Core Insights - The company presented its core business operations and significant developments at the 2026 Investment Summit, highlighting growth in retail gas volume, LNG supply chain synergy, LPG sales, and crude oil performance, while addressing investor concerns regarding gross margin trends, medium to long-term planning, non-gas business, and dividend policies [1] Business Performance - The company expects to achieve its annual guidance with retail gas growth projected to return to 5% for the year, driven by high single-digit growth from industrial users and efficient operation of LNG receiving stations with an expected annual load factor of 85%-90% [1] - LPG sales showed high single-digit growth in the first nine months, with a slight increase anticipated for the full year, while crude oil production is expected to stabilize at 8 million barrels [1] Gross Margin and Cost Trends - The gross margin for the first half of the year was 0.44 CNY per cubic meter, a slight year-on-year decrease, primarily due to gas station integration and promotional strategies for industrial users; however, a stable to slightly increasing trend is expected in the second half due to cost optimization in winter [2] - The company anticipates that gas demand will remain robust under the dual carbon goals, supported by industry pricing mechanisms, which will help maintain gross margins within a reasonable range [2] Medium to Long-term Strategy - The company has outlined a medium to long-term strategy focusing on "innovation, green, market, capital, and low cost," aiming to become a leading comprehensive energy supplier in China, with natural gas market share expected to align with upstream supply [2] - Non-gas business initiatives include a 380,000 kW onshore wind power project in Shandong set to be operational by Q3 2026, and the "Kunlun Huixiang+" value-added business showing good growth, albeit still at a small scale [2] Dividend Policy and Valuation - The interim dividend was set at 0.166 CNY per share, reflecting a year-on-year increase of 1.2%, with a payout ratio of 45.5%, up by 2.5 percentage points year-on-year; the current stock price corresponds to a projected dividend yield of 4.8% for 2025 [3] - The company maintains profit forecasts for 2025-2027 at 6.15 billion, 6.49 billion, and 6.84 billion CNY, respectively, with corresponding EPS of 0.71, 0.75, and 0.79 CNY, and a target price of 8.58 HKD based on an 11x 2025E PE ratio [3]

Investment Rating - The report maintains a "Buy" rating for Kunlun Energy [9] Core Views - The company is expected to achieve dual growth in profitability and dividends, leading to a revaluation of its long-term value [3] - The company has outlined its core business operational trends and significant progress, including retail gas volume growth, LNG industry chain synergy, LPG sales, and crude oil performance [3] Summary by Relevant Sections Business Performance - Retail gas volume growth for the first nine months is expected to return to 5%, driven by high single-digit growth from industrial users [4] - The LNG receiving station is projected to operate at an annual load factor of 85%-90% [4] - LPG sales showed high single-digit growth in the first nine months, with a slight increase expected for the full year [4] - Crude oil production is anticipated to stabilize at 8 million barrels for the year [4] Margin and Cost Trends - The gross margin for the first half was 0.44 RMB per cubic meter, a slight year-on-year decrease of 0.01 RMB, influenced by gas station integration and promotional strategies for industrial users [4] - A stable to slightly increasing gross margin is expected in the second half due to cost optimization in winter [4] - Long-term demand for gas is expected to remain robust, supported by the dual carbon goals and industry pricing mechanisms [4] Long-term Planning and Non-gas Business - The company has clarified its long-term focus on five strategies: innovation, green energy, market, capital, and low cost [5] - The company aims to become a leading comprehensive energy supplier in China, with a natural gas terminal market share expected to match upstream supply [5] - The Shandong 380,000 kW onshore wind power project is planned to be operational by Q3 2026 [5] Dividend Policy - The interim dividend is set at 0.166 RMB per share, reflecting a year-on-year increase of 1.2%, with a payout ratio of 45.5% [4] - The current stock price corresponds to a 2025 estimated dividend yield of 4.8% [4] - The dividend policy for 2023-2025 is expected to be steadily implemented, with a more positive outlook for 2026-2028 [4] Profit Forecast and Valuation - The report maintains the forecast for the company's net profit attributable to the parent company at 6.15 billion, 6.49 billion, and 6.84 billion RMB for 2025-2027, respectively [6] - The target price is set at 8.58 HKD, based on an 11x PE for 2025E and an exchange rate of 0.91 for HKD to RMB [6]