Zhi Tong Cai Jing·2026-02-26 06:34Core Viewpoint - Morgan Stanley maintains a cautious outlook on China's gas utility sector, expecting disappointing full-year performance for covered companies and limited improvement in this year's outlook due to weak gas sales growth, declining new residential connections, and stable gas profit margins [1] Industry Summary - The industry is anticipated to sustain low growth this year, influenced by weak gas sales and a decline in new residential connections [1] - Gas profit margins are expected to remain stable, contributing to the overall cautious outlook [1] Company Summaries - Kunlun Energy (00135) is the preferred choice in the industry, with an expected shareholder return rate of 6% (including dividends and buybacks). There is an opportunity to increase the dividend payout ratio in March, along with a new dividend plan. The rating is "Overweight," with a target price raised from HKD 7.8 to HKD 9 [1] - New Hope Energy (02688) also receives an "Overweight" rating due to a current discount of 33% on its A-shares and H-shares. If privatization progresses, the discount is expected to narrow. The target price for New Hope Energy's H-shares is raised from HKD 66.5 to HKD 72.5, while the target price for its A-shares is increased from RMB 17 to RMB 18.5, with a "Neutral" rating [1] - Hong Kong and China Gas (00003) has its rating downgraded from "Overweight" to "Neutral," with a target price raised from HKD 7.25 to HKD 7.6, as its stock price has risen since last year's second half, making its valuation relatively reasonable [1]