Investment Rating - The report maintains an "OUTPERFORM" rating for Kunlun Energy [3][6][9] Core Views - In 2023, all business segments of Kunlun Energy achieved comprehensive profitability, with a revenue of CNY 177.35 billion, representing a year-on-year growth of 3.2%. The net profit attributable to the parent company was CNY 5.68 billion, an increase of 8.7% compared to the previous year [6][9] - The growth in revenue was primarily driven by a 9.6% increase in natural gas sales volume, reaching 49.29 billion cubic meters, particularly from industrial and commercial users [6][7] - The company expects to add 800,000 new users in 2024, with a projected 10% year-on-year increase in natural gas sales volume [7][9] Financial Summary - Revenue for 2023: CNY 177.35 billion, up 3.2% YoY [6] - Net profit for 2023: CNY 5.68 billion, up 8.7% YoY [6] - Gross profit margin: 12.0%, down 0.2 percentage points YoY [6] - Operating profit margin: 6.7%, up 0.2 percentage points YoY [6] - Net profit margin: 5.2%, up 0.5 percentage points YoY [6] - Average processing rate of LNG facilities: 90.6% [6] - Average processing rate of LNG increased by 1.1 percentage points to 45.4% [6] Dividend and Cash Flow - Operating cash flow in 2023 reached CNY 14.41 billion, with free cash flow of CNY 9.02 billion [8] - The dividend per share increased to CNY 0.28 in 2023, corresponding to a payout ratio of 40% of core profit [8] - The company expects the dividend payout ratio to increase to 45% by 2025 [8] Valuation Forecast - Revenue projections for FY24-26 are CNY 189.98 billion, CNY 202.59 billion, and CNY 215.16 billion, respectively [9] - Target price set at HKD 8.11 per share [9]

Natural Gas Sales and Volume - Natural gas sales business revenue reached RMB 140,600 million[3] - Total natural gas sales volume was 49,285 million cubic metres[3] - Sales volume of natural gas was 493 million cubic metres in 2023[7] - The total sales volume of natural gas reached 4.93 billion cubic meters in 2023, up from 4.50 billion cubic meters in 2022[13] - Natural gas sales volume was 49.285 billion cubic meters, a year-on-year increase of 9.6%, with retail gas sales volume at 30.312 billion cubic meters, up 9.2%[28] Revenue and Profit - Revenue for the year was RMB 177,354 million[5] - Profit attributable to shareholders was RMB 23,016 million[5] - Revenue for 2023 increased to RMB 177,354 million, up 3.15% from RMB 171,944 million in 2022[9] - Core profit before income tax expense for 2023 was RMB 13,101 million, compared to RMB 12,481 million in 2022[9] - The company achieved a revenue of RMB 177,354 million in 2023, a year-on-year increase of 3.1%[25] - Revenue for the year reached RMB 177.354 billion, a year-on-year increase of RMB 5.410 billion or 3.1%[26] - Revenue increased by 3.1% to RMB177,354 million compared to RMB171,944 million last year, driven by higher natural gas sales volume and prices[50] Earnings and Dividends - Basic earnings per share were RMB 265.80 cents[6] - Dividend per share was RMB 234.67 cents[6] - Earnings per share (Basic) rose to RMB 65.62 cents in 2023 from RMB 60.38 cents in 2022[11] - Dividend per share increased to RMB 28.38 cents in 2023 from RMB 25.39 cents in 2022[11] - Dividend payout ratio increased to 40.00% in 2023 from 35.00% in 2022[11] - The Group's 2023 final dividend is RMB28.38 cents per share, totaling approximately RMB2,457 million, with a payout ratio of 40%[184][187] - The company recommended a final dividend of RMB28.38 cents per share for 2023, totaling approximately RMB2,457 million, with a payout ratio of 40.00%[71] Profitability and Financial Ratios - Net profit margin improved to 5.22% in 2023 from 4.77% in 2022[11] - Return on total assets (ROA) increased to 6.55% in 2023 from 6.04% in 2022[11] - Liabilities-to-EBITDA ratio decreased to 3.17 in 2023 from 3.57 in 2022[11] - Profits before income tax increased by 10.5% to RMB 12,593 million in 2023[25] - Profit before income tax expense increased by 10.5% to RMB12,593 million compared to RMB11,392 million last year[49] - Profit attributable to shareholders increased by 8.7% to RMB5,682 million compared to RMB5,228 million last year[49] - Core profit attributable to shareholders decreased by 2.2% to RMB6,144 million compared to RMB6,281 million last year[49] LNG and Crude Oil Sales - LNG gasification, entrucking & processing volume was 191 million cubic metres in 2023[8] - Equity sales volume of crude oil was 1,354 10,000 barrels[8] - LNG gasification volume increased to 1.56 billion cubic meters in 2023, compared to 1.52 billion cubic meters in 2022[15] - The company's LNG processing volume remained stable at 28 million cubic meters in 2023[15] - Equity sales volume of crude oil decreased to 921,000 barrels in 2023 from 1,105,000 barrels in 2022[15] - LNG gasification and entrucking volume at Tangshan and Jiangsu LNG terminals totaled 16.326 billion cubic meters, a year-on-year increase of 3.1%[32] - Equity sales volume of crude oil was 9.21 million barrels, a year-on-year decrease of 1.84 million barrels or 16.7%, with sales revenue dropping 60.2% to RMB 911 million[33] User and Market Growth - Cumulative users reached 15,604,000 with 890,000 new users added[3] - The number of city gas projects in operation reached 280 across various provinces in 2023[17] - Cumulative number of users reached 15.604 million, a year-on-year increase of 6.1%[28] - The company added 12 new city gas projects and 15 new projects including Changzhou Kunlun were put into production and consolidated[34] - 48% of project companies achieved residential gas sales using the price linkage mechanism[34] - The annual apparent consumption of natural gas in China increased by 7.6% to 3,945.3 billion cubic meters in 2023[22] Environmental and Social Responsibility - Methane emission intensity decreased by 32% compared to 2020, and carbon dioxide emission intensity decreased by 6%[40] - The company achieved energy savings of 24 million tons of standard coal in 2023[40] - The company invested over RMB 16 million in social welfare, consumption assistance, and rural revitalization[41] - The Group emphasizes environmental protection and promotes energy conservation and emission reduction as part of its long-term strategy[182][185] Corporate Governance and Board Activities - The Board has a strong element of independence and effectively exercises independent judgement[84] - The Board consists of at least three independent non-executive directors, with one possessing appropriate professional qualifications or financial management expertise[84] - Independent non-executive directors represent at least one-third of the Board[84] - The Board has adopted a Board Diversity Policy and a Nomination Policy to align with diversity requirements[86][90] - The Nomination Committee reviews the Board's structure, size, composition, and diversity at least once a year[91] - Board appointments are based on meritocracy, contributions to the Board, and objective criteria including skills, knowledge, experience, gender, age, ethnicity, and educational background[92] - As of 31 December 2023, the Board's age diversity includes 14% aged 50-59, 29% aged 60-69, and 57% aged above 70[94] - The Board currently has all male Directors and aims to appoint at least one female board member by 31 December 2024[97][98] - As of 31 December 2023, the Group had 27,138 employees, with male and female employees accounting for 68% and 32% respectively[99] - The Board held four meetings, three Audit Committee meetings, one Remuneration Committee meeting, two Nomination Committee meetings, and one Sustainability Committee meeting during the year[106] - All Executive Directors attended all four Board meetings, with Mr. Fu Bin and Mr. Gao Xiangzhong also attending Nomination Committee and Sustainability Committee meetings respectively[108] - Independent Non-executive Directors attended all Board meetings and relevant committee meetings, with Dr. Liu Xiao Feng and Mr. Tsang Yok Sing Jasper attending all committee meetings[108] - Notices for regular Board meetings are served at least 14 days in advance, with agenda and Board papers sent at least 3 days before each meeting[109] - The Chairman, CEO, CFO, and Company Secretary attend Board and committee meetings to advise on business developments, financial matters, and corporate governance[110] - The Audit Committee reviewed the company's annual results and found no material uncertainties affecting its ability to continue as a going concern[122] - The Audit Committee conducted three meetings during the year to deliberate on financial results, internal controls, and the re-appointment of the independent auditor[119][121] - The Remuneration Committee reviewed management's remuneration proposals and made recommendations based on corporate goals, individual performance, and market conditions[123] - The company's Board has four committees: Audit, Remuneration, Nomination, and Sustainability, each with defined written terms of reference[115] - The Chairman and Chief Executive Officer roles are held by separate individuals, with Mr. Fu Bin as Chairman and Mr. Qian Zhijia as CEO[113][116] - The Audit Committee comprises three Independent Non-executive Directors, including one with professional accounting or financial management expertise[118] - The company ensures Directors receive adequate, complete, and reliable information in a timely manner for decision-making[114] - The Remuneration Committee is chaired by Dr. Liu Xiao Feng and focuses on transparent procedures for determining remuneration[123] - The company supports the division of responsibilities between the Chairman and CEO to ensure a balance of power and authority[113][116] - The Audit Committee reviewed the company's financial reporting system, internal control system, and risk management system for adequacy and effectiveness[119] - The majority of the company's management received remuneration totaling around RMB 8 million in 2023[127] - The Remuneration Committee held one meeting during the year to review the company's remuneration policy and structure[126] - The Nomination Committee held two meetings during the year to review board composition and director re-election proposals[128] - The Board reviewed the effectiveness of the company's internal controls and risk management systems during the year[130] - The audit fees charged by PricewaterhouseCoopers for the Company and its subsidiaries amounted to approximately RMB14 million, a decrease from RMB15 million in 2022[133] - The fees charged by other auditors of the Group for audit services and non-audit services during the Year amounted to approximately RMB17 million and RMB2 million respectively, compared to RMB8 million and RMB2 million in 2022[133] - Two general meetings were held on 31 May 2023 and 16 November 2023, which were the 2023 annual general meeting and special general meeting[136] - The attendance records of the Directors to the 2023 annual general meeting and special general meeting show full attendance for most directors, except for Mr. Zhou Yuanhong who missed the special general meeting[137] - A special general meeting can be convened by shareholders holding at least one-tenth of the paid-up capital of the Company with voting rights[138] - The Company has adopted a new arrangement for the dissemination of corporate communication, allowing shareholders to request printed copies in addition to electronic distribution[139] - The company adopted new bye-laws on 31 May 2023 to comply with the Core Shareholder Protection Standards and incorporate housekeeping amendments[143] - The company maintains a website (http://www.kunlun.com.hk) for extensive business updates, financial information, and corporate governance practices[143] - The company’s internal control system includes a well-established organizational structure, comprehensive policies, and an internal audit department[144] - The Board annually assesses the effectiveness of the Group’s internal control system, covering financial, operational, compliance controls, and risk management[145] - The company identified and monitored eight major risks in 2023, focusing on dynamic monitoring and alert systems[148] - The company ensured winter natural gas supply by coordinating incremental resources to balance market demand and supply[150] - The company strengthened terminal purchase and marketing price differential management, incorporating it into annual performance contracts[150] - The company implemented a weekly dynamic analysis mechanism to stay updated on market changes and optimize marketing strategies[150] - The company achieved a 100% pipeline digitization rate through the production management system, realizing comprehensive factor coverage and online management mode[153] - The company strengthened cooperation with key chemical users, promoting regional resource recycling and repurchase of by-product resources through raw material supply[151] - The company expanded import resource procurement channels, opening a Russian gas import route in the Hunchun direction and organizing sales of Kazakhstan gas beyond Xinjiang to the Ningxia region[151] - The company formulated the "Four Principles" for third-party management, including detailed data, complete markers, and graded control for pipeline management[153] - The company implemented the "Five-step Method" for third-party pipeline construction management, achieving closed-loop management of third parties[153] - The company strengthened risk prevention and control, clarifying conditions and strategies for project termination or withdrawal based on market risks[152] - The company improved the efficiency of pre-planning work, simplifying feasibility study procedures and implementing project classification and authorization management[152] - The company promoted the use of vibration warning, smart AI video surveillance, and drones for pipeline inspection, constructing an all-round three-dimensional protection network[153] - The company standardized safety inspection procedures, enhancing the capability of safety inspectors and improving the quality of safety inspections[154] - The company implemented IoT-powered gas meters, stainless steel corrugated hoses, self-closing valves, and combustible gas alarms to reduce safety incidents caused by improper customer-end operation[154] - Strengthened policy research and response by collecting and studying national and local policies, enhancing analysis and response strategies at bi-weekly and monthly meetings[156] - Promoted two contango exercises for heating and non-heating periods, ensuring a stable year-on-year increase in the purchase and marketing price differential[156] - Integrated gas station business by leasing stations to refined oil sales enterprises to eliminate uncertainty and expand gas supply scale[156] - Increased end-user development to diversify user structure and offset lower gas consumption in a single industry due to policy reasons[156] - Revised the "Management Measures for the Selection of Cooperative Shareholders" to improve standards and implement risk prevention and compliance management[157] - Strengthened communication with cooperative shareholders and monitored their operating conditions to adopt early risk mitigation measures[157] - Conducted annual special inspections of guarantee and credit business, identifying no new irregularities in guarantee matters[160] - Strengthened project supervision and inspection, implementing closed-loop management of identified problems[162] - Regularly convened special coordination meetings and provided onsite guidance to strengthen project process control and management[162] - Enhanced accountability management by holding responsible units and persons accountable for serious and typical problems found during inspections[162] Future Development and Strategy - The company aims to achieve "multi-energy integration" and "new energy" installed capacity of one million kilowatts by 2025[46] - The company is focusing on the integration of gas and new energy to broaden the road of green and low-carbon transformation[171] - The company is accelerating the building of smart gas enterprises by strengthening data intelligence and establishing a full-process data management chain[174] - The company is promoting the local price linkage mechanism to improve the upstream and downstream cost transmission mechanism[171] - The company is actively exploring emerging businesses such as carbon sink, carbon trading, and methane escape detection[171] - The company is striving to create a safe gas enterprise that allows the government to rest assured and the people to rest assured[174] - The company is enhancing modern governance by focusing on ESG management efficiency[174] - The company is expanding the new mode of service system based on customer needs to achieve sustainable development[170] - The company is promoting the integration of "One City, One Gas Supplier" projects to maintain a market size with steady growth[171] - The company is actively carrying out the exploration of photovoltaic, wind energy, geothermal, and biomass fields[171] - National natural gas consumption is expected to grow by approximately 6% in 2024, with power generation gas leading the growth[42][44] - The company is confident in its performance guidance and future development under the national "carbon peak and carbon neutrality" goals[43][45] Financial and Operational Costs - Purchases, services, and others increased by 3.4% to RMB151,091 million compared to RMB146,077 million last year, in line with natural gas sales growth[50] - Employee compensation costs increased by 3.8% to RMB5,970 million compared to RMB5,749 million last year, remaining stable at 3.37% of operating revenue[51] - Depreciation, depletion, and amortization increased by 2.1% to RMB4,992 million compared to RMB4,887 million last year[52] - Other selling, general, and administrative expenses decreased by 3.0% to RMB3,656 million compared to RMB3,770 million last year due to strict cost control[53] - Interest expenses for the year increased by 6.8% to RMB960 million compared to RMB899 million last year[54] - Total interest expenses for the year increased by 2.8% to RMB995 million compared to RMB968 million last year[54] - Capitalized interest expenses under construction-in-progress decreased by 49.3% to RMB35 million compared to RMB69 million last year[54] - Share of profits less losses of associates decreased by 11.2% to RMB466 million compared to RMB525 million last year[55] - Employee compensation costs increased by 3.8% to RMB5,970 million compared to RMB5,749 million last year[56] - Depreciation, depletion, and amortization increased by 2.1% to RMB4,992 million compared to RMB4,887 million last year[57] - Other selling, general, and administrative expenses decreased by 3.0% to RMB3,656 million compared to RMB3,770 million last year[57] - Share of profits less losses of joint ventures increased by 24.0% to RMB579 million compared to RMB467 million last year[60] - Total assets of the Group increased by 3.3% to RMB143,519 million compared to RMB138,892 million last year[61] - The gearing ratio of the Group decreased by 1.55% to 22.71% compared to 24.26% last year[63] - The company has formulated a three-year dividend distribution plan aiming to achieve an annual dividend payout ratio of 45% of the Group's annual profit attributable to shareholders by the financial year ending 31 December 2025[71] - The company plans to declare interim and final dividends twice a year for the financial years ending 31 December 2024 and 2025[71] - The company's distributable reserves as of 31 December 2023 were RMB 10,284 million, including RMB 109 million in contributed surplus and RMB 10,175 million in retained earnings[197] - The company's distributable reserves as of 31 December 2022 were RMB 10,949 million, including RMB 109 million in contributed surplus and RMB 10,840 million in retained earnings[197] Customer and Market Satisfaction - Customer survey satisfaction rate increased to 99.5%[39][40] - The company secured new energy installation indicators totaling 4.302 million kilowatts in regions such as Xinjiang, Hebei, and Shandong[39] - Value-added business revenue increased by 21% year-on-year[39] - The company operated

Investment Rating - The report does not explicitly state an investment rating for the company Core Insights - The company has shown a steady increase in retail gas volume, with a projected growth of 10% for 2024 [5] - The company plans to increase its dividend payout ratio to 45% by 2025, supported by strong cash flow and stable capital expenditures [4] - The company's LNG processing and storage business has seen a revenue increase of 5.9% in 2023, indicating robust performance across various business segments [6] Financial Performance Summary - In 2023, the company achieved total revenue of RMB 177.354 billion, a year-on-year increase of 3.15% [3] - The net profit attributable to shareholders was RMB 5.682 billion, reflecting an increase of 8.68% year-on-year [3] - The diluted EPS for 2023 was RMB 0.66, with a return on equity (ROE) of 9% [3][4] - The company reported a free cash flow of RMB 9.017 billion in 2023, indicating strong liquidity [4]

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]