In a report released today, Patricia Yeung from DBS downgraded ENN Energy Holdings (XNGSF – Research Report) to a Hold, with a price target of HK$70.00.
Patricia Yeung’s rating is based on several factors that influence ENN Energy Holdings’ current market position. Despite the company’s strong market presence as one of the largest gas distributors in China and its robust earnings growth from integrated energy and value-added businesses, the positives appear to be already reflected in the stock price. The company’s efforts in optimizing gas procurement and improving project efficiency are expected to support margin increases and earnings growth in the coming years.
However, the decision to downgrade the stock to a Hold rating comes amid concerns about potential risks such as weaker-than-expected economic growth, gas volume growth, and higher procurement costs, which could impact earnings negatively. Additionally, the stock’s recent price surge following the resumption of trading suggests that the market has already priced in much of the anticipated growth, leading to a more cautious outlook. The target price has been adjusted to HKD70, reflecting these considerations and the anticipated earnings growth from the privatisation transaction.
In another report released on March 28, UBS also maintained a Hold rating on the stock with a HK$62.00 price target.