Golden Go Finance | Guoyuan International Research indicates that ENN ENERGY (02688) reported a 4.8% increase in retail gas volume for the first three quarters, reaching 18.819 billion cubic meters, maintaining a full-year gas volume growth guidance of 5%. As of the end of September, the company has a cumulative operational scale of 347 pan-energy projects, with pan-energy business sales volume increasing by 21.4% year-on-year to 29.668 billion kilowatt-hours. The scale of installed capacity under construction exceeds 830 MW, with several projects expected to begin operating in the fourth quarter, and new projects are anticipated to contribute additional revenue. Furthermore, the workload generated by managed projects will increase in the fourth quarter, with Q4 sales volume expected to rise month-on-month, projecting that the company's full-year pan-energy business sales volume and gross profit will grow within a range of 20-30%.
The bank indicates that the company announced it will use no more than 0.3 billion Hong Kong dollars to instruct the trustee to continue purchasing shares in the open market. Currently, the stock pool used for Stock-based Incentive is sufficient, and subsequent share repurchases will be canceled, which will directly enhance the company's EPS. In 2024, capital expenditure is expected to be at levels of 4.5-4.6 billion yuan, significantly down from the initial plan of 8 billion yuan for the whole year, mainly based on the company's relatively cautious investment strategy. It is anticipated that the cash on hand by the end of 2024 will increase significantly, and besides prioritizing debt repayment, there is also a possibility for increasing buybacks and dividends. Overall, it is determined that the company's future payout ratio will steadily increase, with a projected dividend yield of about 5.6% for 2024 being attractive.
The bank updated the company's Target Price to 71.5 Hong Kong dollars, equivalent to 11 times PE for 2024 and 10 times PE for 2025, representing a 27% upside potential from the current price, and assigned a Buy rating.