Investment Rating - The report assigns an "Accumulate" rating to the company, Kunlun Energy (0135.HK) [6]. Core Views - Kunlun Energy, as a subsidiary of China National Petroleum Corporation, is positioned to benefit from the high-quality development of its natural gas terminal business, with a projected net profit of 6 billion yuan in 2024, representing a year-on-year growth of 4.9% [1][4]. - The company aims to increase its dividend payout ratio to 45% by 2024, reflecting a commitment to returning value to shareholders [1][46]. - The natural gas sales business is expected to maintain strong growth, with a compound annual growth rate (CAGR) of 13.7% in revenue from 2016 to 2024, supported by a stable supply of high-quality gas from its parent company [2][53]. Summary by Sections 1. Company Overview - Kunlun Energy is the largest natural gas terminal utilization enterprise in China, focusing on natural gas sales and comprehensive utilization, with operations covering 28 provinces and municipalities by the end of 2024 [17][26]. - The company achieved a natural gas sales volume of 54.2 billion cubic meters in 2024, marking a year-on-year increase of 9.9% [17][26]. 2. Business Development - The natural gas sales business is expanding, with a significant focus on industrial gas sales, which is projected to grow at a CAGR of 24.35% from 2018 to 2024 [2][58]. - The company has established two LNG receiving stations with a total unloading capacity of 13 million tons per year, contributing a pre-tax profit of 3.577 billion yuan in 2024, with a profit margin of 75% [3][72]. 3. Financial Projections and Valuation - The company forecasts net profits of 6.649 billion yuan, 7.124 billion yuan, and 7.598 billion yuan for 2025, 2026, and 2027, respectively, with corresponding earnings per share (EPS) of 0.77 yuan, 0.82 yuan, and 0.88 yuan [4][5]. - The report highlights a stable financial structure with a projected revenue of 187.046 billion yuan in 2024, reflecting a growth rate of 5.46% [5][28]. 4. Market Position and Competitive Advantage - Kunlun Energy benefits from a strong resource supply from its parent company, which allows it to maintain a competitive edge in purchasing costs compared to other gas companies [2][64]. - The company is gradually transitioning from upstream oil exploration to focus on natural gas terminal utilization, reducing its cyclical exposure [3][89].

Core Viewpoint - The company, a subsidiary of China National Petroleum Corporation, is focused on natural gas terminal sales and is expected to see profit recovery and increased dividends in 2024, with a projected net profit of 6 billion yuan, representing a 4.9% year-on-year growth [2]. Group 1: Business Performance - The company's natural gas sales business has shown strong growth, with a compound annual growth rate (CAGR) of 13.7% in revenue and 15.7% in pre-tax profit from 2016 to 2024 [3]. - The company has a significant presence in the mid-western city gas projects and is actively expanding its retail gas market, particularly in industrial gas, which is expected to grow at a CAGR of 24.35% from 2018 to 2024 [3]. - The company's gross margin for 2024 is projected to be 0.47 yuan per cubic meter, a slight decrease of 0.03 yuan per cubic meter year-on-year, primarily due to structural impacts from adjustments in the gas station business [3]. Group 2: LNG Operations - The company operates two LNG receiving stations with a combined unloading capacity of 13 million tons per year, contributing a pre-tax profit of 3.577 billion yuan in 2024, with a profit margin of 75% [4]. - The processing fee for LNG remains stable at 0.30 yuan per cubic meter, with unit pre-tax profit ranging between 0.21 to 0.22 yuan per cubic meter, providing a consistent revenue and profit source [4]. - The company is transitioning from upstream oil exploration to focus on natural gas terminal utilization, thereby reducing its cyclical attributes [4].

Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The report highlights that the company has achieved a revenue of 3.777 billion yuan in 2024, representing a year-on-year increase of 7.4%. However, net profit decreased by 15.23% to 1.205 billion yuan, while the attributable net profit increased by 13.12% to 1.185 billion yuan. The cash flow from operating activities was 2.071 billion yuan, up 4.9% year-on-year [1][6] - The report emphasizes the growth in the Ma Bi block, with significant production increases expected in the long term. The company is focusing on enhancing its coalbed methane extraction and sales, which contributed 2.908 billion yuan in revenue, a 21.3% increase year-on-year, accounting for 76.99% of total revenue [3][5] Summary by Sections Financial Performance - In Q4 2024, the company reported a revenue of 812 million yuan, down 16.89% year-on-year and 19.84% quarter-on-quarter. Net profit for the same period was 298 million yuan, a decrease of 21.37% year-on-year but an increase of 2.41% quarter-on-quarter [2] - The overall revenue for 2024 was 3.777 billion yuan, with a year-on-year growth rate of 7.4%. The attributable net profit was 1.185 billion yuan, reflecting a 13.1% increase compared to 2023 [6] Business Segments - The coalbed methane extraction and sales business is the primary profit source, with a gross profit contribution of 1.608 billion yuan, a 12.02% increase year-on-year, and a gross margin of 55.29% [3] - The average selling price of coalbed methane in the Ma Bi block increased by 7.31% to 2.35 yuan per cubic meter, while the overall average selling price for the company was 2.20 yuan per cubic meter, up 2.33% year-on-year [4] Production and Capacity - The company achieved a coalbed methane production of 2.005 billion cubic meters in 2024, a 17.66% increase year-on-year. The Ma Bi block saw a production increase of 56.82%, reaching approximately 897 million cubic meters [3][5] - The report projects that the Ma Bi block could reach a production capacity of over 2.5 billion cubic meters annually by 2025-2027, with significant growth expected in the coming years [5] Future Outlook - The company is expected to maintain long-term high growth in natural gas production, supported by rich reserves in various blocks, including the Ma Bi and Xinjiang Kashgar North blocks. The report forecasts attributable net profits of 1.371 billion yuan, 1.507 billion yuan, and 1.629 billion yuan for 2025, 2026, and 2027, respectively [5][6]