BOCOM INTL: Maintains "Buy" rating on KUNLUN ENERGY (00135) with a decreased target price of HK$9.08.

BOCOM INTL releases a research report, maintaining a "buy" rating for KUNLUN ENERGY (00135), with the company's core profit for 2024-2026 being lowered by 5.4%/2.9%/3.6% respectively. The company's target price has also been adjusted to 9.08 Hong Kong dollars. In terms of dividend policy, the company's management stated last year that the dividend target for the full year 2024 is consistent with the medium-term dividend ratio at 43%, increasing to 45% in 2025. The dividend yield for 2024/25 is 4.4%/5.1%. The bank stated that they have adjusted KUNLUN ENERGY's profit forecast and valuation. They believe that domestic natural gas demand has been affected by the mild winter, impacting the year-on-year growth of the company's retail gas sales. Additionally, the utilization rate of LNG receiving terminals has been affected by the weak import volume in the fourth quarter of 2024, leading to an increase in forecasted management expenses. The report mentioned that due to the warmer winter starting in the fourth quarter of 2024, domestic natural gas demand saw a year-on-year decline in November 2024. The bank has also lowered the company's estimates for industrial and residential gas consumption. The company's gas station business began a restructuring with its parent company in 2024, with the bank estimating that the company will still have around 500 million cubic meters of sales from gas stations by the end of 2024. Overall, the bank estimates that the company's retail gas sales will increase by 8.6% year-on-year in 2024. Due to a 1% year-on-year decline in domestic natural gas imports starting in November 2024, the bank has also lowered the forecasted utilization rate of the company's LNG receiving terminal for 2024 by 1 percentage point to 89%. As for LNG processing plants, the bank maintains its expectation for a 16% year-on-year growth in the company's LNG processing volume in 2024. Additionally, the bank has increased its forecast for management expenses in the second half of 2024 after reviewing the company's expense distribution in the past.