Core Viewpoint - Jianyin International has lowered the target price for XinAo Energy (02688) to HKD 63, citing a weak outlook for the second half of the year [1] Financial Performance - XinAo Energy's core profit for the first half of the year decreased by 1% year-on-year, while core profit from domestic operations saw a slight increase of 1% [1] - Retail natural gas sales increased by 1.9% year-on-year, with a notable acceleration in the second quarter to 4.1%, compared to just 0.3% in the first quarter [1] Profit Forecast Adjustments - The company has adjusted its core profit forecasts for 2025 to 2027 downwards by 3% to 8% due to declining profits from natural gas sales and Integrated Energy (IE) business [1] - The target price was revised from HKD 65 to HKD 63 [1] Market Outlook - The overall outlook for XinAo Energy in the second half of the year is expected to be weak, influenced by macroeconomic challenges and structural changes in the economy [1] - Retail natural gas sales growth is anticipated to be moderate, supported mainly by large commercial and industrial customers [1] - Profit growth from the Integrated Energy segment may slow down due to reduced heat supply installation work and weak demand from industrial clients [1]

Core Viewpoint - New Hope Energy's core profit declined by 1% year-on-year in the first half of the year, while domestic business core profit saw a slight increase of 1% [1] Group 1: Financial Performance - Retail natural gas sales increased by 1.9% year-on-year, indicating a sales growth acceleration to 4.1% in the second quarter, compared to only 0.3% in the first quarter [1] - The target price for New Hope Energy has been revised down from HKD 65 to HKD 63, reflecting a 3% to 8% downward adjustment in core profit forecasts for 2025 to 2027 [1] Group 2: Market Outlook - The overall outlook for New Hope Energy in the second half of the year is expected to be relatively weak due to macroeconomic challenges and structural economic changes [1] - Retail natural gas sales growth is anticipated to remain moderate this year, supported primarily by large commercial and industrial customers [1] - Integrated energy (IE) profit growth may slow down due to reduced heat supply installation work and weak demand from industrial customers [1]

Core Viewpoint - Jianyin International has downgraded Kunlun Energy's (00135) core profit forecast for 2025 to 2027 by 5% and slightly reduced the target price from HKD 8.7 to HKD 8.5 while maintaining an "outperform" rating [1] Financial Performance - Kunlun Energy's net profit for the first half of the year decreased by 4.4% to RMB 3.2 billion, primarily due to a 10.5% year-on-year decline in natural gas sales and a 3% drop in pre-tax profit from liquefied petroleum gas (LPG), which offset an 11% increase in pre-tax profit from LNG receiving and processing operations [1] - Despite the profit decline, the interim dividend increased by 1.2% year-on-year to RMB 0.166, with the payout ratio rising from 43% last year to 45.5% in the first half of this year [1] Sales and Market Conditions - The report indicates that warm winter and leasing gas stations to the parent company led to a slowdown in retail natural gas sales growth from 8.1% last year to 2.2% in the first half of this year [1] - The company aims for a 5% year-on-year increase in total retail natural gas sales for the year, with a projected 7.7% growth in the second half, considering normalization of vehicle natural gas sales and contributions from new gas projects [1] Profitability Outlook - The company expects unit gross margins to remain stable in the second half, supported by a recovery in the natural gas sales structure and weak overall procurement costs, along with continued improvement in LNG processing plant profits, which will help offset the impact of weak gas sales profits for the year [1]

Core Viewpoint - Citigroup has revised down its net profit forecasts for Kunlun Energy for the years 2025 to 2027 by 6.2%, 7.3%, and 9% respectively, due to slowing retail natural gas sales growth and a slowdown in LNG processing, which cannot be fully offset by the increase in LPG sales [1] Summary by Category Company Analysis - The target price for Kunlun Energy has been reduced from HKD 8.7 to HKD 8.4 while maintaining a "Buy" rating [1] - The negative impact on Kunlun Energy's performance is attributed to the slowdown in retail natural gas sales and LNG processing [1] Industry Insights - Citigroup's preferred choice in the industry is New Hope Energy, highlighting the potential upside from its privatization [1]

Financial Data and Key Metrics Changes - The company achieved a revenue increase of 10.2% to RMB 6.7 billion for the year [3] - Profit increased by 16.2%, with household profit rising by 18% and gross profit increasing by 4.2% [4] - Free cash flow rose significantly by RMB 630 million year on year, totaling RMB 3.73 billion, with a dividend payout ratio of 45% [5][10] Business Line Data and Key Metrics Changes - The gas business grew by 4.2%, while the Integrated Energy (IE) business saw a 10.8% increase [3] - Retail gas volume increased by 4.2%, with commercial and industrial sales rising by 5.1% [12] - The gross profit for the IE business increased by 19.9%, and the value-added business (VAB) gross profit rose by 24.1% year on year [9] Market Data and Key Metrics Changes - The domestic business achieved a 10.2% core profit growth, despite a decline in profit from wholesale gas and overseas gas [7] - The company reported a significant increase in installed capacity for integrated energy projects, reaching 13.3 gigawatts [16] Company Strategy and Development Direction - The company is focused on safety and digital intelligence to enhance customer service and operational efficiency [6][15] - Strategies include optimizing sales in natural gas and expanding the customer base through intelligent solutions [8][26] - The company aims to leverage intelligent capabilities for efficient operations and cost structure optimization [27] Management's Comments on Operating Environment and Future Outlook - The management acknowledged challenges from a complex global environment and structural issues in the domestic economy but remains committed to core strategies [25] - Future strategies will focus on increasing profitability for existing and potential clients while exploring innovative products [27] Other Important Information - The company has received high ratings from major rating agencies and has been recognized for its sustainability efforts [7] - The company has implemented a diversified resource portfolio to reduce procurement costs and enhance supply stability [14][15] Q&A Session Summary Question: Concerns about dividend growth relative to free cash flow increase - Management emphasized stable dividend policy and future dividends will be determined based on operating needs and cash flow [31][32] Question: Changes in sales of gas for residential and industrial customers - Management could not provide specific figures due to regulatory requirements but reiterated a focus on healthy returns [32] Question: Impact of recent announcements from oil companies on gas purchase costs - Management noted slight increases in gas prices for heating and non-heating contracts, with some areas experiencing price adjustments [33][34] Question: Performance of joint ventures and connections to new property projects - Management reported better-than-expected performance from associated companies and increased connections due to government policies [42][44] Question: Profitability from connections and future outlook - Management indicated a decrease in connection profits due to fewer residential connections and increased costs per customer [46]