1、M IdeaMorgan Stanley Asia Limited+Albert LiEquity Analyst Albert.L +852 3963-3610 Eva HouEquity Analyst Eva.H +852 2848-6964 Estelle WangResearch Associate Estelle.W +852 3963-4117 Evan ChenResearch Associate Evan.C +852 2848-7317 China UtilitiesAsia PacificIndustry ViewAttractiveChina Gas Utilities

2、|Asia Pacific1H25 Preview:Muted Growth,Kunlun Should Outperform Market earnings expectations on the gas sector have already been lowered in the past few months.We expect city gas names to mostly report flat earnings in 1H.Kunlun should outperform and we anticipate weakness at CR Gas.Whats Changed Ch

3、ina Resources Gas Group Ltd(1193.HK)FromToPrice TargetHK$30.00HK$19.20One of the weakest years for gas demand:Despite good GDP and export growth in 1H25,China gas apparent demand growth was muted.This was due to 1)warm winter,2)high base last year and 3)declining coal/oil prices in our view.City gas

4、 companies are generally experiencing weak industrial gas volume growth YTD.Dollar margin(DM)still a positive factor in 2025:Amid stable upstream gas cost,residential gas price adjustment is still ongoing YTD.For example,Taiyuan,Guiyang,Xiangtan,and Shaoyang among other cities raised gas prices by 5

5、-8%this year.Since the provincial governments in China have already issued the policy,we think its just a matter of time until all the cities/counties complete such adjustment.New connections continue to be a drag on earnings:When gas sales growth slows,lower new connections will have a larger impac

6、t on earnings.Kunlun is most defensive with less than 10%of GP from connections while CR Gas is most vulnerable with still over 20%.1H preview:Considering new connection decline,slight DM expansion but muted industry volume growth,we estimate earnings will be mostly flat for gas players.Among which,