KUNLUN ENERGY(00135) 海通国际·2024-03-10 16:00Investment 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]