Kunlun Energy: it's a gas! Here is one way of boosting returns: throw in two full years" worth of numbers from a company you have owned for just eight days. China's Kunlun Energy did just that last week. This week, it raised $1.4bn in fresh equity. The cash call, equivalent to about 11 per cent of the existing share base and supported by Temasek and Richard Ong's RRJ Capital, was always likely to be a breeze. Kunlun's parent is PetroChina and its business is distributing natural gas just as China begins a big shift towards cleaner energy, specifically gas. About 3 per cent of China's power generation comes from gas right now, compared with two-thirds from coal. However, gas usage is set to soar, more than doubling from current levels to 260bn cubic metres by 2015 and by half as much again by 2020, according to Bernstein. But as for its accounting? Because the assets - notably a 60 per cent stake in the Beijing gas pipeline - were acquired from PetroChina, Kunlun's controlling shareholder (59 per cent after the share sale), Kunlun says that it can account for the deal as if it had owned a controlling economic interest for the whole year and for 2010, even though the deal only closed on December 23 2011. The additions almost doubled 2010 sales and profits. Kunlun's fans may have to get used to such disorienting treatment: the assumed purpose of its capital raising is to buy more assets from PetroChina. The assets do however make the company more "real." Previously, investors were betting on what might be transferred. Now Kunlun trades at a more reasonable 3 times its book value from a peak of 5 times. Yet the Hang Seng composite energy index trades at less than 2 times. Investors should not get too excited about Kunlun until it makes the new asset deals - and explains how it will account for them.