Core Viewpoint - The report from Dongwu Securities highlights the ongoing fluctuations in natural gas prices due to weather conditions and inventory changes, with U.S. gas prices rising while European prices are declining [1] Price Tracking - As of December 5, 2025, U.S. HH gas prices increased by 13.2% week-on-week, while European TTF prices decreased by 6.2%. The prices for East Asia JKM, China LNG ex-factory, and China LNG CIF also saw slight declines of 1.9%, 1.4%, and 6.5% respectively [1] Supply and Demand Analysis - U.S. natural gas storage decreased by 120 billion cubic feet to 39,230 billion cubic feet, a year-on-year decline of 0.4% [2] - European gas prices fell by 6.2% due to inventory extraction, with a total consumption of 2,884 billion cubic meters in 2025, reflecting a year-on-year increase of 4.6% [2] - European gas supply decreased by 9.9% week-on-week to 92,490 GWh, with significant contributions from inventory consumption and LNG receiving stations [2] - Domestic gas prices in China decreased by 1.4% week-on-week, with a total apparent consumption of 3,541 billion cubic meters in 2025, a year-on-year increase of 0.7% [2] Pricing Progress - As of November 2025, 67% of cities in China have implemented residential pricing adjustments, with an average increase of 0.22 yuan per cubic meter [3] Investment Recommendations - For 2025, the industry is expected to experience relaxed supply and cost optimization for gas companies, with a focus on pricing mechanisms and demand growth. Key recommendations include: - **New Hope Energy** with a dividend yield of 4.4% and potential valuation recovery [4] - **China Gas** with a dividend yield of 6.0% and **Kunlun Energy** with a yield of 4.7% [4] - Attention to companies with quality long-term contracts and cost advantages, such as **Jiufeng Energy** and **New Hope Holdings** [4] - Focus on companies with gas production capabilities like **New Natural Gas** and **Blue Flame Holdings** due to increasing uncertainties in U.S. gas imports [4]

Group 1 - China Gas (00384) saw a stock increase of over 3%, reaching HKD 8.52 with a trading volume of HKD 102 million [1] - Beijing is entering a new heating season as temperatures drop, with gas supply preparations fully in place [1] - The introduction of biomass natural gas, a renewable energy source derived from processed waste, will be integrated into Beijing's gas supply for the first time this winter [1] Group 2 - In the first nine months of 2025, China's apparent natural gas consumption is expected to increase by 0.7% year-on-year to 318.8 billion cubic meters, influenced by a warmer winter in 2024 [2] - Natural gas production is projected to rise by 6.5% year-on-year to 194.9 billion cubic meters, while imports are expected to decline by 6.2% to 130.7 billion cubic meters [2] - The pricing mechanism for natural gas is being optimized, with a price difference of 0.53-0.54 CNY per cubic meter for leading companies, indicating a potential 10% recovery space [2]

Investment Rating - The report maintains an "Overweight" rating for the gas industry [1] Core Viewpoints - The report highlights that the US has sufficient gas inventory leading to a decrease in gas prices, while Europe is advancing its storage and domestic demand is slowly recovering, resulting in relatively stable gas prices across regions [1][4] - The investment outlook for 2025 suggests a relaxed supply environment, cost optimization for gas companies, and a continued adjustment of pricing mechanisms with increasing demand [52] Price Tracking - As of October 17, 2025, the week-on-week price changes for various gas prices are as follows: US HH -8.6%, European TTF -1.7%, East Asia JKM +0.8%, China LNG ex-factory -0.4%, and China LNG CIF +5.5% [9][14] - The average total supply of natural gas in the US decreased by 0.1% week-on-week to 111.7 billion cubic feet per day, while total demand increased by 2.7% to 101.3 billion cubic feet per day [15] Supply and Demand Analysis - The report indicates that the US natural gas market is experiencing a price drop due to ample inventory, with a total storage increase of 80 billion cubic feet to 37,210 billion cubic feet year-on-year [15] - In Europe, natural gas consumption from January to July 2025 was 265.4 billion cubic meters, a year-on-year increase of 5% [17] - Domestic gas prices in China saw a week-on-week decrease of 0.4%, with apparent consumption from January to August 2025 increasing by 0.8% year-on-year to 283.2 billion cubic meters [21][26] Pricing Progress - Nationwide pricing adjustments are gradually being implemented, with 65% of cities having executed residential pricing adjustments, resulting in an average increase of 0.21 yuan per cubic meter [36] Investment Recommendations - The report recommends focusing on companies that can optimize costs and benefit from the ongoing pricing adjustments, such as Xin'ao Energy, China Resources Gas, and Kunlun Energy, all of which have attractive dividend yields [52][53] - It also suggests monitoring companies with quality long-term contracts and flexible scheduling capabilities, such as Jiufeng Energy and Xin'ao Shares [53]

Investment Rating - The report maintains an "Overweight" rating for the gas industry, specifically recommending New Hope Holdings for its stable profits and high dividend yield [1]. Core Insights - The report highlights that high temperatures in the US are driving up gas prices, while European storage efforts are leading to price declines. Domestic gas prices are weak [10][20]. - It emphasizes the importance of monitoring companies with US gas sources, particularly in light of the recent reduction of import tariffs on US LNG from 140% to 25% [56]. Price Tracking - As of July 18, 2025, US HH gas prices increased by 9.1% week-on-week, while European TTF prices decreased by 3.2%. Domestic LNG prices showed a slight decline of 0.1% [10][15]. - The average total supply of natural gas in the US increased by 0.4% week-on-week to 1,131 billion cubic feet per day, with total demand rising by 2.2% to 1,070 billion cubic feet per day [17][20]. Supply and Demand Analysis - The report notes that European gas consumption from January to April 2025 was 1,920 billion cubic meters, a year-on-year increase of 7.4% [20]. - Domestic apparent gas consumption in China decreased by 0.6% year-on-year to 1,786 billion cubic meters, attributed to warmer winter conditions and trade war impacts [31]. Pricing Mechanism Progress - The report states that 64% of cities in China have implemented residential pricing adjustments, with an average increase of 0.21 yuan per cubic meter [40]. Important Events - The reduction of US LNG import tariffs is expected to enhance the economic viability of US gas imports [46]. - The European Parliament has agreed to provide greater flexibility regarding natural gas storage targets, allowing for a 10% deviation from the 90% storage goal [53][55]. Investment Recommendations - The report recommends focusing on companies that can optimize costs and benefit from the ongoing pricing mechanism adjustments, particularly New Hope Holdings, China Resources Gas, and Kunlun Energy [56].

Core Viewpoint - Leading gas companies have released their 2024 annual reports, indicating that price differentials and connection numbers meet expectations, while gas volumes are slightly lower than anticipated due to a warm winter. The growth of dual business segments shows divergence. Looking ahead to 2025, supply is expected to be ample, with cost optimization for gas companies and a continued adjustment of pricing mechanisms alongside increasing demand [1]. Price Tracking - The overall gas prices in Europe and the U.S. remain stable, with a continued price inversion between domestic and international markets. As of March 28, 2025, the weekly price changes for various gas markets are as follows: U.S. HH -1.4%, Europe TTF -5.1%, East Asia JKM -2.2%, China LNG ex-factory -0.6%, and China LNG CIF -7.4%. The domestic and international price inversion has decreased to 0.2 yuan per cubic meter [2]. Supply and Demand Analysis - Warm weather has led to a slight increase in total gas supply, with a weekly rise of 0.1% to 1,108 billion cubic feet per day, and a year-on-year increase of 4.7%. Total demand has increased by 3.4% week-on-week to 1,077 billion cubic feet per day, but is down 5.5% year-on-year. The residential and commercial sectors saw a significant increase in consumption, while industrial consumption remained stable [3]. - European gas prices have decreased by 5.1% due to ongoing negotiations between Russia and Ukraine. In 2024, European gas consumption is projected at 4,387 billion cubic meters, a year-on-year increase of 0.9%. The supply from Europe has decreased by 17% week-on-week, with significant reductions in inventory consumption [4]. Market Demand and Pricing - Domestic gas prices have decreased by 0.6% week-on-week, with apparent consumption in January and February 2025 down 1.2% year-on-year to 717 billion cubic meters. The production has increased by 3.9% to 433 billion cubic meters, while imports have decreased by 8.1% to 284 billion cubic meters. The average import prices for LNG and gas have also shown a downward trend [5]. Pricing Progress - As of February 2025, 60% of cities in China have implemented residential pricing adjustments, with an increase of 0.21 yuan per cubic meter. The price differential for leading city gas companies is between 0.53 and 0.54 yuan per cubic meter, indicating a potential for further price adjustments [6]. Important Events - Starting February 10, 2025, a 15% tariff has been imposed on LNG originating from the U.S., yet imported U.S. LNG still maintains a price advantage of 0.27 to 0.74 yuan per cubic meter in coastal regions. Ongoing negotiations between Russia and Ukraine continue to impact the market. Additionally, New Hope Group plans to privatize New Hope Energy with a transaction value of 59.924 billion HKD, which is expected to enhance earnings per share post-acquisition [7].