[ET Net News Agency, 18 October 2017] Deutsche Bank lifted its target price for Kunlun
Energy (00135) to HK$8.7 from HK$8.5, and maintained its "buy" rating.
The research house said the LNG market is fully liberalized, the market price is a
timely reflection of supply/demand dynamics. China's average LNG ex-factory prices reached
a two-year-high level of Rmb3,900/ton (+24% yoy) in early October, or Rmb0.6/cm higher
than the same period last year. This is positive for Kunlun's LNG processing business but
puts pressure on those projects using LNG as a source gas.
But DB said gas distributors that were squeezed during the previous winter (like Kunlun)
will likely have higher risks of margin squeeze. But Kunlun's downstream margin squeeze
should be partially compensated by the better profitability of LNG processing plants. (KL)