Shares of China gas utilities have outperformed HSCEI by ~30% YTD on the recovery of gas demand in 1H21. The market has priced in strong interim results for ENN Energy (+46% vs HSCEI’s -7%), but overlooked China Resources Gas’s growth potential (20% earnings growth in 2021E). The stock now trades at a 40% discount to ENN, which we think is unjustified given their similar growth profiles. We recommend accumulating shares ahead of results. We downgrade China Gas to Neutral on weaker earnings outlook as we have concerns on its new business segments, LPG micro-grid and urban gas heating, and cash flow outlook. We don’t think it can achieve its HK$15bn net profit target in FY23. We prefer ENN Natural Gas over ENN Energy on 1) lower valuation (15x 22E P/E vs ENN’s 19x); 2) closer alignment of interests with major shareholders; and 3) potential asset injection.