中国天然气分发：从液化天然气进口增长中挑选下游赢家

1、June 11, 2019 09:00 PM GMTChina Gas DistributionJune 11, 2019 09:00 PM GMTPicking downstreamfrom LNG importgrowthImprovementintheoutlookLNGimportsandmidstreaminfrastructure shouldprovidevolumeandmarginupside.MorganStanleydoesandseekstodobusinesswithcompaniesinMorganStanleyResearch.Asaresult,shouldbe

2、awarethatthefirmmayhaveaconflictof interestthatcouldaffecttheobjectivityofMorganStanleyResearch.shouldconsiderMorganStanleyResearchasonlyasinglefactorinmakingtheirinvestment decision.For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of thi

3、s report.+=Analystsemployedbynon-U.S.affiliatesnotwithFINRA,maynotbeassociatedpersonsofthememberandmaynotbesubjecttoNASD/NYSErestrictionson communicationswithasubjectpublicandsecuritiesheldbyaanalystaccount.ContributorsMORGAN STANLEY ASIA LIMITED+Simon H.Y. Lee, CFAEquity Analyst+852 2848-1985 HYPER

4、LINK mailto:Simon.Lee Simon.LeeMORGAN STANLEY ASIA LIMITED+Andy Meng, CFAEquity Analyst+852 2239-7689 HYPERLINK mailto:Andy.Meng Andy.MengMORGAN STANLEY ASIA LIMITED+Beryl WangResearch Associate+852 3963-3643 HYPERLINK mailto:Beryl.Wang Beryl.WangChina Gas DistributionPicking downstreamfrom LNG impo

5、rtgrowthImprovementintheoutlookLNGimportsandmidstreaminfrastructure shouldprovidevolumeandmarginupside.WHATS WHATS CHANGED Industry ENNEnergyHoldingsFrom LtdPriceTargetHK$97.00HK$90.00China Gas HoldingsPriceTargetHK$25.00HK$30.00RatingEqual-weightOverweightKunlun EnergyPriceTargetHK$11.50HK$9.50Chin

6、a Resources Gas GroupLtdPriceTargetHK$46.00HK$40.00RatingOverweightEqual-weightTowngas ChinaPriceTargetHK$7.70HK$6.50Hong Kong & China GasPriceTargetHK$15.27HK$16.30Beijing Enterprises HoldingsPriceTargetHK$41.80HK$42.50NationalGasPipelineCompany(NGPC)tofacilitategreaterpetition.expectChinatosetupan

7、NGPCin3Q19.believethis, alongwiththeagreedarrivalofRussiangasbyend-2019andexpectedincreaseinLNGimports,willallowmorecompetition betweenpipedgasandLNG,thuscreatingmorechoicegasdis- tributorsandreducingunitgastransmissioncosts.WhichdistributorswouldbenefitmostfromLNGimports?mapfutureLNGterminalswithci

8、tygasprojectlocations.ENN,andCRGbenefittingthemostfromLNGimportareas (coastalprovinces),whileENN,ChinaGasandKunlunwouldbenefit fromdirectorindirectownershipinLNGterminals,whereROEcould reach40%uponfullutilization.estimateGuangdong-basedgas enduserscouldsave30%oneveryspotLNGcargoimportvs.the currentc

9、ostofpipedgasprocurement.IfeachcitygascompanyChina Utilities - AttractiveCitygasdistributors(exCRGasandHKCG)haveunderper- formedHSCEIbyYTDduetoshort-termconcerns,asconnectionrisk,potentialdollarmarginsqueezeduetogaspricehikesandatemporaryslowdowningasvolumegrowth.believeabuyingopportunityhasemerged,

10、giventhemanyimprove- ments in upstream gas supply and midstream infrastructure expected in 2H19 and beyond, creating potential volume marginupside.assesstheimpactoncitygasdistributorsifthese catalysts playout.PotentialUSLNGimports,large-scaleterminalconstructionthird-partyaccess.Ifatradedealisreache

11、dbetweentheUSChina,wewouldexpectChinatoimportlargeamountsofLNGtheUS.Ourreport HYPERLINK /eqr/article/webapp/510ac0ae-6c88-11e9-8aeb-37d0d74878c7?forceUpdate GlobalGas:WhatiftheUSandChinaReacha HYPERLINK /eqr/article/webapp/510ac0ae-6c88-11e9-8aeb-37d0d74878c7?forceUpdate TradeDeal?seestheUSshareofCh

12、inasLNGimportsincreasing from 4% in 2018 to 40% by 2025. In 2H19, we expect China announceitsLNGreceivingterminalconstructionplan,whichseeimportcapacityincreasefrom71mtonsin2018to250mtonsby 2035.Chinaisalsoduetoannouncedetailsofthird-partyaccessLNGterminals,allowingcitygasdistributorstodirectlyimpor

13、tLNG fromoverseas.10% gas volume from LNG with Rmb0.33/m3 savings, we see 2.3-6.6% 2019e earnings upside.OWonENN,ChinaGasandKunlun;downgradeCRGtopreferENNandChinaGas,astheyareexposedtorapidgassupply growthincoastalregions;inparticular,weseeENNsgasandgrated energy businesses benefitting from potentia

14、l competitive LNGimports.ChinaGaswouldbenefitfrompotentialLNGterminals investmentandhighvisibilityinnear-termearnings.downgrade CRGduetoitsrelativelyhighvaluation.Withthisreport,Simontakesprimarycoverageofgasstocks.Related reportsKunlun Energy: China Summit Feedback (3 Jun 2019)China Resources Gas G

15、roup Ltd: China Summit Feedback (312019)ContentsOrderofPreferenceExecutiveSummary9PotentialincreaseinUSLNGimportsandlarge- scale construction of LNGterminals19WhyLNGimports/Russiangas/NGPCwill benefit city gasdistributors23 Which city gas distributors could benefit the most from LNG import growth?28

16、 Existing risk factors growth, dollar margin and connection fee33 Looking at 2019ComparativevaluationENNEnergy44 China Gas Holdings47 Kunlun Energy50 China Resources Gas54 Towngas China57Hong & ChinaGas61Beijing EnterprisesHoldingsOrder of PreferenceExhibit 1:China Gas Distributors: Order of Prefere

17、nceOrder of preference ENNEnergyChinaGasKunlunChinaTowngasHongKong&BeijingResourcesChinaGasEnterprisesName(H)(H)Energy(H)Gas(H)China(H)(H)Holdings(H)Stock code2688.HK0384.HK0135.HK1193.HK1083.HK0003.HK0392.HKRatingOWOWOWEWEWEWEWCurrencyHKDHKDHKDHKDHKDHKDHKDCurrent price72.5025.857.0337.555.6616.9239

18、.15Price target90.0030.009.5040.006.5016.3042.50Target upside (%)24.1%16.1%35.1%6.5%14.8%-3.7%8.6%Market cap (US$ bn)10.016.47.710.41.931.66.4Liquidity (avg daily vol) (US$ mn)25.727.620.517.21.831.58.2Valuation multiplePE Multiples2019e13.5 e13.5 e8.0 e16.0 e10.3 e30.8 e6.2 e2020e11.8 e11.5 e7.3 e1

19、4.3 e9.4 e29.4 e5.7 eMS PT Implied PE Multiples2019e16.715.610.817.011.829.76.72020e14.613.39.815.210.828.36.2PB Multiples2019e0.62020e0.6MS PT Implied PB Multiples2019e3.31.04.20.72020e2.93.04.00.6Price Performance1M Abs Perf(3.5%)3.8%(13.1%)3.4%(6.6%)(1.1%)(6.1%)3M Abs Perf(10.8%)0.4%(22.1%)13.6%(

20、8.7%)3.4%(16.6%)YTD Abs Perf4.4%(7.3%)(15.3%)21.1%(2.6%)14.9%(5.7%)Source: Thomson Reuters, Morgan Stanley Research (e) estimates. Stock prices as of June 6, 2019.Executive SummaryExtensive natural gas infrastructure shouldfacilitatelong-termdemand growthIn2018,Chinasgasdemandwas280.3bcm,up18.1%ofLN

21、G accounted 53% of incremental supply. Given the lackdomesticproductiongrowthpotentialanddelaysintheconstruction ofpipedgasimports,weexpectChinatoincreaseitsdependenceLNG imports. expect Chinas Ministry of Transport (MOT) to announceanLNGterminalplan(2019-2035)toincreasecapacity fromthecurrent71mton

22、sto250mtonsby2035.expectthe announcementtobemadebymidyear2019afteraperiodofpublic consultation from Dec2018.IncrementalLNGiscostcompetitivecurrentLNGcontracts,weestimateBasedonthefuturelocationsofLNGterminals,weexpecttheBohai area,YangtzeDelta,Fujian,Guangdong/GuangxiandHainantoefitfrompotentiallowc

23、ostLNGimportsgoingforward.MOTmatesLNGimportswillincreasefrom38mtonsin2017to151mtons by2035.Moreimportantly,judgingfromthecurrentoilpricespotLNGpriceandLNGcontractterms,weexpectnewlysignedcouldbemorecompetitivethanexistingLNGcontracts.InMay2019, GuangdongsIPPsimportedspotLNGusingDapengLNGterminal and

24、achieved30%costsavingsvs.theprevailingpipedgascost.Exhibit 2:China: LNG terminals likely to be operational by end-2035RegionTotal #. Of Port / HarbourExistingcapacity(mntons)Designedcapacity(mntons)Incrementalcapacity(mntons)Provincial /National(%)Bohai Area13.023.7104.080.343.9%- Shandong6.06.044.0

25、38.020.8%- Hebei2.06.523.016.59.0%- Liaoning3.06.018.012.06.6%- Tianjin2.05.219.013.87.5%Yangtze-Delta River12.016.684.267.636.9%- Jiangsu6.018.1%- Zhejiang5.06.038.032.017.5%- Shanghai1.03.56.02.51.4%East China(excl. Yangtze-Delta River)5.06.3%- Fujian3.06.311.04.72.6%- Anhui1.0-2.02.01.1%- Jiangxi

26、1.0-%South China8.024.148.324.213.2%- Guangdong6.017.835.017.29.4%- Guangxi1.03.010.07.03.8%- Hainan1.03.33.3-0.0%Central China2.0-%- Hunan1.0-%- Hubei1.0-%Total40.070.7253.7183.0100.0%Source: Ministry of Transport (PRC), Morgan Stanley ResearchWhich city gas distributorsbenefit most?mapped the incr

27、emental supply growthexpected fromincreasedthird-partyaccess,theestablishmentanNGPCandRussiangasbyDecember2019againstcity gas distributors existing project exposure. cludedthatENNandHKCG/TowngasandCRGbenefit the most from projects locations, but Suntien,KunlunEnergy,andpotentiallyChinashouldbenefitf

28、romLNGterminalinvestments.GasandHKCG/Towngasstandoutintermsoftheirvincialgasnetworkinvestments,whileENNandGas own the largest LNG-related logistic including CNG/LNG truckfleets.EarningssensitivitywithwithoutaUSLNGdealIn his report entitled HYPERLINK /eqr/article/webapp/510ac0ae-6c88-11e9-8aeb-37d0d7

29、4878c7?forceUpdate Global Gas: What if the US HYPERLINK /eqr/article/webapp/510ac0ae-6c88-11e9-8aeb-37d0d74878c7?forceUpdate ChinaReachaTradeDeal?,MorganStanleyChina&Chemicalsanalyst,AndyMeng,presentsdifferentsce- nariosregardingapotentialUS-Chinatradedeal.HisDealscenarioenvisionsimportsofUSLNGmeeti

30、ng75% ofincrementalChinesedemandin2019-25,attwocificpricinglevels.BasedonAndysfindings,weconductedasensitivityanalysisofdownstreamgastributorsinwhichweassumethat10%oftheirannual naturalgassalesvolumewouldbenefitfromcostsavings(Rmb0.17/m3orRmb0.33/m3)underLNGimportdealbetweentheUSandChina. HYPERLINK

31、l _bookmark1 Exhibit HYPERLINK l _bookmark1 6 and HYPERLINK l _bookmark2 Exhibit HYPERLINK l _bookmark2 7 show that downstream gas couldseeimprovementof1.2-3.4%and2.3-6.6%,respec- tively, in their 2019 recurring earnings, based on assumedcostsavingsofRmb0.17/m3andon10%oftheirannualgassalesvolume.Exh

32、ibit 3:Major China gas distributors: Summary of city gas project locationsHKCGTowngas ChinaENN EnergyChina GasCR GasSouthern China75313633Central China21296339Eastern China2143897792Northern China26297320Northeastern China11955829Northwestern China100155Southwestern China0234533Source: Company data,

33、 Morgan Stanley ResearchExhibit 4:ExposuretoExposuretoProvincialGasBEHShaanxi-BeijingGasPipeline(notprovin-ENNGuangdongChinaGasGuangxi, Heilongjiang,ShandongHKCGGuangdong, Hebei, Jilin, AnhuiCRGasYunnan,JiangsuSource: Company data, Morgan Stanley ResearchExhibit 5:Sensitivity analysis under A Deal b

34、etween the US and China on LNG tradeA DealSensitivity analysisSensitivity analysisIIILNG import cost saving- US$/ton35.8669.31- Rmb/m3 (equivalently)0.170.33Impacted volume (%)10%10%Source: Morgan Stanley Research estimatesExhibit 6:China gas distributors: Sensitivity analysis of 2019 recurring earn

35、ings (Rmb0.17/m3 cost saving on 10% of gas sales volume)2019 recurring earningsCurrent MS estimateAssmuing 10% gas volume with cost saving of Rmb0.17/m3Change (%)ENN Energy (mn Rmb)5,2135,3462.6%*China Gas (mn HK$)10,18610,3841.9%Kunlun Energy (mn Rmb)6,2456,3181.2%CR Gas (mn HK$)5,2215,3983.4%Towng

36、as China (mn HK$)1,5481,5973.2%BEH (mn HK$)8,0098,1481.7%Source: Morgan Stanley Research estimates* Recurring earnings for FY ending in March 2020.Exhibit 7:China gas distributors: Sensitivity analysis on 2019 recurring earnings (Rmb0.33/m3 cost saving on 10% of gas sales volume)2019 recurring earni

37、ngsCurrent MS estimateAssmuing 10% gas volume with cost saving of Rmb0.33/m3Change (%)ENN Energy (mn Rmb)5,2135,4714.9%*China Gas (mn HK$)10,18610,5703.8%Kunlun Energy (mn Rmb)6,2456,3872.3%CR Gas (mn HK$)5,2215,5656.6%Towngas China (mn HK$)1,5481,6436.1%BEH (mn HK$)8,0098,2793.4%Source: Morgan Stan

38、ley Research estimates* Recurring earnings for FY ending in March 2020.AssumingthereisNOdealwiththeUSonLNG,weexpectChina toshifttoothercountriesitsLNGimports.AndyforecaststheUS totakeonly10%ofincrementalorders,whileRussiaandAustralia wouldtake50%and20%,respectively.Thatwouldmeantheabove costsavingsm

39、aynotmaterialize,whichreflectsourcurrentearnings estimates.increaseinUSLNGimportsand large-scale construction of LNGIf the US and China were to strike a trade deal, we wouldIf the US and China were to strike a trade deal, we wouldexpecttheUSshareofChinasLNGimportsto jumpfrom4%in2018to40%by2025.suppo

40、rtthe Ministry of Transport is due to announce its LNG terminal construction plan, and the National Energy Administration is due to announce details of third-party access to terminals in 2H19. All would facilitate more competition in gas supply, in ourview.OilNatural gas Nuclear Renewables2018Coal20

41、173,5003,55019%bcm OilNatural gas Nuclear Renewables2018Coal20173,5003,55019%bcm 3,60024%3,65035%6%16%3,700LNG-supplylinerobustdemand growth inChinaLNGisthekeysourceofsupplysupportingChinas gas demand growth, at around 26% of supply in 2018In2018,Chinasgasdemandwas280.3bcm,up18.1%OfChinas totalenerg

42、yconsumptiongrowthin2018,weestimatethatinnaturalgasconsumptionaccounted35%ofthetotalincrease, morethandoublethatofrenewablesat16%.AccordingtotheCNPCEconomicandTechnologyResearchcitygas,industrialgasandpowergenerationareamongthedriversofgasdemandgrowthinChina,withgrowthratesof20%and23%,respectively,i

43、n2018,andaccounting36%,and 22% of total gas consumption that year. Chemical/fertilizer accountedaround10%offinaldemand.Duetocoal-to-gasefforts inChina,industrialfuelgasdemandincreasedby19.2bcmandcitydemandincreasedby15.2bcm;thesetwoaggregatedaccounted84%ofthegrowthinincrementalgasdemandin2018.Onthes

44、upplyside,domesticproductionincreasedbyonly6.7%to 157.3bcm,whilegasimportsincreasedby31.7%yoytoAmongimports,pipedgasimportswere52bcm,up21%LNGimportswere54mtons(or73.4bcm),41%growthIn2018, importedLNGaccounted26%ofgasdemandandwasantant supplement to satisfy winter space heating demand. average utiliz

45、ation rate was over 80% in Chinas LNG approaching fullutilization.Source: NBS, Shell, IHS Markit, Morgan Stanley ResearchExhibit 9:2018IndustrialResidential & TransportationCommercial2017generation2402202002018IndustrialResidential & TransportationCommercial2017generation24022020011%bcm26044%28038%7

46、%300Source: NDRC, Shell, IHS Markit, Morgan Stanley ResearchExhibit 10:2018LNG importPiped gas importDomesticproduction2017240220200bcm26%21%2802602018LNG importPiped gas importDomesticproduction2017240220200bcm26%21%28026053%300Source: NDRC, Shell, IHS Markit, Morgan Stanley ResearchLNGaccounted53%

47、ofincrementalgassupplyin 2018Regardingincrementalsupplyanddemandofnaturalgasin2018,of thesupplyincrease,LNGimportsaccounted53%ofincremental growth,followedby26%fromdomesticproductionand21%pipedgasimports.Onincrementaldemandgrowth,industrialresidential/commercial, mainly supplied by city gas distribu

48、tors, accounted 82%, while power generation and transportation accounted11%and7%,respectively,ofthegrowth.Asdomesticproductionwillcontinuetolagdomesticgasdemand, andincrementalgasdemandmainlycomesfromRussiaandCentral Asia,weexpectLNGwillcontinuetogaininmarketshare.In2018,at 54.8mtonsofLNGimports,Chi

49、nawasthesecondlargestimporter ofLNGglobally.In2018,gasstoragecapacityinChinareached16bcm, representinggrowthof3bcmbutonlyaccounting5.7%total national gas demand, below the developed countries averageof12-15%.Actualusablecapacitywasonly10bcmor3.5%total national gas demand in2018.Exhibit 11:China: Nat

50、ural gas supply-demand model (Andy Meng and Morgan Stanley O&G team)201120122013201420152016201720182019e2020e2021e2022e2023e2024e2025eSupply Volume (bcm)Supply Volume131150171190193208242280316358391432477526579Domestic Production103111121133135137152163179197216234252272294Growth rate7.2%9.3%10.0%

51、1.6%1.6%11.0%6.9%9.8%10.5%9.5%8.0%8.0%8.0%8.0%Import31425359617593121140164178201227257288By SourcePipeline Import142127313438415059697991103121137LNG Import1721252828375272819699110124136150Contracted LNG Import202028334254556870757373797880Import Growth Rate34.9%25.1%12.6%3.4%22.0%24.5%29.6%16.1%1

52、7.3%8.5%13.0%13.0%13.0%12.0%Export333333333333333Import (Converted to Mn Tons)Pipeline Import1016202325283037435058677689101LNG Import13151921202738536070738191100111Contracted LNG Import151521243140405052555454585859Demand Volume (bcm)Demand Volume134150171187193206237277315357390430472520572Reside

53、ntial26293234364147546169768493102112Chemical262831323229313234363639434852Electricity & Heat Generation2223242627354347566472798796105Other Industrial Use40485864657081100115132145160176193213Transportation141518212421242934394347525763Others67891010111415171820222527Demand Volume Growth24.1%11.6%1

54、3.9%9.6%3.4%6.5%15.3%16.7%13.7%13.3%9.5%10.0%10.0%10.0%10.0%Import/Demand23%28%31%32%32%36%39%44%44%46%46%47%48%49%50%Supply/Demand Ratio98%100%100%101%100%101%102%101%100%101%100%101%101%101%101%Source: National Bureau Of Statistics, company data, Wind, CEIC, Bloomberg, Morgan Stanley Research (E)

55、Estimates.Exhibit 12:Exhibit 13:China: LNG trucking / total gas demand (%)Truckingas%ofTruckingas%ofChinastotalgasdemand201820172016201514%12%10%8%6%4%2%0%Source: Wood Mackenzie, Morgan Stanley ResearchWhereisLNGsourcedfromChina?There are two key sources of LNG in China: 1) LNG receiving terminals,

56、and 2) LNG liquefaction plants, which convert piped gas into LNG.LNGterminalsmainlyalongthecoastofChina.end2018,therewere20LNGreceivingterminalsoperation, and 9 under construction. tionalcapacityofthe20terminalsin2018wastonsp.a.LNG liquefaction plants mainly in North Thereare190smallLNGplants(each25

57、0m tons by2035LNGterminalcapacitywillgrowfrom71mtonsin2018totonsin2020,120.6mtonsby2025,and250mtonsby2035.Asofend2018,Chinahadatotalof20approvedterminals,withLNGExhibit 21:China: LNG capacity outlook (2018-25)receivingcapacityof71mtons,andtotaldesignedberthcapacityof106mtons.In2018alone,threetermina

58、lscommissioned,including Tianjin, Zhejiang Zhoushan and Shenzhen. There are no LNG receivingterminalsinlandalongtheYangtzeRiver.AsofDec.therewereninenewLNGterminals(26.6mtons)underconstruction thatwillcommissionby2021,another13terminalsunderplanning, andinvestmentinterestexpressedafurther32terminals

59、.From nowuntilend-2021,LNGcapacitywillincreaseto92.5mtons,and 50%ofthenewbuild(21.5mtons)willbeownedbycompaniesother than the three oilmajors.InDecember2018,theMinistryofTransportationbeganapubliccon- sultationChinas2035plansLNGterminalsalongthecoastChinaandalongtheYangtzeRiver.understandduetoantici

60、pated rapidgasconsumptiongrowth(2035at650bcm),ChinaaimstoLNGterminalcapacityfromonly71mtonstodaytoover250mtons by2035.Inparticular,Chinawillprioritizeexpansionofexistingminals(berthandstoragecapacities),andaimstopromoteLNG terminals with mega size terminals (vs. a large number smallerterminals),inor