Investment Rating - The report maintains an "Overweight" rating for Kunlun Energy with a target price of HKD 8.45 [2] Core Views - Kunlun Energy's 2023 performance met expectations with stable retail price spreads and a focus on shareholder returns through a three-year dividend plan [2] - The company aims for growth in 2024 with rapid expansion in value-added services [2] - Kunlun Energy's retail gas price spread met expectations at RMB 0.501 per cubic meter, with LNG terminal utilization rate significantly improving to 90.6% in 2023 [2] - The company announced a three-year dividend plan, aiming to increase the payout ratio from 40% to 45% by 2025 [2] - Kunlun Energy's 2024 operational targets include a 10% YoY increase in natural gas retail volume and a 7% YoY increase in LNG plant processing volume [2] - Value-added services showed strong growth, with e-commerce platform sales reaching RMB 74.65 million, a 366% YoY increase, and gas appliance sales reaching 45,900 units, a 58.8% YoY increase [2] Financial Summary - Kunlun Energy's 2023 revenue was RMB 177.35 billion, a 3.1% YoY increase, with net profit attributable to shareholders of RMB 5.682 billion, an 8.7% YoY increase [3] - Natural gas sales revenue reached RMB 140.6 billion, a 6.6% YoY increase, with pre-tax profit of RMB 8.32 billion, a 6.3% YoY increase [3] - LNG business revenue was RMB 9.04 billion, a 5.9% YoY increase, with pre-tax profit of RMB 3.65 billion, a 15.6% YoY increase [3] - The company's 2024-2026 EPS forecasts were adjusted to RMB 0.74, RMB 0.78, and RMB 0.85, respectively [3] Comparable Company Valuation - Kunlun Energy's 2024E PE ratio is 8.46x, lower than the industry average of 9.25x [4] - The company's 2024E EPS is forecasted at RMB 0.74, with a target price of HKD 8.45 based on a 10.5x PE ratio [4]

申万宏源研究 上海市南京东路99号 | +86 21 2329 7818 www.swsresearch.com 简单金融 成就梦想 公共事业 | 公司研究 工业气量保持高增，毛差仍具修复空间 2024年3月26日 昆仑能源 (00135:HK) 买入 昆仑能源发布2023年业绩报告，2023年公司实现营业收入1773.54亿元，同比增长3.1%； 归属于上市公司股东的净利润为 56.82 亿元，同比增加8.68%；归母核心利润61.44亿元， 维持评级 同比下跌 2.18%。公司2023 年分红率为 40%，每股派息0.2838元/股，根据3 月26 日收 盘价计算股息率为4.55%。公司业绩表现略低于我们的预期，主要受下半年公司受员工激励、 资产减值、原油销售价格下降及零售气顺价进度慢于预期等因素叠加所致。 市场数据：2024年3月26日 工业气表现强劲引领天然气销量稳健增长，顺价进度较缓拖累下半年业绩。2023全年公司天 收盘价（港币） 6.79 然气总销售量492.85亿m³，同比增加9.6%，零售气量303.11亿m³，同比增加9.2%。其 恒生中国企业指数 5825.42 中占零售气量比重达69% ...

Investment Rating - The investment rating for the company is "Buy" with a target price not specified, maintaining the rating for the next six months [1][6]. Core Viewpoints - The company has shown a steady increase in revenue and profit, with a 3.1% year-on-year increase in revenue to RMB 177.35 billion and an 8.7% increase in net profit to RMB 5.68 billion in 2023 [2]. - The company has implemented a three-year dividend distribution plan, increasing the payout ratio from 35% to 40% in 2023, with a target to reach 45% by the end of 2025 [5]. - Natural gas sales have seen significant growth, with a total sales volume of 49.285 billion cubic meters, a 9.6% increase year-on-year, outperforming the industry average [3]. Summary by Sections Basic Data - Total shares outstanding: 8,658.80 million shares - Total market capitalization: 58,793.26 million HKD - Net asset value per share: 8.09 HKD - Debt-to-asset ratio: 40.23% - Price range over the past year: 7.75 HKD (high) / 5.45 HKD (low) [1]. Financial Performance - The company achieved a net profit margin of 5.22% in 2023, up from 4.77% in 2022, and a return on equity of 11.12%, compared to 10.48% in the previous year [2]. - The company’s earnings per share (EPS) for 2024, 2025, and 2026 are projected to be 0.75, 0.81, and 0.88 RMB respectively, with corresponding price-to-earnings (PE) ratios of 8.2, 7.6, and 7 times [6]. Natural Gas Sales - The company added 12 new city gas projects, bringing the total to 280 projects, with retail gas sales reaching 30.312 billion cubic meters, a 9.2% increase year-on-year [3]. - The industrial and commercial gas sales volumes were 21.045 billion cubic meters and 2.945 billion cubic meters, reflecting year-on-year growth of 15.5% and 11.1% respectively [3]. LNG Processing and Storage - The LNG processing and storage segment generated revenue of RMB 9.042 billion, a 5.9% increase year-on-year, with an average load factor of 90.6% for the LNG receiving stations [4]. - The LNG plants turned a profit with a pre-tax profit of RMB 0.02 billion, achieving a processing volume of 2.827 billion cubic meters [4]. Dividend Policy - The company has announced a three-year dividend distribution plan, aiming to increase the payout ratio progressively, with a capital expenditure of RMB 5.348 billion in 2023, a decrease of 16.66% year-on-year [5].

Natural Gas Sales Performance - Natural gas total sales volume increased by 9.55% to 49,285 million cubic meters in 2023 from 44,988 million cubic meters in 2022[1] - Natural gas retail sales volume grew by 9.19% to 30,312 million cubic meters in 2023 from 27,762 million cubic meters in 2022[1] - Revenue from natural gas sales increased to RMB 140,600 million in 2023, up from RMB 131,892 million in 2022[16] - Natural gas sales segment contributed the highest revenue at RMB 142.887 billion in 2023, an increase from RMB 133.987 billion in 2022[12][13] - Natural gas sales volume reached 49.285 billion cubic meters, a year-on-year increase of 9.6%[31] - Retail gas volume was 30.312 billion cubic meters, up 9.2% year-on-year, with cumulative users reaching 15.604 million, a 6.1% increase[31] Financial Performance - Revenue increased by 3.15% to RMB 177,354 million in 2023 from RMB 171,944 million in 2022[1] - Profit before tax rose by 10.54% to RMB 12,593 million in 2023 from RMB 11,392 million in 2022[1] - Net profit attributable to shareholders increased by 8.68% to RMB 5,682 million in 2023 from RMB 5,228 million in 2022[1] - EBITDA grew by 8.31% to RMB 17,675 million in 2023 from RMB 16,319 million in 2022[1] - Basic earnings per share increased by 8.68% to RMB 65.62 in 2023 from RMB 60.38 in 2022[1] - Total revenue for 2023 reached RMB 182.861 billion, with external customer revenue at RMB 177.354 billion, up from RMB 178.404 billion and RMB 171.944 billion respectively in 2022[12][13] - Segment performance (excluding tax and share of profits/losses from associates and joint ventures) for 2023 was RMB 11.548 billion, up from RMB 10.400 billion in 2022[12][13] - Profit before tax for 2023 was RMB 12.593 billion, compared to RMB 11.392 billion in 2022[12][13] - Revenue for the year reached RMB 177.354 billion, an increase of RMB 5.410 billion or 3.1% year-on-year[30] - Net profit attributable to shareholders was RMB 5.682 billion, up RMB 454 million or 8.7% year-on-year[30] - The company achieved a pre-tax profit of approximately RMB 12,593 million, a 10.5% increase compared to the previous year's RMB 11,392 million[39] - Revenue for the year was approximately RMB 177,354 million, a 3.1% increase from the previous year's RMB 171,944 million, driven by higher natural gas sales volume and prices[40] - The company's net profit attributable to shareholders was approximately RMB 5,682 million, an 8.7% increase from the previous year's RMB 5,228 million[39] - The company's core profit attributable to shareholders was RMB 6,144 million, a 2.2% decrease from the previous year's RMB 6,281 million[39] Assets and Liabilities - Total assets increased to RMB 143,519 million in 2023 from RMB 138,892 million in 2022[5] - Total equity rose to RMB 85,783 million in 2023 from RMB 80,702 million in 2022[5] - Net current assets increased to RMB 22,615 million in 2023 from RMB 16,955 million in 2022[6] - Total assets increased to RMB 143.519 billion in 2023 from RMB 138.892 billion in 2022[14] - The company's non-current segment assets increased by RMB 4.803 billion in 2023, compared to RMB 6.230 billion in 2022[12][13] - Accounts receivable (net of impairment) decreased to RMB 1,977 million in 2023 from RMB 2,887 million in 2022[25] - Contract liabilities increased to RMB 13,596 million in 2023 from RMB 12,621 million in 2022[26] - Accounts payable decreased to RMB 2,790 million in 2023 from RMB 3,112 million in 2022[28] - The company's total assets as of December 31, 2023, were approximately RMB 143,519 million, a 3.3% increase from the previous year's RMB 138,892 million[45] - The company's capital-to-liability ratio decreased to 22.71% from 24.26% in the previous year[46] - Total assets pledged as collateral for bank loans amounted to RMB 818 million as of December 31, 2023, down from RMB 958 million in 2022[47] LNG and LPG Sales Performance - The LNG processing and storage segment saw a decrease in revenue from RMB 12.810 billion in 2022 to RMB 12.167 billion in 2023[12][13] - LNG processing and storage service revenue rose to RMB 9,042 million in 2023, compared to RMB 8,542 million in 2022[16] - LPG sales revenue decreased to RMB 26,801 million in 2023 from RMB 29,224 million in 2022[16] - LPG sales volume was 5.7677 million tons, up 2.7% year-on-year, but revenue decreased by 8.3% to RMB 26.801 billion[32] - LNG processing and storage business revenue increased by 5.9% to RMB 9.042 billion, with LNG gasification and loading volume reaching 16.326 billion cubic meters, up 3.1% year-on-year[32] Exploration and Production Performance - Exploration and production segment revenue dropped significantly from RMB 2.286 billion in 2022 to RMB 911 million in 2023[12][13] - Crude oil sales revenue was RMB 2,286 million in 2023[16] - Crude oil equity sales volume decreased by 16.7% to 9.21 million barrels, with average realized crude oil sales price dropping to $66.9 per barrel[32] Dividend and Shareholder Information - The proposed final dividend for 2023 is RMB 2,457 million, compared to RMB 2,198 million for 2022[23] - The company's basic earnings per share (EPS) for 2023 was RMB 5,682 million, up from RMB 5,228 million in 2022[22] - The proposed final dividend for 2023 is RMB 28.38 per share, totaling approximately RMB 2,457 million, with a payout ratio of 40.00%[55] - The company plans to gradually increase its annual dividend payout ratio, aiming to reach 45% of the annual profit attributable to shareholders by the fiscal year ending December 31, 2025[50] - The company has a dividend policy that ensures a minimum annual dividend payout of 25% of the consolidated annual profit attributable to shareholders, subject to certain considerations[49] - Shareholders choosing to receive the 2023 final dividend in RMB must ensure they have an appropriate bank account to cash RMB checks, and no guarantee is provided regarding fees, delays, or the ability to cash RMB checks outside Hong Kong[56] - Beneficial owners of shares registered in the name of a nominee, trustee, or other registered holder must make appropriate arrangements to receive the 2023 final dividend in RMB, or they will receive it in HKD[56] - Shareholders must return share transfer documents by June 4, 2024, to be eligible to receive the 2023 final dividend[57] - Share transfer registration will be suspended from June 5 to June 6, 2024, for determining eligibility to receive the 2023 final dividend[57] Corporate Governance and Compliance - The company adopted revised accounting standards, including HKFRS 17 for insurance contracts, with no material impact on financial statements[9] - The company is evaluating the potential impact of new accounting standards set to take effect from 2024 onwards, currently expecting no significant impact[10] - The company maintains high corporate governance standards and has complied with all code provisions of the Corporate Governance Code[52] - The audit committee reviewed and confirmed the annual results for the year ended December 31, 2023[53] - The company has no significant acquisitions or disposals during the year[47] - The company has no significant contingent liabilities that would materially affect its financial position or performance[48] - The company has not purchased, sold, or redeemed any of its shares during the year[51] Operational and Strategic Developments - The company added 12 new city gas projects and achieved a retail gas volume increase of 9.2% year-on-year[33] - The company secured new energy installation indicators totaling 4.302 million kilowatts in regions such as Xinjiang, Hebei, and Shandong[33] - Methane emission intensity decreased by 32% compared to 2020, and CO2 emission intensity decreased by 6%[34] - The company aims to achieve a "multi-energy integration" and "new energy" installed capacity of 1 million kilowatts by 2025[37] Employee and Cost Management - The company's procurement, services, and other costs were approximately RMB 151,091 million, a 3.4% increase from the previous year's RMB 146,077 million, mainly due to increased natural gas procurement[41] - The company's employee compensation costs were approximately RMB 5,970 million, a 3.8% increase from the previous year's RMB 5,749 million[42] - The company employed 27,138 employees globally as of December 31, 2023, a decrease from 30,916 in 2022[47] Interest and Financing - Interest expenses on bank loans increased to RMB 566 million in 2023 from RMB 541 million in 2022[17] - The company's interest expense for the year was approximately RMB 960 million, a 6.8% increase from the previous year's RMB 899 million[44] Shareholder Meetings and Reporting - The 2024 Annual General Meeting (AGM) will be held on May 30, 2024, and the notice of the AGM will be sent to shareholders along with the 2023 Annual Report[56] - Shareholders must return share transfer documents by May 24, 2024, to be eligible to attend and vote at the 2024 AGM[56] - Share transfer registration will be suspended from May 27 to May 30, 2024, for determining eligibility to attend and vote at the 2024 AGM[56] - The 2023 Annual Report will be published on the company's website and the Hong Kong Stock Exchange website in due course[57]

Investment Rating - The report initiates coverage with an "OUTPERFORM" rating for Kunlun Energy, with a target price of HKD 7.96 per share [3][23][86] Core Insights - Kunlun Energy is one of the largest domestic natural gas terminal utilization and LPG sales enterprises in China, primarily engaged in urban gas, natural gas pipelines, LNG and CNG terminals, natural gas power generation, LNG processing and storage, and LPG sales [6][89] - The company has achieved steady revenue growth, reaching RMB 87.072 billion in H1 2023, a year-on-year increase of 3.8%, with a pre-tax profit of RMB 6.791 billion, reflecting an 8.2% growth [7][90] - Natural gas sales account for 79.1% of total revenue, with a year-on-year growth of 8.5%, while LPG sales contribute 15.8% [8][90] Company Overview - Kunlun Energy, established in 1994 and listed on the Hong Kong Stock Exchange, has shifted its focus from oil exploration to domestic natural gas sales and comprehensive utilization, emphasizing LNG business development [6][69] - The company operates across 31 provinces in China, with an annual natural gas sales volume of 20 billion cubic meters and an LNG receiving capacity of 19 million tons [6][89] Financial Performance Review - The revenue breakdown for H1 2023 includes natural gas sales at RMB 68.896 billion, LPG sales at RMB 13.804 billion, LNG processing and storage at RMB 3.764 billion, and exploration and production at RMB 0.608 billion [8][90] - The company has maintained a stable cash flow, with a current ratio around 1 and a net debt-to-equity ratio around 0.7 [10][73] Business Segment Analysis - Natural gas sales volume grew by 9.0% year-on-year in H1 2023, reaching 23.916 billion cubic meters, with retail gas volume increasing by 9.5% [10][91] - The natural gas price differential was RMB 0.495 per cubic meter, showing a stable upward trend [13][91] - LPG sales reached 293.69 million tons in H1 2023, with a year-on-year increase of 5.17% [15][78] Emerging Business Developments - The company is focusing on green development and has entered the field of wind-solar-thermal integrated power generation, with 3 million kilowatts of new energy indicators obtained [22][92] - Kunlun Energy is diversifying its energy offerings to meet various user needs, promoting the operation of 12 projects and the orderly development of 24 projects [22][92] Profit Forecast and Valuation - The forecast for main operating revenue for FY23-25 is RMB 182.16 billion, RMB 195.07 billion, and RMB 207.95 billion, with corresponding net profits of RMB 6.11 billion, RMB 6.46 billion, and RMB 6.49 billion [23][93]

Financial Performance - The Group recorded natural gas sales volume of 23,916 million cubic metres, representing a year-on-year increase of 9.04%[9] - Revenue reached RMB 87,072 million, an increase of RMB 3,208 million or 3.83% year-on-year[9] - Profit attributable to shareholders was RMB 3,222 million, reflecting a year-on-year increase of 4.61%[6] - The Group's net profit increased by 12.00% year-on-year to RMB 5,041 million, significantly improving operational efficiency[10] - Profit before income tax was RMB 6,791 million, reflecting an increase of RMB 516 million or 8.22% year-on-year[164] - Other net gains for the period amounted to approximately RMB 239 million, compared to a net loss of RMB 76 million in the same period of 2022, mainly due to increased government subsidies and reduced exchange losses[34] - Employee compensation costs were approximately RMB 2,628 million, a decrease of 7.33% from RMB 2,836 million in the same period last year, mainly due to a reduction in headcount[36] - Interest expenses for the period were approximately RMB 436 million, a decrease of 5.83% compared to RMB 463 million for the same period last year[41] Sales and User Growth - The total number of users exceeded 15 million, with retail sales volume increasing to 14,787 million cubic metres, a year-on-year increase of 9.50%[10] - The company added 506,900 new users, including 492,600 residential and 14,300 industrial and commercial users, bringing the cumulative total to 15.2202 million[17] - The company achieved natural gas sales volume of 23,916 million cubic meters, a year-on-year increase of 9.04%, with retail gas sales volume at 14,787 million cubic meters, up 9.50%[17] Business Segments and Revenue Sources - Revenue from the natural gas sales business reached RMB 69,859 million, representing an 8.89% year-on-year increase, while profit before income tax was RMB 4,887 million, up 26.08%[18] - LNG sales from self-operation, processing, and gasification totaled 8,432 million cubic metres, representing a decrease of 8.11%[7] - LPG sales volume was 2.9369 million tonnes, a year-on-year increase of 5.17%, but revenue decreased by 7.99% to RMB 13,855 million[20] - LNG gasification and entrucking volume at Jingtang and Jiangsu terminals totaled 7,336 million cubic meters, down 6.73% year-on-year, with revenue from LNG processing and terminal business at RMB 5,188 million, a decrease of 14.42%[22][23] Strategic Initiatives and Future Outlook - The Group launched its first customized insurance product, with sales on platforms increasing by 17.8 times year-on-year[14] - The Group acquired 3 million kilowatts of new energy indicators and put eight new energy projects into operation[14] - The company is focusing on green development, acquiring 3 million kilowatts of new energy indicators and launching 8 new energy projects[16] - The Group aims for approximately 7% year-on-year growth in domestic natural gas consumption in the second half of the year, despite a complex business environment[182] - The company plans to optimize market structure and profitability while focusing on high-end markets and key infrastructure projects like the Fujian LNG terminal[26] Cost Management and Efficiency - Purchases, services, and others totaled approximately RMB 73,949 million, an increase of 4.53% from RMB 70,745 million for the same period last year, attributed to rising procurement costs for natural gas[35] - Other selling, general and administrative expenses were approximately RMB 1,373 million, a decrease of 21.00% from RMB 1,738 million for the same period last year, due to strict cost control measures[41] - Depreciation, depletion, and amortisation for the period was approximately RMB 2,896 million, representing an increase of 19.18% compared to RMB 2,430 million for the same period last year[41] Corporate Governance and Compliance - The Company has maintained compliance with all code provisions in the Corporate Governance Code during the Period[56] - The Audit Committee has reviewed the unaudited interim financial report for the Period, which was also reviewed by PricewaterhouseCoopers[57] - The Company adopted new bye-laws on May 31, 2023, to comply with Core Shareholder Protection Standards[54] Shareholder Information - The Board of Directors resolved not to recommend the payment of any interim dividend for the period ended 30 June 2023[52] - The final dividend for 2022 was RMB 2,198 million, reflecting the company's commitment to returning value to shareholders[85] - The company did not grant any unexercised share options to directors or employees during the reporting period[69]

Financial Performance - Revenue for the six months ended June 30, 2023, was RMB 87,072 million, reflecting a 3.83% increase from RMB 83,864 million in 2022[2] - Profit attributable to shareholders rose by 4.61% to RMB 3,222 million from RMB 3,080 million in the previous year[3] - EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) increased by 11.10% to RMB 9,729 million compared to RMB 8,757 million in 2022[1] - The company reported a total comprehensive income of RMB 5,115 million, up from RMB 4,410 million in the previous year[2] - Total revenue for the six months ended June 30, 2023, was RMB 89,510 million, an increase from RMB 86,460 million in the same period of 2022, representing a growth of approximately 3%[11] - Profit before tax for the period was RMB 6,201 million, compared to RMB 5,696 million in the previous year, indicating an increase of about 8.9%[12] - The company reported a net profit of RMB 5,041 million for the six months ended June 30, 2023, compared to RMB 4,501 million in the same period of 2022, marking an increase of approximately 12%[12] - Profit before income tax was RMB 6.791 billion, an increase of RMB 516 million or 8.22% year-on-year[25] Sales and Volume - Total natural gas sales volume increased by 9.04% to 23,916 million cubic meters compared to 21,933 million cubic meters in 2022[1] - The natural gas sales segment generated revenue of RMB 69,859 million, while LPG sales contributed RMB 13,855 million, LNG processing and storage brought in RMB 5,188 million, and exploration and production accounted for RMB 608 million[11] - The total number of users exceeded 15 million, with retail gas sales increasing to 14.787 billion cubic meters, a year-on-year increase of 9.50 percentage points in retail proportion[26] - Natural gas sales volume reached 23.916 billion cubic meters, a year-on-year increase of 9.04%, with retail gas volume at 14.787 billion cubic meters, up 9.50%[28] - LPG sales volume increased by 5.17% to 2.937 million tons, but revenue decreased by 7.99% to RMB 13.855 billion[29] - LNG processing and storage revenue decreased by 14.42% to RMB 5.188 billion, with profit before income tax down 19.94% to RMB 1.341 billion[31] - Crude oil sales dropped by 13.73% to 4.84 million barrels, with revenue falling 48.61% to RMB 608 million due to lower average selling prices[32] Assets and Liabilities - The total assets as of June 30, 2023, were RMB 138,537 million, compared to RMB 138,892 million at the end of 2022[4] - Current assets net value increased to RMB 19,156 million from RMB 16,955 million in the previous year[5] - Total liabilities decreased slightly to RMB 56,478 million from RMB 58,190 million[5] - Total assets for the segments as of June 30, 2023, amounted to RMB 122,918 million, compared to RMB 123,476 million as of June 30, 2022[11] - The capital debt ratio decreased to 23.68% as of June 30, 2023, down from 24.26% as of December 31, 2022, representing a reduction of 0.58 percentage points[43] - Total borrowings as of June 30, 2023, were RMB 24,670 million, with RMB 5,618 million due within one year[44] - The value of properties, plants, and equipment pledged as collateral for loans was RMB 755 million as of June 30, 2023, down from RMB 958 million as of December 31, 2022[45] Operational Highlights - The company has made significant progress in strategic infrastructure projects, including the completion of the joint venture registration for the Fujian LNG receiving station[27] - The company has acquired 3 million kilowatts of new energy indicators and has launched 8 new energy projects[27] - The company expects domestic natural gas consumption to grow by approximately 7% year-on-year in the second half of the year[33] - The company plans to enhance safety standards and improve digital management systems to strengthen operational safety[34] - Focus will be on expanding high-end markets and key infrastructure projects, particularly in Fujian LNG receiving station[34] - The company aims to accelerate the development of renewable energy projects in Xinjiang and Shandong, enhancing its role in the new energy system[34] Employee and Governance - Employee compensation costs decreased by 7.33% to RMB 2.628 billion due to a reduction in workforce[38] - The company employed 28,139 employees globally as of June 30, 2023, a decrease from 30,655 employees in the same period last year[46] - The company did not recognize any revenue from a single customer that exceeded 10% of total revenue for the periods reported[13] - The company adopted new articles of association on May 31, 2023, to comply with the core shareholder protection levels as per the listing rules[48] - The board decided not to recommend any interim dividend for the period ending June 30, 2023[47] Future Outlook - The company plans to implement several accounting standard revisions effective January 1, 2024, including classifications of liabilities and cash flow statements, which are anticipated to have no significant impact on future transactions[9] - The detailed interim financial results will be published by September 15, 2023, on the stock exchange and the company's website[52]

Financial Performance and Costs - Purchases, services, and others increased by 26.0% to RMB146,077 million, driven by higher natural gas purchase volume and prices[55] - Employee compensation costs rose by 4.8% to RMB5,749 million due to business growth and economic inflation[55] - Depreciation, depletion, and amortization increased by 5.7% to RMB4,887 million, remaining stable throughout the year[55] - Other selling, general, and administrative expenses grew by 10.9% to RMB3,770 million, mainly due to increased royalty expenses and natural gas business expansion[55] - Interest expenses increased by 14.8% to RMB899 million, while total interest expenses decreased by 7.5% to RMB968 million due to improved weighted average interest rates[55] - Share of profits less losses of associates decreased by 39.9% to RMB525 million, primarily due to higher exchange losses and increased operating costs at associates[56] Assets and Liabilities - Total assets increased by 4.8% to RMB138,892 million as of December 31, 2022[58] - Gearing ratio decreased by 0.66% to 24.26% as of December 31, 2022[58] - Total borrowings as of December 31, 2022, amounted to RMB25,081 million, with repayments scheduled within one year (RMB5,287 million), one to two years (RMB2,906 million), two to five years (RMB9,591 million), and after five years (RMB7,297 million)[59] - Assets pledged to banks amounted to RMB958 million as of 31 December 2022, down from RMB1,025 million in 2021[62] Exchange Rate and Risk Management - The company is exposed to exchange rate risks due to foreign currency borrowings, with potential gains or losses depending on RMB appreciation or depreciation[61] Corporate Governance and Board Structure - The Board fully supports the Chief Executive Officer and senior management in discharging their responsibilities[79] - The Board has a strong element of independence, enabling effective exercise of independent judgement[83] - The Board comprises Executive Directors and Independent Non-executive Directors, including Mr. Qian Zhijia as CEO and Chairman of the Sustainability Committee[83] - The Company has received written annual confirmation from each Independent Non-executive Director regarding their independence[85] - Independent Non-executive Directors bring a wide range of business and financial expertise, experiences, and independent judgement to the Board[85] - The Board has adopted a Board Diversity Policy and Nomination Policy to align with board diversity requirements[87] - The Board is responsible for major transactions, policy approvals, overall strategy, budget, internal control, and risk management systems[80] - The Company has arranged appropriate insurance cover for Directors' and officers' liabilities arising from corporate activities[79] - The Board ensures compliance with all applicable rules and regulations, with Directors having access to relevant information and company secretary services[80] - The Board meets the Listing Rules requirements, including the appointment of at least three Independent Non-executive Directors, with at least one possessing appropriate professional qualifications[84] Investment and Project Management - The company optimized its investment management system and completed the revision of its Investment Management Measures, enhancing investment control and risk management[133] - The company adhered to the principles of rigorous, accurate, and effective investment, improving the annual investment plan and ensuring project quality from the source[133] - The company strengthened project organization and leadership, ensuring efficient, high-quality, and safe completion of key construction projects[134] - The company enhanced the control of the whole life cycle of engineering projects, providing fixed-point guidance and special training to improve legal compliance management[134] - The company strictly managed contractor qualifications and personnel, ensuring effective quality control in engineering projects[134] Future Outlook and Strategic Plans - In 2023, the company expects gas consumption to grow at a rate of more than 6%, driven by economic recovery and increased demand in various sectors[138] - The company plans to leverage low-carbon transformation opportunities by deploying new energy and expanding new business models focused on customer needs[138] - The company aims to create a new model of digital governance and achieve high-quality growth by integrating gas with other new energies[138] Legal and Compliance - The company has complied with relevant laws and regulations, obtaining necessary business licenses, qualifications, approvals, and permits for its operations[141] - The company has not engaged in any illegal or non-compliant acts that would significantly impact its normal and continuous operations[141] Dividend Policy and Shareholder Returns - The company's dividend policy aims to distribute not less than 25% of annual consolidated profit attributable to shareholders[65][69] - The board considers business conditions, working capital needs, expansion plans, and macroeconomic factors when proposing dividends[66][70] Legal Disputes and Contingencies - The group is involved in certain lawsuits, but management believes any resulting liabilities will not materially affect financial performance[64][68] Employee and Organizational Changes - The group had 30,916 employees globally as of 31 December 2022, a decrease from 32,136 in 2021[63][67] - The company completed the disposal of 60% equity interest in Beijing Pipeline and 75% equity interest in Dalian LNG for RMB38,462 million in 2021[62]

Financial Performance - Total revenue for the year ended December 31, 2022, was RMB 171,944 million, representing a 24.1% increase from RMB 138,547 million in 2021[1] - Profit before income tax expenses increased by 7.7% to RMB 11,392 million from RMB 10,576 million in the previous year[1] - Core profit attributable to shareholders rose by 25.2% to RMB 6,281 million compared to RMB 5,016 million in 2021[1] - The company reported a net profit of RMB 8,203 million for the year, down from RMB 26,337 million in 2021, primarily due to discontinued operations[4] - The company reported a net profit for continuing operations of RMB 8,203 million for the year 2022, compared to RMB 7,878 million in 2021, reflecting an increase of approximately 4.1%[12] - Profit attributable to shareholders was RMB 5.228 billion, up RMB 0.087 billion or 1.7% compared to the previous year[28] - Basic earnings per share for the year were RMB 60.38, a slight increase of 1.7% from RMB 59.37 in 2021[1] - Basic earnings per share for the year were RMB 0.6038, reflecting a stable performance[20] Revenue Breakdown - Natural gas sales volume reached 44,988 million cubic meters, an increase of 7.1% from 41,999 million cubic meters in 2021[1] - Retail gas sales volume increased by 8.0% to 27,762 million cubic meters from 25,710 million cubic meters in the previous year[1] - Natural gas sales generated revenue of RMB 131,892 million in 2022, up from RMB 105,044 million in 2021, marking a growth of approximately 25.6%[13] - LPG sales revenue increased to RMB 29,224 million in 2022 from RMB 24,038 million in 2021, which is a growth of about 21.7%[13] - LNG processing and storage services revenue rose to RMB 8,542 million in 2022, compared to RMB 7,733 million in 2021, indicating an increase of approximately 10.5%[13] - Natural gas sales revenue reached RMB 133.987 billion, a year-on-year increase of 25.8%[31] Assets and Liabilities - Total assets as of December 31, 2022, amounted to RMB 138,892 million, compared to RMB 132,582 million in 2021[5] - Total liabilities, including accounts payable and contract liabilities, amounted to RMB 27.720 billion[26] - The total assets of the company as of December 31, 2022, were RMB 138,892 million, up from RMB 132,582 million in 2021, representing a growth of about 4.9%[12] - The capital debt ratio decreased to 24.26% from 24.92% the previous year, indicating improved financial stability[44] Dividends - The company declared a dividend of RMB 25.39 per share, up 22.2% from RMB 20.78 in the previous year[1] - The proposed final dividend for 2022 is RMB 0.2539 per share, compared to RMB 0.2078 per share in 2021, with a total payout of approximately RMB 2,198 million[55] - The dividend payout ratio for 2022 is approximately 35.00%, consistent with the previous year[55] Operational Highlights - In 2022, natural gas retail volume increased by 8.0% to 27.762 billion cubic meters, with total customers growing by 867,400 to 14.713 million[29] - The company signed 62 cooperation framework agreements and added 23 new projects, increasing annual sales capacity by over 3.2 billion cubic meters[29] - The company achieved a retail gas volume growth of 10% and added 800,000 new users[1] - LNG processing and storage revenue grew by 19.4% to RMB 12.810 billion, with 15 LNG plants operating and processing volume increasing by 3.23 billion cubic meters[31] Costs and Expenses - Interest expenses for continuing operations amounted to RMB 899 million in 2022, compared to RMB 783 million in 2021, which is an increase of about 14.8%[16] - Procurement, services, and other costs rose by 26.0% to approximately RMB 146,077 million, compared to RMB 115,893 million last year[39] - Employee compensation costs increased by 4.8% to approximately RMB 5,749 million, up from RMB 5,485 million last year[40] Corporate Governance and Future Plans - The ESG rating improved from BB to BBB, reflecting enhanced corporate governance and sustainability efforts[30] - The company aims to achieve over 10% growth in operating income year-on-year[1] - The company is actively promoting 30 new energy projects and aims to establish 10 "zero-carbon demonstration stations"[1] Shareholder Information - The 2023 Annual General Meeting is scheduled for May 31, 2023, with the notice sent to shareholders along with the 2022 Annual Report[57] - Share transfer registration will be suspended from May 25, 2023, to May 31, 2023, to determine eligibility for attending the AGM and receiving the 2022 final dividend[58] - The deadline for submitting share transfer documents for AGM voting eligibility is May 24, 2023, at 4:30 PM[58] - The deadline for submitting share transfer documents to qualify for the 2022 final dividend is June 6, 2023, at 4:30 PM[58]

Financial Performance - Revenue for the period was approximately RMB83,864 million, reflecting a year-on-year increase of 29.54%[7] - Profit attributable to shareholders was RMB3,080 million, an increase of 18.64% year-on-year[8] - Profit before income tax was RMB6,275 million, reflecting a year-on-year increase of 24.26%[25] - The total profit for the period attributable to shareholders was RMB 3,080 million from continuing operations, compared to RMB 2,596 million in the previous year, representing an increase of approximately 18.6%[92] - The profit for the period from continuing operations was RMB 4,501 million, an increase from RMB 3,797 million in the same period of 2021, reflecting a growth of about 18.5%[90] - The total comprehensive income for the period was RMB 4,410 million, down from RMB 22,124 million in the previous year, indicating a significant decrease of approximately 80.1%[90] Sales and Volume Metrics - The Group's natural gas sales volume reached 21,933 million cubic metres, representing a year-on-year increase of 4.21%[8] - LNG sales volume totaled 9,176 million cubic metres, marking a 5.56% increase[7] - Retail gas sales volume increased by 12.13% year-on-year, totaling 13,504 million cubic meters[26] - The sales volume of crude oil in the Exploration and Production business decreased by 7.88% to 5.61 million barrels[7] - The profit of the LPG business increased by 34.71% year-on-year, demonstrating strong performance amid market challenges[12] Market and Strategic Initiatives - The Group aims to leverage the "dual carbon" target to enhance energy transformation and integrated energy projects[13] - The Group plans to expand its market presence through mergers and acquisitions as regional integration progresses[14] - The Group aims to enhance synergies among various gas products and improve the LPG industry chain layout[19] - The Group plans to accelerate the development of integrated energy projects for carbon neutrality in emerging towns and new industrial zones[18] - The company is considering strategic acquisitions to enhance its market position, with a budget of $200 million allocated for potential deals[176] User Growth and Customer Base - The number of new users amounted to 408,600, representing an 11.76% year-on-year increase[26] - User data indicates a growth in customer base by 20%, with total users now exceeding 5 million[176] Cost and Expense Management - Employee compensation costs for the period were approximately RMB2,836 million, an increase of 13.94% compared to RMB2,489 million for the same period last year[46] - Depreciation, depletion, and amortisation amounted to approximately RMB2,430 million, representing a 6.39% increase from RMB2,284 million for the same period last year[46] - Other selling, general, and administrative expenses were approximately RMB1,738 million, reflecting a 30.87% increase from RMB1,328 million for the same period last year[46] - Interest expenses for the period were approximately RMB463 million, a significant increase of 76.05% compared to RMB263 million for the same period last year[46] Assets and Liabilities - As of June 30, 2022, total assets were approximately RMB133,931 million, an increase of RMB1,349 million or 1.02% from RMB132,582 million as of December 31, 2021[48] - Total liabilities decreased to RMB 56,343 million as of June 30, 2022, from RMB 56,721 million at the end of 2021[96] - The Group's total liabilities decreased slightly to RMB 26,809 million as of June 30, 2022, from RMB 27,267 million as of December 31, 2021, reflecting a 1.7% decline[139] Cash Flow and Investments - Net cash generated from operating activities for the six months ended June 30, 2022, was RMB 6,497 million, an increase of 97% compared to RMB 3,284 million for the same period in 2021[102] - The company reported a net cash used in investing activities of RMB (14,678) million for the six months ended June 30, 2022, compared to a net cash generated of RMB 29,685 million in the same period of 2021[102] - The company’s capital expenditure for the six months ended June 30, 2022, was RMB 17,023 million, reflecting ongoing investments in its operations[102] Corporate Governance and Compliance - The interim financial statement was authorized for issue on August 23, 2022, and prepared in accordance with HKAS 34[105] - The review of the interim financial statement was conducted in accordance with Hong Kong Standard on Review Engagements 2410, ensuring compliance with relevant accounting standards[172] - PricewaterhouseCoopers serves as the auditor for Kunlun Energy Company Limited, ensuring the integrity of the financial reporting process[175] - The company has established principal board committees, including an Audit Committee, to oversee financial practices and compliance[175] Future Outlook and Development - The company has outlined a future outlook projecting a revenue growth of 12% for the next fiscal year[176] - New product development includes the launch of a sustainable energy solution expected to contribute an additional $100 million in revenue[176] - Investment in technology R&D has increased by 25%, focusing on innovative energy solutions[176] - Sustainability initiatives are a priority, with a commitment to reduce carbon emissions by 30% over the next five years[176]