Bank of America Securities: Maintaining Kunlun Energy's (00135) “Neutral” Rating and Raising the Target Price to HK$7.5

The Zhitong Finance App learned that Bank of America Securities released a research report stating that it maintained the “neutral” rating of Kunlun Energy (00135), raised the net profit forecast by 5% to 6% from 2026 to 2028 based on the performance of the first half of the year, and raised the target price from HK$7.4 to HK$7.5, based on the unchanged target market account ratio of 0.8 times, which is consistent with the historical average after 2020. The bank believes that the current price of Kunlun Energy corresponds to the predicted dividend rate of about 5.9% in 2026, but profit growth is expected to moderate as the growth of mainland natural gas demand slows down.

Kunlun Energy's net profit in the first half of the year reached 3.3 billion yuan, up 4.6% year on year, slightly higher than the forecast. Profit growth was mainly due to rising energy prices, which led to the profit performance of the liquefied petroleum gas (LPG) distribution and exploration and production (E&P) business. Since minority interests in such businesses account for a relatively low share, they contribute significantly to net profit. The management declared an interim dividend of RMB 19 cents per share, an increase of 15% over the previous year, with a dividend ratio of 50%, in line with the guidelines.

According to the report, the gross margin of the LPG distribution business improved by 62 yuan or 32% year on year, but total sales volume fell 11% year over year to 2.7 million tons. In terms of exploration and production business, the price of oil was 71.6 US dollars per barrel, up 14% year on year; equity production was 4 million barrels of oil equivalent, down 2% year on year.