bullish

Kunlun Energy

Will Investors Find Shangri-La in Kunlun?

929 Views14 Feb 2021 14:08
SUMMARY

In 1933, British author James Hilton published a book called Lost Horizon, which was four years later more famously made into a movie of the same name by Frank Capra. The movie depicts a love story in a mythical utopia hidden in the mountains - a paradise removed from the earth, unbothered by the cares of the world, where people live very long lives in harmony with each other and their environment.

It is a fabulous movie in terms of scenery and sets, though its treatment of non-western culture is somewhat 1937-ish.

The name of this temperate paradise on earth "found" by plane crash survivor Robert Conway (the character played by Ronald Colman) is the now-famous Shangri-La and it is at the western end of the Kunlun Mountains (崑崙山).

The subject of this insight is Kunlun Energy (昆侖能源有限公司) and as you can see, the characters of the two Kunluns have nothing to do with each other, but it's a nice movie.

The News and The Backdrop

On 22 December last year, HK-listed China energy investment holdco Kunlun Energy (135 HK) made an announcement regarding the sale of its 60% equity interest in Beijing Pipeline and 75% equity interest in Dalian LNG to an entity called PipeChina, which is 29.9% owned by PetroChina (857 HK).

Osbert Tang, CFA published a report on 23 December regarding the sale, and subsequently another in the middle of January regarding how Kunlun Energy would look on a pro-forma basis afterwards.

I think this deserves a closer look.

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