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China Gas 1H26 performance outlook: Weak profits are a foregone conclusion, and the industry turning point has not yet arrived (J.P. Morgan)

2026-07-18·ima-daily5min-0718-34-b59386b981

Street Signal | China Gas 1H26 performance outlook: Weak profits are a foregone conclusion, and the industry turning point has not yet arrived (J.P. Morgan)

The performance of China's gas and utility sector in 1H26 (first half of the year) is expected to be overall weak, with most companies' profits declining year-on-year. JP Morgan predicts that overall earnings will be about 7% lower than the market consensus, and there is a high probability of a round of earnings cuts after the results are announced.

Although the sector has underperformed the market during the year and is undervalued, the industry turning point has not yet come due to the possibility of rising gas prices in winter and macro uncertainty. It is highlights that ENN Energy be preferred, as its expected return rate is higher than 7% and its dividends are guaranteed.

The market may have certain expectations for the defensive attributes of the gas sector, but the report pointed out that weakness in earnings and downward risks are the biggest negatives at hand, and the so-called "bottom" may not have arrived yet.

One sentence conclusion: The "valuation bottom" of gas stocks may have arrived, but the "profit bottom" has not yet appeared. The wave of profit reductions after the performance announcement will be the last test facing the sector. Good/bad: Bad for China's gas sector as a whole, especially for stocks with high market consensus. Avoid in the short term.

After performance risks are released, high-quality targets such as ENN Energy may usher in layout opportunities. The market has priced in its defensive attributes and low valuation, but may not have fully priced in the coming wave of earnings downward revisions. Catalysts:

1) Centralized disclosure of 1H26 performance, confirming the magnitude of earnings revision;

2) The final determination of the winter natural gas price policy, which is an important variable affecting the performance turning point;

3) Macroeconomic recovery signals.

Full text

China Gas 1H26 performance outlook: Weak profits are a foregone conclusion, and the industry turning point has not yet arrived (J.P. Morgan)

The performance of China's gas and utility sector in 1H26 (first half of the year) is expected to be overall weak, with most companies' profits declining year-on-year.

The performance of China's gas and utility sector in 1H26 (first half of the year) is expected to be overall weak, with most companies' profits declining year-on-year. JP Morgan predicts that overall earnings will be about 7% lower than the market consensus, and there is a high probability of a round of earnings cuts after the results are announced. Although the sector has underperformed the market during the year and is undervalued, the industry turning point has not yet come due to the possibility of rising gas prices in winter and macro uncertainty. It is highlights that ENN Energy be preferred, as its expected return rate is higher than 7% and its dividends are guaranteed. The market may have certain expectations for the defensive attributes of the gas sector, but the report pointed out that weakness in earnings and downward risks are the biggest negatives at hand, and the so-called "bottom" may not have arrived yet. One sentence conclusion: The "valuation bottom" of gas stocks may have arrived, but the "profit bottom" has not yet appeared. The wave of profit reductions after the performance announcement will be the last test facing the sector. Good/bad: Bad for China's gas sector as a whole, especially for stocks with high market consensus. Avoid in the short term. After performance risks are released, high-quality targets such as ENN Energy may usher in layout opportunities. The market has priced in its defensive attributes and low valuation, but may not have fully priced in the coming wave of earnings downward revisions. Catalysts: 1) Centralized disclosure of 1H26 performance, confirming the magnitude of earnings revision; 2) The final determination of the winter natural gas price policy, which is an important variable affecting the performance turning point; 3) Macroeconomic recovery signals.

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