1、 Disclosures&Disclaimer This report must be read with the disclosures and the analyst certifications in the Disclosure appendix,and with the Disclaimer,which forms part of it.Issuer of report:The Hongkong and Shanghai Banking Corporation Limited View HSBC Global Research at:https:/ Thank you for you

2、r supportSee resultsHSBC in Extel Survey 2025 Gas utilities are entering a more mature cycle with slowing gas demand and contracting new connections Cash flows and sustainability of dividends are key;we assess both factors and preview 1H25 results in this report Prefer ENN,then TSE both Buys.Upgrade

3、 Kunlun to Buy(from Hold),downgrade CRG to Reduce(from Hold)Preparing for upcoming interim results:In the face of shrinkages in new connections and slower growth in gas demand(China:-1.3%in 5M25),we expect gas utilities to report earnings for 1H25,which are due in Aug 2025,at around low-single-digit

4、 growth.Fortunately,dollar-margins are still expanding on price resets with residentials,while non-gas businesses are generally still growing.We continue to prefer ENN(2688 HK,Buy,CMP HKD63.40)for its qualities in earnings and cash flows from a more integrated and diversified portfolio to sustain/gr

5、ow dividends,although an ongoing merger deal remains a key share price driver in the near term.We also like TSE(1083 HK,Buy,CMP HKD4.28)for attractive risk/reward on stronger earnings,as well as Kunlun(135 HK,upgrade to Buy from Hold,CMP HKD7.71)for cash value.Cash flow is our focus:As gas utilities

6、 enter a more mature cycle where earnings growth is slowing overall,we believe investors have been paying more attention to cash flows,and therefore the quality of dividend yields.Based on our analysis,as discussed in this report,ENN and Kunlun stand out with stronger FCFs,which look sustainable and