KUNLUN ENERGY(00135) 东吴证券·2024-05-31 02:31Investment Rating - The report initiates coverage on Kunlun Energy with a "Buy" rating [2] Core Views - Kunlun Energy is positioned as a leading city gas company, benefiting from its strategic transformation and strong backing from its parent company, China National Petroleum Corporation (CNPC) [2] - The company's gas sales are primarily focused on industrial transfer regions in Northeast and Northwest China, driving rapid growth in gas volume [2] - Kunlun Energy maintains stable price differentials due to its reliable gas supply from CNPC, ensuring steady profitability [2] - The company's LPG and LNG businesses are also experiencing high-quality development, with LNG processing and storage operations achieving profitability [2] Strategic Transformation and Business Development - Kunlun Energy transitioned from oil and gas exploration to focus on domestic natural gas terminal sales and comprehensive utilization in 2009 [7] - The company has undergone continuous restructuring of CNPC's downstream natural gas business since 2012, and in 2021, it sold some midstream assets to concentrate on downstream operations [7] - Kunlun Energy operates in 31 provinces, autonomous regions, and municipalities across China, making it one of the largest natural gas terminal utilization and LPG sales companies in the country [7] - The company's strategic shift has led to steady revenue growth, with a 10-year CAGR of 17.9% from 2013 to 2023 [8] Financial Performance and Valuation - Kunlun Energy's operating revenue for 2023 was RMB 177.726 billion, with a year-on-year growth of 3.16% [1] - Net profit attributable to the parent company in 2023 was RMB 5.682 billion, a year-on-year increase of 8.68% [1] - The company's EPS (fully diluted) for 2023 was RMB 0.66 per share, with a P/E ratio of 11.45 [1] - Kunlun Energy's market capitalization as of the valuation date (May 30, 2024) was HKD 71.5217 billion [1] Gas Sales Business - Kunlun Energy's gas sales are concentrated in industrial transfer regions, with industrial gas consumption driving overall growth [2] - From 2018 to 2023, the company's retail gas volume grew at a CAGR of 16.0%, significantly higher than the national average of 7.1% [2] - Industrial gas sales accounted for 69.4% of total gas sales in 2023, with commercial and residential gas sales making up 9.7% and 12.2%, respectively [2] - The company's gas price differential has remained stable at around RMB 0.5 per cubic meter from 2018 to 2023 [2] LPG and LNG Business - Kunlun Energy's LPG business is supported by stable gas supply from CNPC, with 90.1% of LPG resources sourced from CNPC in 2023 [2] - The company's LNG processing and storage operations have achieved high load rates, with the Tangshan and Jiangsu LNG receiving stations operating at around 90% capacity [2] - Kunlun Energy's LNG factories achieved a load rate of 45.4% in 2023, turning the business profitable for the first time [2] Profit Forecast and Investment Recommendation - The report forecasts Kunlun Energy's net profit attributable to the parent company to be RMB 6.106 billion, RMB 6.560 billion, and RMB 7.060 billion for 2024, 2025, and 2026, respectively, with year-on-year growth rates of 7.5%, 7.4%, and 7.6% [2] - The company's P/E ratios for 2024, 2025, and 2026 are projected to be 10.7x, 9.9x, and 9.2x, respectively [2] - Kunlun Energy's valuation is considered moderate compared to peers, with its stable gas supply from CNPC providing a competitive advantage [2]