中国燃气控股FY26：宏观承压下股息削减

Brian Ho, CFA+852 2123 2615brian.ho@bernsteinsg.com Price Target Quick Take: China Gas FY26 - Dividend cut as macro remainschallenging. Underperform The good:Core gas operations were clearly stronger than feared: total gas volumes grew3.7% y-o-y to 41.4bcm vs. flat–2% guidance, driven by +9.2% in direct-supply and trading,while city-gas dollar margin climbed to RMB0.552/m³ (+2.8% y-o-y) as the residentialpass-through ratio jumped to 76.3%. This, combined with lower financing costs (3.27% vs.3.84%), underpinned record FCF of HKD4.84bn. Integrated energy is no longer just a slidestory: electricity sales rose 31.2% y-o-y, China Gas locked in 2.8GWh of grid-side storageand BTM projects are delivering 11–12% IRRs; LPG also swung to a 58% profit increasedespite weaker volumes, showing trading discipline is biting. The bad:The capital-return was unambiguously negative: earnings fell 16% y-o-y toHKD2,719MM (9% below our forecast) and management cut the dividend by 30% toHKD0.35/share, resetting the payout from 83% to 70% and undermining the stock’s yieldsupport just as macro weak. VAS, marketed as the key structural engine, missed its >10%target for a 2nd year, with profit down 7.4% y-o-y as real estate and a collapsing home-appliance market hit the highest-margin products, while new connections (–18.6% y-o-y) and CNG/LNG volumes (–20.4% y-o-y;1.4% of retail) highlight that both property andtransport demand are structurally impaired rather than cyclical. The bottom line:The core gas business held up better than feared — volumes, margins andFCF all came in at or above expectations — and integrated energy is scaling fast, but neitheris enough to offset the dividend cut and the persistent weak in VAS and connections. The VASmiss is particularly frustrating given China Gas guidance that this will be the primary earningsgrowth driver; two consecutive years of shortfall and the macro backdrop raise questionsabout whether the >10% FY2027 target is achievable. The integrated energy build-out (gridstorage, BESS, biomass) is strategically compelling given weaker gas growth, but does notyet contribute to the P&L and the ramp timeline remains uncertain. In summary, while FCFimproved the results were below to our estimates. We maintain our Underprform rating with aprice target of HKD5.30, although the upside from shorts is more limited here. China Gas reported FY2026 earnings of HKD2,719MM (-16% y-o-y; HKD0.50/share), which was 9% below ourestimates and consensus. Operating profit (excluding JV and associate gains) declined -% y-o-y to HKD6,518MM,which was 2% higher than our forecast of HKD6,362MM. Additional details: •Clean profit declined 16% y-o-y to HKD2,860MM, similar with our expectation, the decline primarily due to weaker VASsegment margins, lower JV and associate income, and the absence of non-recurring LNG ship leasing income whichsupported FY2025 numbers. •Operating segment profit (excluding JV/associate gains) fell 2.5% y-o-y to HKD6,518MM, modestly above our estimate ofHKD6,362MM.•Free cash flow for FY2026 reached an all-time high of HKD4.84bn (+4% y-o-y), with operating cash flow improving toHKD7.02bn (+9% y-o-y). Average financing cost declined from 3.84% to 3.27% y-o-y, reflecting active onshore/offshoreRMB refinancing.•Full-year dividend to HKD0.35/share (–30% y-o-y), comprising HKD0.15/share interim and proposed HKD0.20/share finaldividend, representing a 70% payout ratio (vs. 83% in FY2025).•Net gearing declined to 77.7% by March 2026 (vs. 78.8% by March 2025), with further reduction guided for FY2027. Operating income from gas sales increased 3% y-o-y to HKD3,402MM, driven by a +2.8% dollar margin improvementand total volume growth of 3.7% y-o-y — both ahead of guidance. •City and township gas volume was essentially flat at 23.5bcm (–0.2% y-o-y), in line with the guided range. Direct-supplypipeline and trading recovered strongly (+9.2% y-o-y)•Residential gas grew 0.9% y-o-y (37% of mix), recovering from a –2.1% decline in FY2025 as heating demand normalized.•Industrial gas grew 1.0% y-o-y (49% of mix), supported by machinery, healthcare, and chemical sectors, though real estate-linked industries remained soft •Commercial gas declined 4.5% y-o-y (13% of mix) under macroeconomic headwinds and weaker restaurant demand.•CNG/LNG station volumes fell sharply by 20.4% y-o-y to 0.34bcm (1.4% of mix), driven by accelerating NEV penetration —a structural headwind. Management now treats this as a structural headwind, with gas stations’ share of retail volumes fallingfrom c.15% to 1.4%.•The blended dollar margin improved to RMB0.552/cm (FY2025: RMB0.537/cm), driven by procurement cost reduction;average unit cost fell to RMB2.69/m³ from RMB2.75/m³. The residential pass-through ratio reached 76.3% by March 2026(vs. 68% by March 2025), now implemented across 26 provinces. Management also emphasised the role of the Singaporetrading platform, where the group used derivatives and US–Europe cargo swaps to lock in L