00135 Overview

Stock Performance: Several Hong Kong gas companies experienced declines in share prices, with China Gas Holdings down 1.34% and China Resources Gas down 2.44%.

Short Selling Activity: Notable short selling activity was reported, with China Gas Holdings having a short selling ratio of 26.606% and HK & China Gas at 23.762%.

Analyst Ratings: ENN Energy received an "Overweight" rating with a target price increase from 66.5 to 72.5, while HK & China Gas was downgraded from "Overweight" to "Neutral".

Market Updates: Kunlun Energy saw a slight increase in share price, while Jefferies upgraded HKEX to "Buy" and raised target prices for BEA and BOCHK.

JPMorgan's Cautious Outlook: JPMorgan maintains a cautious view on Chinese gas utilities, predicting disappointing annual results and limited improvement for 2026.

Top Picks and Ratings: KUNLUN ENERGY is rated Overweight with a target price increase to $9, while ENN ENERGY is also rated Overweight due to a significant A/H discount, with target prices raised accordingly.

Downgrade of HK & China Gas: HK & CHINA GAS has been downgraded from Overweight to Neutral, with a slight target price increase reflecting its reasonable valuation after recent price hikes.

Market Context: The report highlights uncertainties in the market, suggesting that investors may consider taking profits on some HK utilities amid concerns over US rate cuts.

Offshore Wind Turbine Procurement: China's offshore wind turbine procurement capacity reached 8.42 gigawatts last year, with MINGYANG SMART ENERGY leading at 2.1 gigawatts and GOLDWIND at 1.2 gigawatts, driven by positive market sentiment.

Stock Recommendations: JPMorgan recommends focusing on companies with strong earnings growth, such as ORIENT WIRES & CABLES, DAQO New Energy, and GCL TECH, while the A-share photovoltaic industry index has outperformed the market.

Energy Storage Growth: China's installed capacity of energy storage systems surged by 73% year-on-year, with SUNGROW POWER expected to benefit from policy reforms and increased demand in high-end markets.

Cautious Outlook on Gas Utilities: JPMorgan maintains a cautious view on China's gas utilities sector due to weak growth and profit margins, with KUNLUN ENERGY identified as a top pick, while CHINA RES GAS faces challenges with slow share buybacks and weak operating trends.

CNOOC and JD.com Short Selling: CNOOC has a short selling value of $28.22M with a ratio of 3.983%, while JD.com shows a significantly higher short selling value of $91.22M and a ratio of 19.039%.

Stock Performance of Various Companies: Companies like SK hynix, Samsung Electronics, and MediaTek are mentioned, with some showing minor fluctuations in stock prices.

Brent Oil Price Forecast: Citi has raised its three-month Brent oil price forecast to $70 per barrel, indicating a positive outlook for oil prices.

Short Selling Data Overview: The report includes short selling data for various companies, with notable figures for Tsingtao Brew and Kunlun Energy, reflecting varying levels of market activity.

ENN Energy Privatization Delay: ENN Energy has extended the deadline for dispatching its privatization scheme document to no later than January 30, 2026, due to the need for more time to meet pre-conditions, which was anticipated by the market.

Impact on Share Prices: JPMorgan believes the delay in ENN Energy's privatization scheme may have a slight negative effect on its share price, while its H-shares are viewed as offering better risk-return compared to A-shares.

China Gas Hold Performance: China Gas Hold reported a 24.2% decline in interim net profit for 1HFY2026, with weak operational indicators, but is expected to see a gradual recovery in gas sales over the next few months.

Market Opportunities: JPMorgan suggests that investors consider market entry opportunities in KUNLUN Energy, which is projected to achieve over 5% sales growth in 2H25, alongside improvements in gas sales for other companies like China Resources Gas.

China's Natural Gas Demand Forecast: BofA Securities predicts China's natural gas demand growth will slow to 2-3% annually from 2025-27, down from a 9% CAGR over the past decade, due to coal being more economical and weak industrial demand.

PETROCHINA Rating and Target Price: BofA maintains a Buy rating on PETROCHINA, raising its target price by 12% to HKD9.5, citing stable natural gas prices and reduced losses on imports as oil prices decline.

KUNLUN ENERGY Rating Downgrade: BofA downgraded KUNLUN ENERGY from Neutral to Underperform, as the company relies heavily on industrial customers, who may require price cuts to remain competitive.

KUNLUN ENERGY Target Price Adjustment: The target price for KUNLUN ENERGY was lowered by 16% to HKD7, reflecting the need to adjust pricing strategies amidst unchanged costs.