The Zhitong Finance App learned that J.P. Morgan Chase released a research report stating that while maintaining the Kunlun Energy (00135) “gain” rating, the target price was raised from HK$7.6 to HK$9, an increase of about 18%.

The bank pointed out that Kunlun Energy is a midstream and downstream gas platform for CNPC (00857). Gas sales account for 60% to 65% of profits. It also operates two LNG terminals, contributing about 25% of net profit. The company traded at a price-earnings ratio of about 8.5 times the 2027 forecast, similar to the urban gas industry. The bank believes that this valuation ignores the value of LNG terminals. Terminal volume growth is high (compound annual growth rate of 14% from 2027 to 2028), and profit margins are far more stable than urban gas.

In addition, the terminal business also provides stable cash flow, which is the main reason why Kunlun Energy's operating cash flow has historically been more stable than that of the urban gas industry. The bank also said that the company's biggest growth potential lies in dividends. The dividend per share is expected to grow at a compound annual rate of 9% from 2026 to 2028, and parent company support is also a long-term advantage.

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