Impact of Return Cap for China's City Gas Distributors Hinges on Connection Fee Treatment
The shares of China city gas distributors took a hit May 15 following news that the government may impose a 6% cap on the annual rate of return on assets for natural gas distributors in urban areas. The share prices of China Gas Holdings, China Resources Gas Group, and ENN Energy Holdings dropped more than 10% from May 12, but we think the sell-off is overdone. In our view, the key to assessing the impact of the return cap is whether the earnings from gas connection are included in the calculati...China Gas Holdings and its subsidiaries is a gas operator and service provider primarily engaged in the investment, construction and operation of city gas pipeline infrastructure facilities, gas terminals, storage and transportation facilities, and gas logistics systems, transmission of natural gas and liquefied petroleum gas (LPG) to residential, industrial and commercial customers, construction and operation of compressed natural gas/liquefied natural gas refilling stations as well as the development and application of technologies relating to natural gas and LPG in China.
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