CICC International: Maintain KUNLUN ENERGY (00135) "Outperform" rating, target price lowered to HK$8.4

CMB International released a research report stating that it maintains a "outperform" rating for KUNLUN ENERGY (00135), and has lowered the core profit forecast for 2024 to 2026 by 3%, 7%, and 9%, with the target price slightly reduced from HKD 8.5 to HKD 8.4. The report predicts that the profit of KUNLUN ENERGY's liquefied natural gas (LNG) processing plant will improve, and the profit from gas and liquefied petroleum gas (LPG) sales will record high single-digit growth, offsetting the decline in profits from LNG terminal and oil exploration and production businesses. Currently, the forecast for core profits in 2024 is expected to increase by 1% annually, with gas sales expected to record high single-digit growth, while the profit from the LNG processing plant is expected to increase by double digits. The bank stated that considering KUNLUN ENERGY's ability to generate over 6 billion RMB of free cash flow annually in the coming years, it is estimated that its dividend payout ratio may increase from 40% in 2023 to 43% in 2024. The bank expects that gas sales business will become the main driver of profit for KUNLUN ENERGY in 2025, providing a relatively stable unit profit margin. It also predicts that sales volume can achieve a moderate to high single-digit growth, supporting a 3% increase in core profits for the year.