Citigroup: Lowered target price of ENN Energy (02688) to HK$47, maintains "neutral" rating

Citigroup released a research report stating that it has lowered the target price of ENN ENERGY (02688) by 6%, from 50 HKD to 47 HKD, while maintaining a "neutral" rating. However, the management still expects to pay at least 3 HKD per share as dividend in 2026, with a yield of 6.9%. The bank has initiated a 90-day negative catalyst observation, expecting a general downward adjustment in market earnings forecasts. The bank has lowered its net profit expectations for the company for the years 2026-2028 by 6.3-8.9%. Given that its parent company ENN Natural Gas (600803.SH) has cancelled its privatization plan, the stock price of ENN ENERGY should be mainly driven by fundamentals. The bank expects its core profit in 2026 to decrease by 4.3% year-on-year, mainly influenced by the following factors: 1) a 2% year-on-year increase in retail natural gas sales volume; 2) the impact of rising natural gas unit costs due to conflicts in the Middle East, leading to a quarter-on-quarter decrease in unit profit margin in the second quarter of 2026; 3) a 15% year-on-year decrease in the number of new household users connected due to the downturn in the real estate market; 4) a 5% year-on-year decrease in sales volume of the integrated energy business due to rising natural gas costs; 5) a 10% year-on-year decrease in income from value-added services due to a decrease in the number of new users connected.