are announced will provide attractive buying opportunities.

The bank pointed out that the management reiterated its promise that the dividend per share for three years would not decrease in RMB, which meant that the dividend return was about 6.6%. The company is also drafting a long-term repurchase plan, for example, for a period of three years, and reasonably increasing leverage to improve return on equity, and drawing up a comprehensive employee incentive plan. After taking into account factors such as lower unit profit from 2027 to 2028, a 1% to 2% reduction in retail gas volume forecasts from 2026 to 2027, a reduction in overall energy sales growth, and a 4% to 8% reduction in the 2026-2028 earnings forecast per share, the bank lowered its target price.

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