BofA Securities has released a research report forecasting that China's natural gas demand growth will slow to 2%-3% annually from 2025 to 2027, compared to a 9% compound annual growth rate over the past decade. The slowdown is attributed to weak industrial demand, coal remaining a more economical fuel, and the higher levelized cost of energy (LCOE) for gas-fired power generation, making "coal-to-renewables" more attractive.

The firm maintains a "Buy" rating on PetroChina (00857), citing its relatively stable natural gas average selling price and narrowing losses on imported gas due to lower oil prices. The target price for PetroChina's H-shares has been raised by 12% to HK$9.5, while its A-shares (601857.SH) target price has been increased by 10% to RMB 11.

However, BofA notes that progress in "anti-involution" measures in China's petrochemical industry remains limited, with little improvement expected in fundamentals before Q2 2025.

Meanwhile, Kunlun Energy (00135) has been downgraded from "Neutral" to "Underperform" due to its heavy reliance on industrial clients, which account for 75% of its retail gas sales. With costs largely unchanged, the company must lower prices to retain price-sensitive customers, such as glass manufacturers. Additionally, dividend growth potential is seen as limited, as Kunlun Energy has already met its 45% payout guidance and needs to reserve funds for acquisitions. Its target price has been cut by 16% to HK$7.