According to the Zhongtong Finance APP, in the afternoon of June 24, Hong Kong gas rose against the trend, with China Resources Gas (01193) up 1.64%, Enn Energy (02688) up 1.13%, and Kunlun Energy (00135) and other stocks following suit. Recently, many parts of the country have experienced continuous high temperatures, leading to increased electricity demand. Overseas areas such as the United States have also entered the summer demand season, and since mid-June, there have been signs of a surge in global natural gas prices. Industrial Securities stated that the center of global natural gas prices has fallen back, domestic favorable price policies continue to be promoted, and urban gas industry profits have reached a turning point. As a transitional energy source with low carbon emissions, natural gas consumption is expected to increase in the long term. Relevant targets: Enn Energy, Kunlun Energy, China Resources Gas, China Gas (00384).

Nowadays, a global heat wave is pushing up natural gas prices, and the demand for electricity needed to operate air conditioners has surged, with the Asia liquefied natural gas price and the benchmark price in Europe and the United States both at their highest level since the beginning of the year.

According to data from the London Stock Exchange Group, the weekly spot (contract) price of liquefied natural gas in Asia reached $12.6 per million British thermal units (BTU) on June 14, an increase of about 50% compared to the new low in early March, while also setting a new high since December 2023.

In Europe, the benchmark Dutch Ownership Transfer Center (TTF) natural gas futures price (next month delivery) reached €38 per megawatt hour (approximately $40.6) in early June, hitting a new high since December 2023, and has since maintained a high level of around €35. The benchmark price in the United States has also nearly doubled since late April.

The rise in overseas natural gas prices is gradually being transmitted to China. Data shows that as of June 14, the price of LNG (liquefied natural gas) landed in China increased by nearly 9% month-on-month to $12.94 per million British thermal units.

Demand-wise, according to research from CITIC Futures, the US market has seen a double increase in supply and demand in the near term, and the increase in power generation demand has provided support for gas prices. However, considering the high natural gas inventories in the United States, attention should be paid to the changes in hot weather in the future.

In China, according to data from the National Bureau of Statistics, the output of natural gas for industrial use above a certain scale was 103.3 billion cubic meters from January to May, a year-on-year increase of 5.2%. Among them, imported natural gas was 54.28 million tons, a year-on-year increase of 17.4%. Xinda Securities stated that with the recovery and growth of domestic natural gas consumption, the urban gas industry is expected to achieve stable gross profit margin in gas sales and high sales volume.

Industrial Securities stated that the global center of natural gas prices has fallen back, and domestic price promotion policy has continued to promote, and the profit of urban gas industry has reached a turning point; the decline in gas prices and the expected economic recovery are expected to further release gas demand, and the consumption of natural gas, as a transitional energy source with low carbon emissions, is expected to grow in the long term. Gross margin management endows urban gas public utilities with characteristics of steady operation cash flow assets with improved infiltration and moderate growth. The bank stated that the industry will remain in the 1.0 era of low infiltration, high capital expenditure, and high growth rate until 2022, and will enter the 2.0 era of low infiltration, moderate growth, and dividend.

Related concept stocks:

Enn Energy (02688): In early May, CICC released a research report stating that Enn Energy's profit forecast for 2024 and 2025 remains unchanged and maintains an 'outperform' rating. Considering the positive catalyst of the growth in gas volume on the company's valuation, the target price is raised by 7.7% to HKD 70. The report quoted the company's operating data briefing for the first quarter, which saw a year-on-year increase of 2.7% in retail natural gas sales, including a 2.9% year-on-year increase in commercial gas volume and a 2.5% year-on-year increase in civil gas volume. The company's sales growth accelerated further by quarters in the first quarter, and the report judged that the main reason was the company's more flexible sales strategy and the year-on-year decline in liquefied natural gas (LNG) prices, which drove downstream demand improvement.

Kunlun Energy (00135): At the end of March, BOCOM International released a research report stating that it maintains a 'buy' rating on Kunlun Energy and believes that the company's stable profit structure coupled with good cash flow still makes it one of the better choices in the industry. With the promotion of natural gas sales in the current period, the overall net profit can maintain a compound growth rate of about 10% from 2023 to 2026, and the target price has been raised to HKD 8.52.

China Resources Gas (01193): As a leading gas public utility group in China, China Resources Gas mainly engages in natural gas procurement and sales, pipeline construction and operation, integrated services, cold, heat and power integrated energy, and vehicle and ship gas use, etc.

China Gas Holdings (00384): China Gas issued an announcement that its wholly-owned subsidiary, Zhongran Investment Co., Ltd. (Zhongran Investment), achieved income of RMB7.915 billion and net income of RMB582 million for the three months ended 31 March 2024.