研究报告全文：MN28Mar2023CMBInternationalGlobalMarketsEquityResearchCompanyUpdateENNEnergy2688HKEmergingfromthedownturnTargetPriceHK13590ENNEnergydeliveredFY22resultswithcoreprofitrisingby113YoYPreviousTPHK13200Despitea08YoYdeclineingrossprofitand244YoYdropinattributablenetprofitduetoeconomicdownturnexchangefluctuationandhighergascostUpDownside34ENNsintegrated-energybusinessandVASbusinessmaintainrobustgrowthCurrentPriceHK10170WebelieveENNsresultswillimprovein2023consideringthat1gassalesgrowthisexpectedtoreboundtolowdoubledigit2dollarmarginmayimproveChinaEnergybasedonlowergascostandmoreeffectiveprice-throughmeasures3MeganXiaCESGAwholesalesgasnetprofitmayfurtherrise4ENNsIEmaintainsarobust85237610836growthmomentum5theCompanyacceleratesproductpromotionofvalue-meganxiacmbicomhkaddedbusinesswhichshowsgreatgrowthpotentialENNistradingataroundFY23E12xPEwhichiscloseto-1SDofits5-yearavgPEThevaluationisstillattractiveWeraisedourSOTP-basedTPtoHK1359andmaintainBUYJackBaiCFArating85239000835jackbaicmbicomhkFY22resultsachievedcorenetprofitgrowthby113YoYduringeconomicdownstreamandCovid-19epidemicexpectafurtherimprovementin2023In2022ENNEnergyrecordedrevenueofStockDataRMB110051bnincreasedby182YoYItscoreprofitwentupby113MktCapHKmn1150320YoYtoRMB796bnHoweveritsgrossmargindecreasedby08ppttoAvg3mthstoHKmn1159143draggedbythehighgascoststhathavenotbeenfullypassedto52wHighLowHK132707805thecustomersBesidesENNEnergysattributablenetprofitdeclinedbyTotalIssuedSharesmn1000244YoYduetoeconomicdownturnandexchangefluctuationWeSourceFactSetbelievetheoverallperformanceofENNEnergywillimprovewiththerecoveryofgassalesbetterdollarmarginandsoundIEsegmentsgrowthShareholdingStructureXinnengHongKongEnergy327ThegrowthofretailgassalesmissedmgmtsguidancebutInvestmentwholesalesgasachievedimpressivenetprofitAffectedbyweakClTheCapitalGroup140SourceHKExgassalesandclimbinggascostENNstotalsgassaleswentupbyonly12YoYItsretailedgassalesincreasedby27YoYwhichwaslowerSharePerformancethanmgmtsguidanceof4-5YoYInparticularClsgassalesvolumeAbsoluteRelativeincreasedby24YoYaccountingforaround785ofretailgassales1-mth-132-128volumeHoweverthewholesalesgasnetprofitachievedgreatgrowth3-mth-40-55partiallyhedgingthedropoftheretailgassalesBesidesENNsdollar6-mth-49-143margindroppedtoRMB051cbmastheresultofhighergascostin2022InSourceFactSet2023webelievethegrowthofClgassalesvolumewillrisetolow-double12-mthPricePerformancedigitandthedollarmarginwillimprovetoRMB054cbmENNEnergysIEsegmentwasgainingmomentumIn2022therevenueofENNsIEbusinesssurgedby403YoYtoRMB1095bnwhichwasslightlybelowtheincreaseof50YoYguidedbyitsmanagementHoweveritsgrossprofitadvancedby14YoYtoRMB156bnUpto2022ENNhad210integratedprojectsputintooperationand60IEprojectswerenewlyaddedENNgeneratedthesalesof22239mnkWhofintegratedenergyupby166YoYWeexpectENNtohave54projectsunderSourceFactSetconstructionanditsgainofthecomprehensiveenergybusinessisexpectedtoincreaseby30in2023maintainingastableandrapiddevelopmentEarningsSummaryYE31DecFY21AFY22AFY23EFY24EFY25ERevenueRMBmn93113110051120109131224146504YoYgrowth3001829193116NetprofitRMBmn775505865099207106227104059YoYgrowth2352446927120EPSReportedRMB688520867921901YoYgrowth2322446676222PEx166187129117105PBx3628282521ROE234157231210180SourceCompanydataBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1MOREREPORTSFROMBLOOMBERGRESPCMBRGOORhttpwwwcmbicomhk28Mar2023ENNEnergysvalue-addedbusinessshowedgreatpotentialIn2022VASsrevenueincreasedby33YoYtoRMB311bnandgrossprofitwentupby206YoYtoRMB2078mnENNactivelyacceleratedproductpromotionandcustomerdevelopmentItsnewlydevelopedcustomerspenetrationraterosefrom101to272in2022Inourviewvalue-addedbusinessstillhasexcellentgrowthpotentialWeraisedourENNsSOTP-basedTPtoHK1359andmaintainBUYratingForFY23webelieveENNsresultswillreboundconsideringrecoveryofretailgassalesbetterdollarmarginrobustIEgrowthmomentumandresilientvalue-addedbusinessThusweraisedourSOTPpricetoHK1359basedon1retailedgassalesgrowthrecoveryto10YoY2dollarmarginimprovementtoRMB054cbm3IEsrevenueriseby40YoYTheTPreflects15xFY23EPEclosetoENNs5-yearavgPEENNisnowtradingatFY23E12xPEaround1-SDofits5-yearavgPEThevaluationisattractiveMaintainBUYratingFigure1PEbandSourceCompanydataCMBIGMestimatesFigure2CompTableClosingMktcapEPS23-25EPERPBRPriceCompanyTickerHKHKmn23E24E25ECAGR23E24E25E23E24E25EENNENERGY2688HK101701150320076885094310811711058956222197177TIANLUNGASHOL1600HK458462592073087nana548461na060055naCHINAGASHOLDIN384HK10645788517127144160124838738663084078074CHINARESGAS1193HK2855660650730233335788945857799135125117TOWNGASSMARTEN1083HK3351091673041053060208811637556050048046KUNLUNENERGY135HK626542041007707908448717693653074070066Average847473101010SourceCompanydataBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE228Mar2023Figure3Keydataassumption2023E2024E2025ETotalgassalesvolumemcbm359953924042803Retailgassalesvolumemcbm284283076633227ResidentialconnectionCTGinclmmHH242231215RevenueHKmn120109131224146504NetIncomeHKmn99211062310406CoreEPSHK780842891SourceCompanydataCMBIGMestimatesFigure4DCFValuationforIESegmentDCFValuationforIESegment2023E2024E2025E2026E2027E2028E2029E2030E2031E2032EENNsIEsalesbnKWh3225435354426258719782769352102871111011999Implyingmarketshare106142178195214234252264271279ENNsIErevenueRMBmn12361164772044723424268473078534709381194112144363GrossprofitRMBmn19778285983589641591482065589163710707337712584092Grossprofitmargin160174176178180182184186188190EBITRMBmn1349205726383119368643555054570963297012EBITMargin109125129133137141146150154158Taxrate25252525252525252525DepreciationRMBmn61381710141162133215271722189120402200Changeinworkingcapital-226-659-635-476-548-630-628-546-480-519CAPEXRMBmn-2400-2000-2500-3000-3000-3000-3000-3000-2400-2400Freecashflow-1001-298-1432554911631884262639064541Discountyear12345678910Discountfactor093086080074069064059055051047DiscountedfreecashflowRMBmn-928-257-114183777421115144319912147TerminalvalueRMBmn97930TerminalEVEBITDAx1063DiscountedTerminalvalueRMBmn46313Terminalperpetualgrowth300SourceCompanydataCMBIGMestimatesFigure5IEvaluationValuationsRMBmnDiscountedTerminalValue46313Terminalperpetualgrowth3TerminalEVEBITDA106TotaldiscountFCF7463PanEnergyValue53777DiscountFCFoftotal139Terminalvalueoftotal861IEvaluepershareRMB4748IEvaluepershareHK5720SourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE328Mar2023Figure6TraditionalbusinessvaluationDCFValuationFY23EFY24EFY25EFY26EFY27EFY28EFY29EFY30EFY31EFY32EKeyoperatingforecastsCitygassalesvolumemcbm28428312713439837838408654413447664514785559660044YoYchange96100100100808080808080Wholesalesgasvolumemcbm75678323915610071108771174712687137021479815982YoYchange120100100100808080808080Annualresidentialconnection24232221212019181717YoYchange158-40-40-40-40-40-40-40-40-40Accumulatedresidentialcustomer308332354375396415434452470487TurnoverHKmn120109131224146504160632173713185254194783201880206208207535Turnovergrowth919311696816651362106EBITHKmn14920159611580416525180441942820623215762224522595EBITmargin124122108103104105106107108109Taxrate240240240240240240240240240240DDA-HKmn2886317434593793410243744599476748694901CAPEXHKmn-13207-9031-9035-9306-9585-9872-10169-10474-10788-11111Investinworkingcapital3661347297-1130-1047-923-762-568-346-106Freecashflow4679662167335916718483449342101231064110855IEFCF-1001-298-1432554911631884262639064541NonIEFCF56806919687558916636718174587497673513631478Years12345678910Discountfactor093086080074069064059055051047Discountfreecashflow5270595754924366456345824415411834332986Terminalvalue117835Terminalperpetualgrowth2TerminalEVEBITDAexclIE644ValuationsHKmnWACCCalculationsTerminalvalue117835Costofdebt40Terminalperpetualgrowth2Taxrate250TerminalEVEBITDA644Aftertaxcostofdebt30TotaldiscountFCF39914Costofequity98Discountterminalvalue55727Adjustedbeta070Firmvalue95641Marketriskpremium115DiscountFCFoftotal583Riskfreerate18Terminalvalueoftotal417ofdebtfinancing300AddCashcashequivalent5470WACC78LessDebt19129Non-controllinginterest6876EquityValue-RMBmn75106Numberofshares1126SharefairvalueRMB6667SharefairvalueHK75992022EPER12822023EPER761SourceUpsideCompanydataCMBIGMestimates-502Figure7IEvaluationSOTPValuationTraditionalbusinessvalue-RMB6667IEvalue-RMB4748ENNsTotalvalue11415FXrateHKRMB084Targetprice-HK13590SourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE428Mar2023FocusChartsFigure8ENNstotalgassalesFigure9ENNsgassalesmixbcm100452090207210392261258237216401553608013111095331327152035119704730296101302709060102550623616610205716015405681530-1210020510124142142158162163--5020192020202120222023E2024E20192020202120222023E2024ETotalgassalesyoychange-RHSResidentialCIVehiclesrefuelingstationsWholesalegasSourceCompanydataCMBIGMestimatesSourceCompanydataCMBIGMestimatesFigure10ENNsClgassalesvolumeFigure11ENNsIEsegmentinrevenuemixmcbm200188300001792018015923951160250002217713719900203751514020000168781533610112010088150008010100847010000802456050003940-02020192020202120222023E2024E00CIgassalesvolumeyoychange-RHS20192020202120222023E2024ESourceCompanydataCMBIGMestimatesSourceCompanydataCMBIGMestimatesFigure12ENNstotalrevenuegrowthFigure13ENNssellingandadminexpensesRMBbn54445401401314039383812041203001103031009321413721211111180701821562016091930401020192020202120222023E2024E2020Sellinganddistributioncosts0020192020202120222023E2024EAdministrativeexpenses數列1Revenuegrowth-RHSSourceCompanydataCMBIGMestimatesSourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE528Mar2023FinancialSummaryINCOMESTATEMENT2020A2021A2022A2023E2024E2025EYE31DecRMBmnRevenue7161793113110051120109131224146504Costofgoodssold592857905794295101493111246126106Grossprofit123321405615756186161997820397Operatingexpenses418148475441588563647032Sellingexpense95111221180132114431612Adminexpense323037254261456449215421Operatingprofit165131890321197245012634327429Otherincome9521077953124312811335Othergainslosses2829841569107190190ShareoflossesprofitsofassociatesJV78269925839876914EBITDA122481422812319178071913519263Depreciation208122592595288631743459EBIT10167119699724149201596115804Interestincome609576672700700700Pre-taxprofit9558113939052142201526115104Incometax222723982388341336633625Aftertaxprofit733189956664108081159811479Minorityinterest105312407998879761073Discontinuedoperations62787755586599211062310406Netprofit62787755586599211062310406BALANCESHEET2020A2021A2022A2023E2024E2025EYE31DecRMBmnCurrentassets235682755827133277833233737278Cashequivalents8630868480565470817010591Restrictedcash116363458230240249Accountreceivables90531056810675129271412515772Inventories128515081708216223622637Prepayment000000FinancialassetsatFVTPL40617371488148814881488Othercurrentassets334639234110492153776003Contractassets732775638585576538Non-currentassets664757243075218861949236198318PPE418614679350380591886421468905Right-of-useassets212921192323230523872463Deferredincometax137012121557228224932784InvestmentinJVsassos776087188477102851116812116Intangibles444643114549397337853585Goodwill251125202520276028803000FinancialassetsatFVTPL505253524327432743274327Othernon-currentassets134614051085107511061138Totalassets9004399988102351113977124698135596Currentliabilities332334157936082432774589849039Short-termborrowings459061506341756178938225Accountpayables8302101728066135181477216491Taxpayable9719091517128714681604Othercurrentliabilities503993654657473951315593Leaseliabilities897591919191Contractliabilities142421490815410160821654417035Non-currentliabilities206381625920714195312055421747Long-termborrowings321229932825298830733165Convertiblebonds000000Obligationsunderfinanceleases000000Deferredincome256227852974360339374395Othernon-currentliabilities148641048114915129411354414187Totalliabilities538715783856796628086645370786Sharecapital117117117118118118Otherreserves304443566038917466965408760998Totalshareholdersequity305613577739034468145420561116Minorityinterest561163736521687672667695Totalequityandliabilities9004399988102351116498127923139597PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE628Mar2023CASHFLOW2020A2021A2022A2023E2024E2025EYE31DecRMBmnOperatingProfitbeforetaxation9558113939052142201526115104Depreciationamortization208122592595288631743459Taxpaid155420791936373933593321Changeinworkingcapital20818715393661347297Others18131285145515721729Netcashfromoperations9696117566888155741385213811InvestingCapitalexpenditure390649323587880850264691Others289228124732449841144463Netcashfrominvesting6798774483191330691409154FinancingDividendpaid168822902004217832683531Netborrowings38835995383830830830Others306117772460178728423066Netcashfromfinancing26731822784395720122236NetchangeincashCashatthebeginningoftheyear7373759813433415954708170Others7148176322707284927705750Cashattheendoftheyear22558359274131127002421GROWTH2020A2021A2022A2023E2024E2025EYE31DecRevenue203001829193116Grossprofit951401211827321Operatingprofit761451211567541EBITDA791621344457507EBIT631771885347010Netprofit1072352446927120PROFITABILITY2020A2021A2022A2023E2024E2025EYE31DecGrossprofitmargin172151143155152139Operatingmargin231203193204201187EBITDAmargin171153112148146131ReturnonequityROE223234157231210180GEARINGLIQUIDITYACTIVITIES2020A2021A2022A2023E2024E2025EYE31DecCurrentratiox070708060708Receivableturnoverdays106109112121127naInventoryturnoverdays106109112121127naPayableturnoverdays686720634673792naVALUATION2020A2021A2022A2023E2024E2025EYE31DecPE144166187129117105PB303628282521SourceCompanydataCMBIGMestimatesNoteThecalculationofnetcashincludesfinancialassetsPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE728Mar2023DisclosuresDisclaimersAnalystCertificationTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportinwholeorinpartcertifiesthatwithrespecttothesecuritiesorissuerthattheanalystcoveredinthisreport1alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthesubjectsecuritiesorissuerand2nopartofhisorhercompensationwasisorwillbedirectlyorindirectlyrelatedtothespecificviewsexpressedbythatanalystinthisreportBesidestheanalystconfirmsthatneithertheanalystnorhisherassociatesasdefinedinthecodeofconductissuedbyTheHongKongSecuritiesandFuturesCommission1havedealtinortradedinthestockscoveredinthisresearchreportwithin30calendardayspriortothedateofissueofthisreport2willdealinortradeinthestockscoveredinthisresearchreport3businessdaysafterthedateofissueofthisreport3serveasanofficerofanyoftheHongKonglistedcompaniescoveredinthisreportand4haveanyfinancialinterestsintheHongKonglistedcompaniescoveredinthisreportCMBIGMRatingsBUYStockwithpotentialreturnofover15overnext12monthsHOLDStockwithpotentialreturnof15to-10overnext12monthsSELLStockwithpotentiallossofover10overnext12monthsNOTRATEDStockisnotratedbyCMBIGMOUTPERFORMIndustryexpectedtooutperformtherelevantbroadmarketbenchmarkovernext12monthsMARKET-PERFORMIndustryexpectedtoperformin-linewiththerelevantbroadmarketbenchmarkovernext12monthsUNDERPERFORMIndustryexpectedtounderperformtherelevantbroadmarketbenchmarkovernext12monthsCMBInternationalGlobalMarketsLimitedAddress45FChampionTower3GardenRoadHongKongTel85239000888Fax85239000800CMBInternationalGlobalMarketsLimitedCMBIGMisawhollyownedsubsidiaryofCMBInternationalCapitalCorporationLimitedawhollyownedsubsidiaryofChinaMerchantsBankImportantDisclosuresTherearerisksinvolvedintransactinginanysecuritiesTheinformationcontainedinthisreportmaynotbesuitableforthepurposesofallinvestorsCMBIGMdoesnotprovideindividuallytailoredinvestmentadviceThisreporthasbeenpreparedwithoutregardtotheindividualinvestmentobjectivesfinancialpositionorspecialrequirementsPastperformancehasnoindicationoffutureperformanceandactualeventsmaydiffermateriallyfromthatwhichiscontainedinthereportThevalueofandreturnsfromanyinvestmentsareuncertainandarenotguaranteedandmayfluctuateasaresultoftheirdependenceontheperformanceofunderlyingassetsorothervariablemarketfactorsCMBIGMrecommendsthatinvestorsshouldindependentlyevaluateparticularinvestmentsandstrategiesandencouragesinvestorstoconsultwithaprofessionalfinancialadvisorinordertomaketheirowninvestmentdecisionsThisreportoranyinformationcontainedhereinhavebeenpreparedbytheCMBIGMsolelyforthepurposeofsupplyinginformationtotheclientsofCMBIGMoritsaffiliatestowhomitisdistributedThisreportisnotandshouldnotbeconstruedasanofferorsolicitationtobuyorsellanysecurityoranyinterestinsecuritiesorenterintoanytransactionNeitherCMBIGMnoranyofitsaffiliatesshareholdersagentsconsultantsdirectorsofficersoremployeesshallbeliableforanylossdamageorexpensewhatsoeverwhetherdirectorconsequentialincurredinrelyingontheinformationcontainedinthisreportAnyonemakinguseoftheinformationcontainedinthisreportdoessoentirelyattheirownriskTheinformationandcontentscontainedinthisreportarebasedontheanalysesandinterpretationsofinformationbelievedtobepubliclyavailableandreliableCMBIGMhasexertedeveryeffortinitscapacitytoensurebutnottoguaranteetheiraccuracycompletenesstimelinessorcorrectnessCMBIGMprovidestheinformationadvicesandforecastsonanASISbasisTheinformationandcontentsaresubjecttochangewithoutnoticeCMBIGMmayissueotherpublicationshavinginformationandorconclusionsdifferentfromthisreportThesepublicationsreflectdifferentassumptionpoint-of-viewandanalyticalmethodswhencompilingCMBIGMmaymakeinvestmentdecisionsortakeproprietarypositionsthatareinconsistentwiththerecommendationsorviewsinthisreportCMBIGMmayhaveapositionmakemarketsoractasprincipalorengageintransactionsinsecuritiesofcompaniesreferredtointhisreportforitselfandoronbehalfofitsclientsfromtimetotimeInvestorsshouldassumethatCMBIGMdoesorseekstohaveinvestmentbankingorotherbusinessrelationshipswiththecompaniesinthisreportAsaresultrecipientsshouldbeawarethatCMBIGMmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreportandCMBISwillnotassumeanyresponsibilityinrespectthereofThisreportisfortheuseofintendedrecipientsonlyandthispublicationmaynotbereproducedreprintedsoldredistributedorpublishedinwholeorinpartforanypurposewithoutpriorwrittenconsentofCMBIGMAdditionalinformationonrecommendedsecuritiesisavailableuponrequestForrecipientsofthisdocumentintheUnitedKingdomThisreporthasbeenprovidedonlytopersonsIfallingwithinArticle195oftheFinancialServicesandMarketsAct2000FinancialPromotionOrder2005asamendedfromtimetotimeTheOrderorIIarepersonsfallingwithinArticle492atodHighNetWorthCompaniesUnincorporatedAssociationsetcoftheOrderandmaynotbeprovidedtoanyotherpersonwithoutthepriorwrittenconsentofCMBIGMForrecipientsofthisdocumentintheUnitedStatesCMBIGMisnotaregisteredbroker-dealerintheUnitedStatesAsaresultCMBIGMisnotsubjecttoUSrulesregardingthepreparationofresearchreportsandtheindependenceofresearchanalystsTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportisnotregisteredorqualifiedasaresearchanalystwiththeFinancialIndustryRegulatoryAuthorityFINRATheanalystisnotsubjecttoapplicablerestrictionsunderFINRARulesintendedtoensurethattheanalystisnotaffectedbypotentialconflictsofinterestthatcouldbearuponthereliabilityoftheresearchreportThisreportisintendedfordistributionintheUnitedStatessolelytomajorUSinstitutionalinvestorsasdefinedinRule15a-6undertheUSSecuritiesExchangeActof1934asamendedandmaynotbefurnishedtoanyotherpersonintheUnitedStatesEachmajorUSinstitutionalinvestorthatreceivesacopyofthisreportbyitsacceptancehereofrepresentsandagreesthatitshallnotdistributeorprovidethisreporttoanyotherpersonAnyUSrecipientofthisreportwishingtoeffectanytransactiontobuyorsellsecuritiesbasedontheinformationprovidedinthisreportshoulddosoonlythroughaUS-registeredbroker-dealerForrecipientsofthisdocumentinSingaporeThisreportisdistributedinSingaporebyCMBISingaporePteLimitedCMBISGCompanyRegnNo201731928DanExemptFinancialAdviserasdefinedintheFinancialAdvisersActCap110ofSingaporeandregulatedbytheMonetaryAuthorityofSingaporeCMBISGmaydistributereportsproducedbyitsrespectiveforeignentitiesaffiliatesorotherforeignresearchhousespursuanttoanarrangementunderRegulation32CoftheFinancialAdvisersRegulationsWherethereportisdistributedinSingaporetoapersonwhoisnotanAccreditedInvestorExpertInvestororanInstitutionalInvestorasdefinedintheSecuritiesandFuturesActCap289ofSingaporeCMBISGacceptslegalresponsibilityforthecontentsofthereporttosuchpersonsonlytotheextentrequiredbylawSingaporerecipientsshouldcontactCMBISGat6563504400formattersarisingfromorinconnectionwiththereportPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE8