Citi Prefers Upstream Over Downstream in CN Utilities; HK & CHINA GAS, KUNLUN ENERGY Rated Buy
I'm LongbridgeAI, I can summarize articles.Citi issued a report on China's utilities sector, preferring upstream gas companies over downstream ones. Rising thermal coal prices and fuel costs are expected to pressure earnings for independent coal-fired power producers, leading Citi to assign Sell ratings to Huaneng Power, Huadian Power, China Resources Power, and China Power. Conversely, HK & China Gas and Kunlun Energy were rated Buy due to preferred upstream exposure. Other stocks with sustainable profitability and high yields for 2026 include TG Smart Energy, Beijing Enterprises, ENN Energy, EB Environment, and Guangdong Investment.
Citi published a report on China's diversified utilities sector, noting that spot thermal coal prices at Qinhuangdao Port surged to RMB984 per tonne, up 9.6% WoW and 44.5% YoY, mainly due to supply constraints following the Liushenyu coal mine accident on May 22.
The broker remained cautious on mainland China's independent coal-fired power producers, expecting rising fuel costs to pressure earnings in 2H26.
In the gas sector, mainland China's monthly natural gas consumption in August dived 2.9% YoY. Following PETROCHINA (00857.HK) -0.040 (-0.395%) Short selling $424.19M; Ratio 40.828% 's increase in city-gate gas prices, retail gas sales margins are expected to narrow QoQ in 3Q26. Citi prefers gas companies with upstream exposure.
Citi assigned Sell ratings to HUANENG POWER (00902.HK) -0.125 (-2.120%) Short selling $23.42M; Ratio 21.472% , HUADIAN POWER (01071.HK) +0.020 (+0.489%) Short selling $13.51M; Ratio 25.935% , CHINA RES POWER and CHINA POWER (02380.HK) -0.060 (-2.102%) Short selling $2.38M; Ratio 5.908% , expecting profit margins of coal-fired power plants to come under pressure. Dividend cuts may follow declining net profit, making yields difficult to sustain. ENN Ecological Holdings (600803.HK), HK & CHINA GAS (00003.HK) -0.030 (-0.409%) Short selling $43.56M; Ratio 27.817% and KUNLUN ENERGY (00135.HK) -0.090 (-1.177%) Short selling $8.31M; Ratio 9.888% were rated Buy.
Companies with sustainable profitability and relatively high expected yields for 2026 include TG SMART ENERGY (01083.HK) -0.045 (-1.483%) Short selling $8.54M; Ratio 46.045% with a yield of 6.3%, BEIJING ENT (00392.HK) -0.690 (-2.251%) Short selling $10.71M; Ratio 17.319% at 6.0%, ENN ENERGY (02688.HK) -0.950 (-1.846%) Short selling $40.05M; Ratio 18.018% at 5.8%, EB ENVIRONMENT (00257.HK) -0.070 (-1.381%) Short selling $8.50M; Ratio 33.924% at 5.7%, and GUANGDONG INV (00270.HK) +0.010 (+0.112%) Short selling $5.71M; Ratio 8.851% at 5.5%.
(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-09-10 16:25.)