Fitch forecasts mixed margin performance for Chinese gas distributors in ’24

Fitch Ratings forecasts a divergence in the dollar margin performance of Chinese gas distributors for 2024 due to differing user mixes and cost structures. Despite a sluggish property market, gas sales remained resilient in H1 ’24.

Most distributors saw higher margins due to reduced procurement costs and increased residential cost pass-through, but Kunlun Energy, Beijing Gas, and Binhai Investment reported lower margins.

Fitch anticipates lower gas prices in H2 ’24, benefiting residential margins further. New connections are expected to decline significantly through 2024-2025, impacting EBITDA contributions.

Large distributors are expanding value-added services and integrated energy solutions, which saw profit growth exceeding 20 per cent in H1 ’24. Moreover, Fitch predicts stable leverage for distributors in 2024 with a focus on pipeline renovation and integrated energy projects.

Attribution: Fitch Ratings

Subediting: M. S. Salama