Investors wanting to bet on the energy sector, but wary of oil plays, should
take a look at Sino Gas & Energy Holdings (SEH.AU), says RBC Capital Markets. The
broker initiates coverage of the China-focused unconventional gas producer at outperform,
with a A$0.30/share price target. Sino Gas aims to produce natural gas from coal seams
deep below the Earth's surface in China's central Shanxi province, targeting
100 million cubic feet/day) by 2017. "The investment story is supported by high gas
prices not linked to oil volatility and a supportive government policy of gas
expansion," analyst Andrew Williams says. "The current project commercializes
only 50% of the 2P reserves base, providing significant potential upside in production
and reserves." He notes that Sino Gas is priced at a 70% discount to London-listed peer Green Dragon Gas (GDG.LN) when valued by its 2P--or proven and probable--reserves. SEH last traded at A$0.15. ([email protected]; @dwinningWSJ)
SEH Price at posting:
16.5¢ Sentiment: Buy Disclosure: Held
