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

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

Shenton Research

Shenton Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of September 18th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight flows for Knowledge Atlas, AIA, Innovent Bio, Beone Medicines, Zj Innolight, Hua Hong Semi, Cspc Pharma, Smic, Yofc, Akeso.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of September 18th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for Knowledge Atlas, AIA, Innovent Bio, Beone Medicines, Zj Innolight, Hua Hong Semi, Cspc Pharma, Smic, Yofc, Akeso.


HK Connect Flows Weekly (Sep 18th): Knowledge Atlas, AIA, Innovent Bio, Beone Medicines, Cspc Pharma

<ul>
<li>
<a href="https://www.smartkarma.com/entities/enn-energy-holdings-limited" target="_blank" data-smartkarma-citation="entities:316:1" rel="noopener">ENN Energy (2688 HK)</a>'s 1H26 results demonstrated that, even without <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>'s privatisation, its fundamentals remain solid. </li>
<li>Its gross margin decline has stabilised; with cost control initiatives, the FY26 earnings will stay healthy. Upside will come from improvement in the IE and smart home segments.</li>
<li>At 7.6x PER for FY26 and FY27, it is among the cheapest in the HSI and the gas utilities sector. Its P/B is now over 1SD below average. </li>
</ul>



ENN Energy (2688 HK)'s 1H26 results demonstrated that, even without ENN Natural Gas (600803 CH)'s privatisation, its fundamentals remain solid. 
Its gross margin decline has stabilised; with cost control initiatives, the FY26 earnings will stay healthy. Upside will come from improvement in the IE and smart home segments.
At 7.6x PER for FY26 and FY27, it is among the cheapest in the HSI and the gas utilities sector. Its P/B is now over 1SD below average. 


ENN Energy (2688 HK): Things Are Not That Bad Without the Privatisation

<ul>
<li>The privatisation proposal for <a href="https://www.smartkarma.com/entities/enn-energy-holdings-limited" target="_blank" data-smartkarma-citation="entities:316:1" rel="noopener">ENN Energy (2688 HK)</a> has lapsed with the parties not extending the Long Stop Date. Hence, the focus will return to fundamentals. </li>
<li>
<a href="https://www.smartkarma.com/entities/enn-energy-holdings-limited" target="_blank" data-smartkarma-citation="entities:316:1" rel="noopener">ENN Energy (2688 HK)</a> has underperformed the gas utility peers lately, and we do not expect a significant negative reaction. Instead, the removal of overhang should be positive. </li>
<li>It is now the cheapest one in the sector, trading on 7.5x FY26 PER. Its P/B of 0.92x is also the lowest in the last five years.</li>
</ul>


The privatisation proposal for ENN Energy (2688 HK) has lapsed with the parties not extending the Long Stop Date. Hence, the focus will return to fundamentals. 

ENN Energy (2688 HK) has underperformed the gas utility peers lately, and we do not expect a significant negative reaction. Instead, the removal of overhang should be positive. 
It is now the cheapest one in the sector, trading on 7.5x FY26 PER. Its P/B of 0.92x is also the lowest in the last five years.


ENN Energy (2688 HK): No Privatisation Now, Then What?

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>More than a year in, the <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> offer for <a href="https://www.smartkarma.com/entities/enn-energy-holdings-limited" target="_blank" data-smartkarma-citation="entities:316:1" rel="noopener">ENN Energy (2688 HK)</a> lapses as the long stop date (12 June) was not extended.</li>
<li>The offer was effectively blocked, not by an explicit CSRC rejection with stated reasons, but by the approval process failing to conclude within a viable timeframe.</li>
<li>The CSRC's non-approval is unprecedented, as the transaction has received NDRC, MoC, and SAFE approvals. My estimated deal-break price is HK$49.00 (broadly in line with the last close).</li>
</ul>


More than a year in, the ENN Natural Gas (600803 CH) offer for ENN Energy (2688 HK) lapses as the long stop date (12 June) was not extended.
The offer was effectively blocked, not by an explicit CSRC rejection with stated reasons, but by the approval process failing to conclude within a viable timeframe.
The CSRC's non-approval is unprecedented, as the transaction has received NDRC, MoC, and SAFE approvals. My estimated deal-break price is HK$49.00 (broadly in line with the last close).


ENN Energy (2688 HK): Precedent Set as the Offer Is Effectively Blocked by Regulators

Hong Kong

Towngas Smart Energy Company Limited is primarily engaged in the sales and distribution of piped gas, the construction of gas pipelines, and the operation of city gas pipeline networks in mainland China. The company is actively expanding its smart energy businesses, including renewable energy generation, digitalized energy management, and carbon management services. It is headquartered in North Point, Hong Kong, and was founded in 1998.

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Towngas Smart Energy (1083 HK)

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

HK Connect Flows Weekly (Sep 18th): Knowledge Atlas, AIA, Innovent Bio, Beone Medicines, Cspc Pharma

We analyzed southbound Hong Kong connect flows in the past week and highlighted flows for Knowledge Atlas (2513 HK), AIA (1299 HK), Innovent Bio...

Ke Yan, CFA, FRM

ENN Energy (2688 HK): Things Are Not That Bad Without the Privatisation

ENN Energy's fundamentals remain solid despite the fallout of privatisation. Stable earnings with upside from IE and smart home are its edges. It...

Osbert Tang, CFA

ENN Energy (2688 HK): No Privatisation Now, Then What?

ENN Energy's 9.8% earnings growth in 1H26 is ahead of the full-year market consensus forecast of 1.5%. Guidance for FY26 is flattish to slight...

Osbert Tang, CFA

ENN Energy (2688 HK): Precedent Set as the Offer Is Effectively Blocked by Regulators

The CSRC's non-approval is unprecedented, as the offer has already received approvals from the NDRC, MoC, and SAFE. My estimated deal-break price...

Arun George

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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

HK Connect Flows Weekly (Sep 18th): Knowledge Atlas, AIA, Innovent Bio, Beone Medicines, Cspc Pharma

We analyzed southbound Hong Kong connect flows in the past week and highlighted flows for Knowledge Atlas (2513 HK), AIA (1299 HK), Innovent Bio...

Ke Yan, CFA, FRM

ENN Energy (2688 HK): Things Are Not That Bad Without the Privatisation

ENN Energy's fundamentals remain solid despite the fallout of privatisation. Stable earnings with upside from IE and smart home are its edges. It...

Osbert Tang, CFA

ENN Energy (2688 HK): No Privatisation Now, Then What?

ENN Energy's 9.8% earnings growth in 1H26 is ahead of the full-year market consensus forecast of 1.5%. Guidance for FY26 is flattish to slight...

Osbert Tang, CFA

ENN Energy (2688 HK): Precedent Set as the Offer Is Effectively Blocked by Regulators

The CSRC's non-approval is unprecedented, as the offer has already received approvals from the NDRC, MoC, and SAFE. My estimated deal-break price...

Arun George

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