Kunlun Energy outlook negative amid sluggish onshore LNG market: Barclays

It has larget domestic LNG market share.

It has been observed that was once seen as an attractive price arbitrage idea between China’s gas-rich north and the gas-hungry south has turned out to be a disappointment for producers that jumped on the onshore liquefaction bandwagon.

According to a research note from Barclays, as prices for domestic gas rise following the recent reform, domestic LNG’s advantage over imports has diminished. Related to this, the report also noted that Barclays remain negative on the outlook for Kunlun (UW), which has the largest market share in domestic LNG.

Here's more from Barclays:

Meanwhile, China has rapidly built up nearly 20bcm/year of onshore LNG facilities, with capacity rising 60% in 2014 ytd despite weak demand, leading to overcapacity and falling utilisation.

Factoring in a weak outlook across all other business segments, we cut our earnings forecasts for 2014-16E by 14-22% and lower our SOTP-based PT 9% to HK$10.00.