The Hong Kong and China Gas (HKG:0003) will face financial roadblocks this year due to dampened demand growth for gas in mainland China and rising investment in solar, S&P Global Ratings said in a recent release.

Property sector weakness should erode new residential gas connections in mainland China while gas costs will increase due to the Middle East conflict, S&P said.

The rating agency expects the group's sales volume to rise 1% this year, compared to 5% in 2024 and flat growth in 2025.

A prolonged rise in global oil and gas prices could strain the company's financial performance amid a narrower dollar margin, but the effect for this year is still contained due to limited exposure to volatile spot prices for liquefied natural gas, S&P said.

The rating agency believes the group will increase the pace of its expansion in distributed solar power, with a goal of 1 gigawatt of new capacity under management in 2026.

Strong earnings from Hong Kong and a conservative financial policy partly offset the risks, S&P said.

Total capital expenditure should be stable in 2026 at about HK$6 billion for the company and HK$2 billion to HK$3 billion for the Chinese subsidiary Towngas Smart Energy.