Chinese Gas Utilities: Same shock, different fates: own the margin defenders and their dividends

研报英文原文证据摘录

Chinese Gas Utilities: Same shock, different fates: own the margin defenders and their dividends

Global Research

30 July 2026ab

Chinese Gas Utilities Equities

ChinaSame shock, different fates: own the margin

defenders and their dividends Gas Utilities

Eason Tang

Analyst

eason.tang@ubs.com

Ex-growth, but the shock creates opportunity through dispersion +852-3712 3883

We upgrade ENN to Buy from Neutral, downgrade China Gas to Neutral from Buy, and Ken Liu

maintain Neutral on CR Gas and HKCG. We stay neutral on the sector as a whole, but Analyst

we see divergence across the stocks that we believe investors have not priced in. City gas ken.liu@ubs.com

is ex-growth, with ~1% volume growth in 2026-28E on our forecasts, yet margin +852-2971 7516

resilience and dividend sustainability now differ sharply across the four names, while the

sector trades at 0.6-2.3x P/B with 5-7% 2026E yields. ENN is our top pick: we expect the

smallest margin decline in 2026 (Rmb1 cent vs Rmb2-3 cents for peers) on protected

sourcing and the lowest residential mix among peers (15% vs 26% average), and its

dividend yield premium to 10-year US treasuries is 2SD above its historical average, on a

7% 2026E yield. We downgrade China Gas as the two pillars of our Buy case have

broken: the 30% DPS cut removed the yield anchor, and its highest-among-peers

residential mix (36%) leaves it most exposed to the margin squeeze, in our view.

Dollar margins reset in 2026E; ENN holds up best

We cut our sector average dollar margin by Rmb2 cents/cum to Rmb0.52/cum for

2026E, as JKM averaged US$16.6/mmbtu in 7M26 (+39% YoY) while tariffs adjust with

a lag, and we expect a partial recovery to Rmb0.53/cum in 2027E. We expect ENN to

decline least on protected sourcing and the lowest residential mix, as in 2021-22, when