Kunlun Energy Announces 2023 Results
In 2023, the company achieved revenue of RMB 177.354 billion, +3.1% YoY; net profit to mother was RMB 5.682 billion, +8.7% YoY. The net interest rate was 5.22% (4.77% in 2022), and the return on net assets reached 11.12% (10.48% in 2022). The company's dividend payout ratio increased from 35% to 40% in 2023, and the dividend per share reached RMB 0.2,838, +11.78% over the same period last year.
Natural gas sales: Industry and commerce continue to grow at a high rate, and the gross margin level remains stable.
In 2023, the company added 12 new urban combustion projects, bringing the total number of projects to 280. Natural gas sales reached 49.285 billion cubic meters, up 9.6% year on year. Among them, retail gas volume reached 30.312 billion cubic meters, up 9.2% year on year, and the growth rate was superior to the industry average (the country's apparent consumption of natural gas was 394.53 billion cubic meters, up 7.6% year on year). Structurally, industrial and commercial gas sales reached 21.045 billion square meters and 2,945 billion square meters respectively, +15.5% and +11.1% year-on-year, maintaining a high level of growth. 2,616 new industrial users and 29,300 commercial users were added, +22.3% and +34.5% compared with the same period last year. The annual gross margin of 0.501 yuan was achieved, up from 2023H1 (0.495 yuan), and remained the same as in 2022 (0.502 yuan).
LNG processing and storage: The loading rate of the receiving station was in line with expectations, and the LNG plant turned a loss into profit. The LNG processing and storage business achieved revenue of RMB 9.042 billion in 2023, an increase of 5.9% over the previous year.
Tangshan and Jiangsu LNG terminals achieved a total LNG gasification loading volume of 16.326 billion cubic meters, an increase of 3.1% year on year; the average load rate of the two terminals was 90.6%, an increase of 2.7 percentage points year on year. Compared with the first half of the year (2023H1 was 81.8%), it is in line with the company's previous guidelines (90%). The annual LNG plant turned a loss into a profit, with profit before tax of 0.2 billion yuan, processing volume reached 2,827 billion cubic meters. The average production load rate of 15 continuously operating plants was 45.4%, an increase of 1.1 percentage points over the previous year.
Propose a three-year dividend distribution plan to effectively enhance shareholder returns.
The company proposed a three-year dividend distribution plan to gradually increase the dividend ratio, aiming to increase the dividend rate to 45% at the end of 2025; in 2024 and 2025, the company will declare interim and final dividends (twice a year in total). The company's capital expenditure in 2023 was 5.348 billion yuan, a year-on-year decrease of 16.66%. Of these, sales of natural gas were 4.986 billion, LNG terminals were 316 million, and new energy was 46 billion yuan.
Profit Forecast and Valuation:
The original forecast for 2024-2025 was 72.663/8.132 billion yuan. Considering the obvious decline in the company's gas station business sales volume and exploration and development business profit, we adjusted the net profit forecast to 2024/2025 to 65.04/7.014 billion yuan, and added the 2026 forecast of 7.599 billion yuan. EPS was 0.75/0.81/0.88 respectively (the original forecast value was 0.84/0.94/-yuan), corresponding to 8.2/7.6/7 times PE (assuming 1 HKD = 0.91 yuan), maintaining a “buy” rating.
Risk warning: natural gas demand growth has slowed; international oil and gas prices have fluctuated greatly; the number of new users connected by the company falls short of expectations; implementation of the favorable price policy falls short of expectations; LPG sales fall short of expectations; estimates are subjective