Two-wheel drive, Tianlun Gas (01600) achieved dual-line growth in gas sales and value-added, and the promise of deterministic dividends ushered in a revaluation

Since April, the stock price of Tianlun Gas (01600) has shown a trend of upward trend, leading the way in the gas industry sector. At the same time, the biggest increase in the gas stock index also reached 17.33%. The profit effect of the entire gas sector in the first half of the year was impressive. It is expected that the gas sector will continue to rise in the second half of the year.

However, behind the impressive performance of the stock price, there is a direct relationship with the steady, moderate and positive fundamentals of Tianlun Gas. This is clearly reflected in its latest performance.

On August 28, Tianlun Gas announced its interim results for the first half of 2025. According to the data, the company's revenue during the reporting period was 4.242 billion yuan (RMB, same below), an increase of 10.6% over the previous year.

Meanwhile, the board of directors of Tianlun Gas announced the payment of an interim dividend of 4.6 points per share, corresponding to a dividend rate of 35% on core profits, demonstrating the firm determination of the company to continue to return to investors.

As a high-dividend asset with stable fundamentals, it is logical that Tianlun Gas is favored by market capital. With the steady growth of the company's future performance and the acceleration of capital allocation to high-dividend assets, Tianlun Gas's stock price is expected to rise to a higher level.

The gas sales business is playing a steady role as a “ballast stone”, and the rapid growth of value-added services has become a highlight

Looking at the macro level of the industry, the natural gas industry in the first half of 2025 is still a situation where both opportunities and challenges coexist. The opportunities are reflected in continuous favorable policies. Not only does the country continue to step up efforts in the aging and upgrading of urban gas pipelines, investing a total of 800 billion dollars for the renovation of underground pipelines such as gas and water supply throughout the year, but the policy has also accelerated the market-based reform of natural gas prices, actively promoted digital and intelligent gas construction, included the entire natural gas supply, marketing, storage and transportation chain within the scope of smart supervision, and accelerated the development process of smart gas.

But the challenges are also clear. In terms of production and marketing, the natural gas industry showed the characteristics of “relaxed supply and slowing demand” during the reporting period. According to the data, in the first half of 2025, the natural gas supply reached 211.6 billion cubic meters. After reducing losses and light hydrocarbon recycling, the available market volume is 205.8 billion cubic meters, rich in resources of 1.7 billion cubic meters, and LNG terminals actively carry out inventory removal operations.

Meanwhile, the slump on the demand side is putting pressure on the market. According to data from the National Development and Reform Commission, China's apparent natural gas consumption in the first half of 2025 was 211.97 billion cubic meters, down 0.9% year on year, and the growth rate fell 4.7 percentage points from the same period in 2024. This is mainly due to factors such as the warm winter effect and weakening industrial demand due to the Sino-US tariff policy.

It can be seen from this that the development of the natural gas industry in the first half of 2025 was not easy, but Tianlun Gas still achieved steady business growth. Looking closely, Tianlun Gas's total revenue increased 10.6% to 4.242 billion yuan during the reporting period, mainly due to two-wheel drive in the gas sales business and value-added services, both of which achieved rapid growth.

Tianlun Gas's gas sales business mainly includes two major segments: retail and wholesale. The increase in gas sales revenue of 12.8% to 3.64 billion yuan during the reporting period was due to a 15.3% increase in the company's total gas sales volume to 1,268 billion cubic meters. The increase in gas sales led to an increase in gas sales revenue.

Among them, in terms of retail gas volume, Tianlun Gas Deep Chemical commercial user insurance and energy use services, stabilizes core customer needs, digs deep into the stock market, and expands new users through policies such as “oil to gas” and “bottle conversion”. The total number of pipeline gas users increased by 3.6% to 5.933 million during the reporting period. Among them, urban gas residential users increased by 5.4% and the number of industrial and commercial users increased by 9.1%. Continued growth in the number of users kept retail gas sales at a stable level of 880 million cubic meters, so the revenue from the retail business remained flat year-on-year during the period.

In terms of wholesale gas volume, in order to meet peak demand during the heating season and ensure a stable supply of gas sources, Tianlun Gas accurately assessed user demand during the reporting period to accelerate market development. The company vigorously promoted the energy trade business, bringing the wholesale gas sales volume to 388 million square meters, an increase of 74.7% over the previous year, which became the main driving force driving the revenue growth of the gas sales business.

It is worth noting that Tianlun Gas's gas source optimization work achieved new results during the reporting period. By developing multi-source gas sources, constructing a multi-source gas supply pattern, and achieving intelligent operation of the pipeline network through technological upgrades, the company effectively reduced gas transmission losses and promoted gas network interconnection. This increased the comprehensive gas sales price difference of Tianlun Gas by 1 point during the reporting period, so retail gas sales profits remained steady and continued to play a key role as a “ballast stone” of performance.

As a new growth pole for Tianlun Gas, value-added services achieved rapid growth during the reporting period. In the first half of the year, Tianlun Gas actively explored new value-added business areas. By building a specialized value-added business marketing system, deeply integrating gas safety and personalized beauty services, and actively using old and improved business scenarios, Tianlun Gas promoted diversified service methods such as increasing the average unit price per insurer and the number of users covered, thereby significantly increasing user stickiness and conversion rate, and opening up a new path of sustainable development.

During the reporting period, Tianlun Gas's value-added service revenue reached 231 million yuan, a year-on-year increase of 27.6%, accounting for 5.4% of the company's total revenue. Among them, the revenue of the American decoration business increased by 44% to 190 million yuan, and the growth momentum is very strong. This indicates that Tianlun Gas has fully grasped the market opportunities of old and renovated through the American decoration business. This also shows from the side that Tianlun Gas's development strategy to create a new growth curve with value-added business has begun to show results at an accelerated pace.

The supply and demand pattern is expected to improve in the second half of the year, and the business environment will improve

Under the challenging industry environment in the first half of the year, Tianlun Gas still achieved steady, moderate and positive results, so in the second half of the year, it is expected to accelerate growth. This is because the supply and demand pattern of the natural gas industry is expected to be further improved in the second half of the year, and the favorable price mechanism is expected to accelerate.

Looking at the demand side, under the combined effects of multi-dimensional factors, the apparent growth rate of natural gas consumption may resume growth in the second half of the year, and downstream demand may pick up significantly compared to the first half of the year.

First, the critical importance of 2025, as the final year of the “14th Five-Year Plan” is self-evident. The government has sufficient momentum to guarantee steady economic development in the second half of the year; moreover, the Federal Reserve is likely to start cutting interest rates in September, which will give the country room to further stimulate economic development, thereby driving the recovery of industrial production, thereby increasing the demand for natural gas in the industrial sector.

Second, after entering the second half of the year, the impact of the tariff policy will gradually weaken, and coastal industrial gas consumption affected by tariffs will also pick up marginally in the first half of the year, which is expected to boost the demand side;

Furthermore, the increase in demand for power generation during peak summer will drive up the number of hours used by gas units. In July, China's electricity consumption load and electricity consumption both hit historical peaks, and during the month, the electricity consumption load broke the historical record 4 times, and entered a high level of operation in August. This will directly drive up demand for peak-switched power supplies. Natural gas is a high-quality peak-shifting energy source, and the recovery in the number of hours used by gas units will surely increase natural gas consumption.

On the supply side, thanks to the continued weakening of the impact of tariff policies, international natural gas trade may improve, and domestic LNG imports may increase in stages, which is expected to drive a recovery in total natural gas imports in the second half of the year. Meanwhile, domestic natural gas production may continue to grow steadily in the first half of the year, which will allow the supply side to maintain a relaxed trend.

With significant improvements on both the supply and demand sides, the natural gas industry's favorable price mechanism is expected to accelerate, thus driving the gas companies' gross margin to be repaired further. From a policy perspective, the “Guiding Opinions on the Provincial Pipeline Transportation Price Mechanism” was issued in August 2025. The “Opinion” reduces the intermediate price increase process, reduces terminal costs (estimated reduction of 0.05-0.12 yuan/square meter), and creates space for smooth prices. As international gas prices fall and domestic production increases, the cost pressure on urban combustion enterprises will be alleviated. Furthermore, the current “anti-domestic volume” breakout of deflation is already the core focus of policy attention, which also provides a favorable environment for the acceleration of the favorable price mechanism.

According to information, many places have now accelerated the establishment of dynamic linkages between terminal sales prices and procurement costs. Gas consumption for non-residents is adjusted on a monthly basis, and gas consumption for residents is adjusted at most once a year. This is a reflection of the accelerated promotion of the favorable price mechanism, which is more beneficial to gas companies with obvious advantages in the industrial and commercial fields.

Location advantages are highlighted, and industrial and commercial user business is expected to achieve resilient growth

In the process of accelerating the favorable price mechanism in the gas industry, Tianlun Gas has a unique customer structure and location advantage compared with other gas companies. Looking at the customer structure, in 2024, Tianlun Gas's gas sales to residential users, industrial and commercial users, transportation users, and wholesale businesses will account for 24.1%, 42.8%, 2.5%, and 30.6% of total gas sales, respectively. It can be seen from this that the industrial and commercial market is a strong area for Tianlun Gas, and it is easier to benefit from the acceleration of the favorable price mechanism.

From a location perspective, Tianlun Gas's urban combustion and industrial and commercial user projects are mainly located in mainland China such as Henan, Jilin, Yunnan, Shandong, and Gansu. Industrial and commercial users are guided by domestic demand, so

Compared to coastal export-oriented industries, commercial users of Tianlun Gas are less affected by international trade frictions. This means that in the context of the current complex and changing international situation, compared with other gas companies, Tianlun Gas's location advantage will make its business operations more stable.

More than that, Tianlun Gas's location advantage will benefit from the shift of the eastern industry to the Midwest region. From 2018 to 2023, the number of production sites transferred from the east to the Midwest reached 137, far exceeding 84 in overseas markets, which enabled Tianlun Gas to benefit from this. Furthermore, the central and western regions have sufficient gas sources, which helps Tianlun Gas to better increase gross margin.

Earlier, China Securities International released a research report stating that Tianlun Gas's commercial customers have a location advantage. In the future, as the Midwest undertakes the trend of transferring industries to the east, the company has great potential for gas sales growth in Baiyin, Jingyuan, etc., and sufficient gas sources in Gansu will benefit the company's gross profit margin in Baiyin and Jingyuan. In the future, Gansu Company is expected to become a major growth pole in the company's gas sales business.

Based on the company's advantages in customer structure and location and the obvious improvement in the industry situation in the second half of the year, Tianlun Gas has made detailed plans on the business layout for the second half of the year in financial reports to ensure the high-quality completion of development goals, and to bring a successful conclusion to 2025, the year the “14th Five-Year Plan” ends.

It is foreseeable that as Tianlun Gas continues to consolidate the basic market of the urban combustion business and continuously innovate diversified service scenarios for value-added services, the company's fundamentals will be further optimized. It is expected to achieve further growth in the second half of the year. Combined with the company's consistent high dividend style, Tianlun Gas has become a high dividend asset with stable, moderate and positive fundamentals.