Gas utility stocks in China are poised for growth as the country implements stimulus measures to boost its economy. Analysts from Bernstein note that recent government actions, including a cut in the required reserve ratio and support for the property market, are expected to benefit gas utility companies. Despite some challenges, the sector has shown resilience, with strong demand growth and solid volume increases for companies like Kunlun, Towngas, and China Resources Gas.
The outlook for gas utilities is further bolstered by the Chinese government’s economic support and an expected increase in global LNG supply in the coming years. Bernstein predicts a gas surplus in China by 2025, driven by imports and lower costs, which will improve margins for utility companies. Cost pass-through improvements and diversification of revenue sources are also expected to contribute to earnings growth acceleration in 2025.
Notwithstanding challenges in the property sector, gas utility stocks remain attractively valued and offer a compelling investment opportunity. ENN and CR Gas are highlighted as top picks due to their high-quality customer bases and well-managed gas supply sources. Meanwhile, Kunlun Energy and Towngas are expected to see more moderate growth. Overall, the outlook for China’s gas utility stocks is optimistic, with the potential to benefit from both domestic stimulus measures and favorable global supply dynamics.