[ET Net News Agency, 20 November 2017] HSBC Global Research cut its target price for
KunLun Energy (00135) to HK$8.2 from HK$8.9, and maintained its "buy" rating.
The research house said recent news flow has been mixed for Kunlun Energy (KE) prompting
HSBC to review its thesis and assumptions.
HSBC believes that future share liquidity of Kunlun and investor interest may be
negatively affected by its exit from Hang Seng Index (HSI).
Also the bad news is that the settlement pipeline transmission tariff is 15% lower than
HSBC's expectation, which reduces pipeline cash flow in the research house's model.
However, the acquisition of Jingtang Co. presents an opportunity to further integrate and
broaden geographic coverage of Kunlun Gas, generate synergies across various businesses,
enhance cost control and improve operation efficiency and profitability.
HSBC cut its 2017-19 earnings by -1%/-11%/-13% respectively. (KL)