Jinwu Financial News | Gas stocks rose collectively. China Resources Gas (01193) rose 4.35%, Xinao Energy (02688) rose 3.13%, Beijing Holdings (00392) rose 1.83%, Hong Kong China Gas (00003) rose 1.52%, China Gas (00384) rose 1.25%, and Kunlun Energy (00135) rose 1.07%.
Haitong International released a research report saying that as of April 2024, a total of 125 regions across the country announced gas bill increases one after another. Among them, the Chengdu region increased 0.16 yuan/square meter, the Shenzhen region increased 0.31 yuan/square meter, the Tianjin region increased 0.29 yuan/square meter, and the Fuzhou region increased 0.45 yuan/square meter. The overall average increase was around 10%. It is recommended to focus on urban gas companies, such as China Resources Gas, Xinao Energy, and Kunlun Energy, which benefit from the gradual realization of favorable prices on the consumer side, and also account for a relatively large share of overseas gas purchases and have excellent fundamentals and environmental, social, and governance performance.
According to the bank, in recent years, urban fuel companies have been under pressure on the operation and cash flow of urban fuel companies that consume large amounts of gas because upstream prices cannot be transmitted to downstream residents, while industrial and commercial companies account for a relatively large share of the price. In June 2023, the National Development and Reform Commission issued the “Guiding Opinions on Establishing and Improving the Upstream and Downstream Price Linkage Mechanism for Natural Gas”, which indicates that the sales price of natural gas will be linked to the procurement costs of gas companies. According to the bank, achieving favorable prices on the residential side is conducive to the gradual restoration of urban combustion companies' profits.