Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

<ul>
<li>In the US, the third estimate of Q4/24 annualised US GDP inched up to 2.4% q-o-q (from 2.3% in the second estimate), mainly reflecting a downward revision to imports.</li>
<li>Separately, February pending home sales rose 2.0% m-o-m (1.0% e / -4.6% p), rebounding slightly from a record low but remaining well below historical levels.</li>
<li>The UST curve twisted steeper yesterday, with long-end yields rising to a one-month-high amid concerns over the impact of tariffs on US growth and inflation. </li>
</ul>


In the US, the third estimate of Q4/24 annualised US GDP inched up to 2.4% q-o-q (from 2.3% in the second estimate), mainly reflecting a downward revision to imports.
Separately, February pending home sales rose 2.0% m-o-m (1.0% e / -4.6% p), rebounding slightly from a record low but remaining well below historical levels.
The UST curve twisted steeper yesterday, with long-end yields rising to a one-month-high amid concerns over the impact of tariffs on US growth and inflation. 


Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>On the 26th March, <strong><a href="https://www.smartkarma.com/entities/enn-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:316:1" rel="noopener">ENN Energy (2688 HK)</a></strong> announced a cash/scrip Offer from <strong><a href="https://www.smartkarma.com/entities/enn-natural-gas-co-ltd" target="_blank" data-smartkarma-citation="entities:16456:1" rel="noopener">ENN Natural Gas (600803 CH)</a></strong> (ENN-NG), its largest shareholder.</li>
<li>The pushback is that the scrip portion pivots off the value of newly-listed ENN-NG H-shares. And the IFA's theoretical assessment on such leaves a lot to be desired.</li>
<li>A redacted version of ENN-NG's application proof is now out. Curiously, the share ratio - new ENN-NG H Shares for each ENN shares - is noticeably absent</li>
</ul>


On the 26th March, ENN Energy (2688 HK) announced a cash/scrip Offer from ENN Natural Gas (600803 CH) (ENN-NG), its largest shareholder.
The pushback is that the scrip portion pivots off the value of newly-listed ENN-NG H-shares. And the IFA's theoretical assessment on such leaves a lot to be desired.
A redacted version of ENN-NG's application proof is now out. Curiously, the share ratio - new ENN-NG H Shares for each ENN shares - is noticeably absent


ENN Energy (2688 HK): ENN Natural Gas' Application Proof Is Out. Interesting For What Is Not Present

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/enn-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:316:1" rel="noopener">ENN Energy (2688 HK)</a> is not required to submit a merger control filing to the SAMR, suggesting it is making a step ahead in meeting the pre-conditions. </li>
<li>The use of onshore bank loans and cash balance as a refinancing source and consideration payment will lower financing costs, boosting the value of ENN Natural Gas H-share.</li>
<li>The current share price is 9.3 and 17.7% below the low-bound and high-bound of our estimated value range. It is also less vulnerable to the current tariff war.</li>
</ul>



ENN Energy (2688 HK) is not required to submit a merger control filing to the SAMR, suggesting it is making a step ahead in meeting the pre-conditions. 
The use of onshore bank loans and cash balance as a refinancing source and consideration payment will lower financing costs, boosting the value of ENN Natural Gas H-share.
The current share price is 9.3 and 17.7% below the low-bound and high-bound of our estimated value range. It is also less vulnerable to the current tariff war.


ENN Energy (2688 HK): Privatisation Progressing Well Ahead

<ul>
<li>We calculated that after the privatisation of <a href="https://www.smartkarma.com/entities/enn-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:316:1" rel="noopener">ENN Energy (2688 HK)</a>, the EPS of <a href="https://www.smartkarma.com/entities/enn-natural-gas-co-ltd" target="_blank" data-smartkarma-citation="entities:16456:1" rel="noopener">ENN Natural Gas (600803 CH)</a> will be Rmb1.94 for FY25F and Rmb2.11 for FY26F.</li>
<li>By using ENN Energy's undisturbed PER (with and without a 10% discount) and <a href="https://www.smartkarma.com/entities/kunlun-energy-co-ltd" target="_blank" data-smartkarma-citation="entities:10054:1" rel="noopener">Kunlun Energy (135 HK)</a>'s ex-cash PER, ENN-NG H-share is worth 6.8-7.9x for FY25F and 6.3-7.2x for FY26F.</li>
<li>ENN-NG H-share is hence valued at HK$14.11-16.37, implying that ENN Energy's value under the privatisation proposal is HK$66.02-72.67, which is lower than Somerly's HK$80 estimate.</li>
</ul>


We calculated that after the privatisation of ENN Energy (2688 HK), the EPS of ENN Natural Gas (600803 CH) will be Rmb1.94 for FY25F and Rmb2.11 for FY26F.
By using ENN Energy's undisturbed PER (with and without a 10% discount) and Kunlun Energy (135 HK)'s ex-cash PER, ENN-NG H-share is worth 6.8-7.9x for FY25F and 6.3-7.2x for FY26F.
ENN-NG H-share is hence valued at HK$14.11-16.37, implying that ENN Energy's value under the privatisation proposal is HK$66.02-72.67, which is lower than Somerly's HK$80 estimate.


ENN Energy (2688 HK): Valuing ENN Natural Gas H-Share

<ul>
<li>
<a href="https://www.smartkarma.com/entities/kunlun-energy-co-ltd" target="_blank" data-smartkarma-citation="entities:10054:1" rel="noopener">Kunlun Energy (135 HK)</a> posted a healthy 2.6% earnings growth for 1H24. If not for the expiry of two oilfields last year, its earnings growth would have reached 6.8%. </li>
<li>Natural gas sales pre-tax margin contracted 0.5pp YoY, but has recovered significantly HoH. Other businesses have all seen good margin expansion. </li>
<li>The company has further accumulated net cash which increased 8.3% in the last six months. At HK$2.76/share, this equals 35% of the share price.</li>
</ul>



Kunlun Energy (135 HK) posted a healthy 2.6% earnings growth for 1H24. If not for the expiry of two oilfields last year, its earnings growth would have reached 6.8%. 
Natural gas sales pre-tax margin contracted 0.5pp YoY, but has recovered significantly HoH. Other businesses have all seen good margin expansion. 
The company has further accumulated net cash which increased 8.3% in the last six months. At HK$2.76/share, this equals 35% of the share price.


Kunlun Energy (135 HK): The Most Solid Play

China

Enn Natural Gas Co.,Ltd. offers natural gas engineering services. The Company provides natural gas engineering investment, gas station construction, and energy equipment distribution services. Enn Natural Gas also operates coal materials, chemicals,  and biopharmaceutical products trading businesses.

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ENN Natural Gas (600803 CH)

Lucror Analytics - Morning Views Asia

In the US, the third estimate of Q4/24 annualised US GDP inched up to 2.4% q-o-q (from 2.3% in the second estimate), mainly reflecting a downward...

Lucror Analytics

ENN Energy (2688 HK): ENN Natural Gas' Application Proof Is Out. Interesting For What Is Not Present

I still would not enter here. The H-share price may surprise to the downside. The Scheme may even get voted down. Unless you have a strong...

David Blennerhassett

ENN Energy (2688 HK): Privatisation Progressing Well Ahead

ENN Energy is progressing on meeting pre-conditions, with no merger control filing needed. Refinancing with onshore bank loans and using cash...

Osbert Tang, CFA

Kunlun Energy (135 HK): The Most Solid Play

Kunlun Energy reports 2.6% profit growth in 1H24. Natural gas sales margin contracted YoY but recovered HoH, while other businesses saw margin...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Lucror Analytics - Morning Views Asia

In the US, the third estimate of Q4/24 annualised US GDP inched up to 2.4% q-o-q (from 2.3% in the second estimate), mainly reflecting a downward...

Lucror Analytics

ENN Energy (2688 HK): ENN Natural Gas' Application Proof Is Out. Interesting For What Is Not Present

I still would not enter here. The H-share price may surprise to the downside. The Scheme may even get voted down. Unless you have a strong...

David Blennerhassett

ENN Energy (2688 HK): Privatisation Progressing Well Ahead

​ENN Energy is progressing on meeting pre-conditions, with no merger control filing needed. Refinancing with onshore bank loans and using cash...

Osbert Tang, CFA

ENN Energy (2688 HK): Valuing ENN Natural Gas H-Share

With privatisation of ENN Energy, ENN-NG H-share is valued at HK$14.11-16.37, implying ENN Energy's value at HK$66.02-72.67, lower than Somerly's...

Osbert Tang, CFA

Kunlun Energy (135 HK): The Most Solid Play

​Kunlun Energy reports 2.6% profit growth in 1H24. Natural gas sales margin contracted YoY but recovered HoH, while other businesses saw margin...

Osbert Tang, CFA

ENN Energy is progressing on meeting pre-conditions, with no merger control filing needed. Refinancing with onshore bank loans and using cash...

Kunlun Energy reports 2.6% profit growth in 1H24. Natural gas sales margin contracted YoY but recovered HoH, while other businesses saw margin...