Fitch Ratings expects rated Chinese gas utilities’ EBITDA to remain flat or decline moderately in 2022, in contrast to growth of 8%-44% in 2021. High international crude oil and gas prices and China’s slowing economic growth will negatively affect gas sales volume and dollar margins. Smaller regional gas distributors with greater exposure to the connections business will see larger EBITDA contraction amid continued stress in the property sector. However, strong growth in the integrated energy business may help to partly offset weaker profits from connections and retail gas sales. Nevertheless, all the rated city-gas distributors will still have plenty of room in their credit metrics relative to the respective rating downgrade triggers based on Fitch’s rating-case assumptions. Gas Sales Growth to Moderate

China’s gas sales increased by 12% in 2021 and retail gas sales rose by the mid-to-high teens for major gas distributors. However, the latter’s gas sales growth slowed to 6%-11% yoy in 1Q22 as a surge in Covid-19 cases spurred lockdowns in major cities. We expect gas sales volume growth to continue to slow in 2Q22 as lockdowns were extended and international gas prices remained high. Nevertheless, we expect rated gas distributors to achieve high single-digit to low-teens growth in gas sales volume in 2022, as city-gas demand is more resilient and new projects contribute to growth.
Source: Fitch Ratings