Company Reports

ENN Energy's first-half core profit fell 1% year over year, while China Resources Gas' net profit rose 1%. Earnings reflected weak retail gas volumes and lower connection income, with new residential connections declining 22%-27% at both companies.

China Resources Gas Group is a state-owned gas utilities group in China engaging in downstream city gas distribution. China’s goal to increase gas usage to 15% of the country’s energy sources by 2030 will continue to encourage long-term demand growth, in our view. We project CRG’s natural gas sales volume to grow at a 3.0% CAGR during 2025-30.

ENN Energy’s first‑quarter 2026 retail gas sales volume rose 0.5% year on year, while integrated energy sales declined 7.0%. New residential connections fell 28.2% to 206,000.

ENN Energy’s 2025 core profit fell 3%, reflecting subdued retail gas and integrated energy sales volumes. China Resources Gas saw a similar trend, with net profit declining 13%. New residential connections dropped 14%-20% for both companies.

China Resources Gas Group is a state-owned gas utilities group in China engaging in downstream city gas distribution. China’s goal to increase gas usage to 15% of the country’s energy sources by 2030 will continue to encourage long-term demand growth, in our view. We project CRG’s natural gas sales volume to grow at a 3.6% CAGR during 2025-30.

China Gas Holdings’ first-half fiscal March 2026 net profit fell 24% year on year, mainly due to weaker contributions from associates and joint ventures, lower other income, and reduced connection profit.

For the first nine months of 2025, China's apparent natural gas consumption fell 0.2% year on year. The country's slowing economic growth has placed pressure on sales volumes of China gas utilities.

China Resources Gas’, or CRG's, first-half net profit fell 30% year on year to HKD 2.4 billion due to weakness across all segments. Management has lowered full-year guidance for gas sales volume, new residential connections, comprehensive service revenue, and integrated energy sales.

China Resources Gas Group is a state-owned gas utilities group in China engaging in downstream city gas distribution. We expect CRG to generate returns above its cost of capital over the next decade, supporting our narrow-moat rating. China’s goal to increase gas usage to 15% of the country’s energy sources by 2030 will continue to encourage long-term demand growth, in our view. We project CRG’s natural gas sales volume to grow at a 3.5% CAGR during 2024-29.

ENN Energy's first-quarter 2025 retail gas sales volume was flat, while the sales volume of integrated energy grew by 9.9%. Meanwhile, new residential connections declined by 16.3% to 287,000.

China Resources Gas Group is a state-owned gas utilities group in China engaging in downstream city gas distribution. We expect CRG to generate returns above its cost of capital over the next decade, supporting our narrow-moat rating. China’s goal to increase gas usage to 15% of the country’s energy sources by 2030 will continue to encourage long-term demand growth, in our view. We project CRG’s natural gas sales volume to grow at a 4.6% CAGR during 2024-29.

China Resources Gas Group is a state-owned gas utilities group in China engaging in downstream city gas distribution. We expect CRG to generate returns above its cost of capital over the next decade, supporting our narrow-moat rating. China’s goal to increase gas usage to 15% of the country’s energy sources by 2030 will continue to encourage long-term demand growth, in our view. We project CRG’s natural gas sales volume to grow at a 4.8% CAGR during 2024-29.

China Resources Gas’ net profit fell 22% year on year to HKD 4.1 billion. This was attributable to disappointing gas sales, slowing comprehensive services revenue, falling new residential connections, and reduced gas connection margin.

China Gas Holdings’ first-half fiscal 2025 (ending March) net profit was down 4% year on year to HKD 1.76 billion. This was attributable to weaker retail gas sales volume, loss-making joint ventures, falling contribution from the LPG segment, a higher tax rate, and increased minority interests.

ENN Energy’s cumulative nine-month operating data is in line with our expectations. Retail gas sales volume rose 4.8% year on year, while sales volume of integrated energy grew 21.4%. Dollar margin was CNY 0.54 per cubic meter with new residential connections of 1.1 million.

China Resources Gas Group is a state-owned gas utilities group in China engaging in downstream city gas distribution. We expect CRG to generate returns above its cost of capital over the next decade, supporting our narrow-moat rating. China’s goal to increase gas usage to 15% of the country’s energy sources by 2030 will continue to encourage long-term demand growth, in our view. We project CRG’s natural gas sales volume to grow at a 5.9% CAGR during 2023-28.

After fine-tuning our model, we marginally raise narrow-moat China Resources Gas’ fair value estimate to HKD 31 per share from HKD 30. CRG’s first-half gas margin is tracking above our full-year assumption. Coupled with better cost control, this led to a 21% year-on-year rise in interim core net profit (which excludes a one-off gain in first half 2023) to HKD 2.86 billion. The 67% rise in the interim dividend is also a surprise, but we keep our full-year dividend payout at 50% as CRG did not commit to a higher payout. Although we think CRG presents decent share price upside, our preferred pick for the sector is ENN Energy, given its larger discount to our valuation and more diversified earnings streams.

We think the China city gas sector is currently undervalued, but our preferred pick is ENN Energy, given its well-diversified earnings supported by its integrated energy, or IE, segment and value-added business, or VAB. Following the in-line first-quarter operating data from ENN, we keep its fair value estimate at HKD 88 per share. We believe the data supports our view of a gradual recovery for the industry and should be a positive read across for China Gas Holdings, or CGH, and China Resources Gas, or CRG, where we maintain our fair value estimates of HKD 12.50 and HKD 30.00 per share, respectively.

China Resources Gas’, or CRG’s, 2023 net profit was up 10% year on year to HKD 5.2 billion. While the firm’s gross profit was in line with our forecast, net profit was below mainly due to higher finance and amortization costs. After factoring in the latest results, our 2024-26 earnings forecasts are cut by an average of 12% and we lower CRG’s fair value estimate to HKD 30.00 per share from HKD 31.00. The reduction in fair value estimate is marginal as we also project lower capital expenditure during 2024-26.

China Resources Gas Group is a state-owned gas utilities group in China engaging in downstream city gas distribution. We expect CRG to generate returns above its cost of capital over the next decade, supporting our narrow-moat rating. China’s goal to increase gas usage to 15% of the country’s energy sources by 2030 will continue to encourage long-term demand growth, in our view. We project CRG’s natural gas sales volume to grow at a 5.9% CAGR during 2023-28.