1H27 Preview: Yield Appeal Shines Amid Demand and Cost Challenges

China Gas Holdings (CGH) is expected to report 1H27 results (March year-end; covering April–September 2026) in late November. We expect: 1) gas sales volume to be largely flat YoY, with residential growth offsetting commercial weakness; 2) gas dollar margins to face pressure amid rising costs, with an estimated contraction of Rmb0.03/cu.m. YoY; and 3) new connections to decline further, dragged down by ongoing weakness in China's property sector (new starts fell 25% in 8M26), while value-added services should remain largely flat. Consequently, we project a single-digit YoY net profit decline for 1H27. Despite these earnings headwinds, we expect the interim DPS to remain flat YoY. With regional LNG prices lingering at high levels and a warmer-than-usual winter expected, near-term challenges persist for Chinese city-gas distributors. That said, we believe CGH's recent share underperformance (underperforming the HSCEI by 7% and its peers by 6%) is overdone, particularly with an attractive