Symbol

ENN ENERGY(02688) Company Profile

		Company Profile
	Stock Name	ENN Energy
	Listing Date	2002-06-03
	Sector	Utilities
	Chairman	WANG Yusuo
	Par Value	0.1
	Total Issued Capital	1.131B
	Market Cap	69.457B
	Principal Activities Pprincipally engaged in investment and construction, as well as operation and management of gas pipeline infrastructures, integrated energy stations and vehicle and ship refuelling stations, the sales and distribution of piped gas, liquefied natural gas and other multi-energy products, and energy trading business and provision of other services in relation to energy supply in the PRC. Latest Results The Group's profit attributable to shareholders for the year ended 31-12-2023 amounted to RMB 6.82 billion, an increase of 16.2% compared with previous corresponding period. Basic earnings per share was RMB 6.0446. A dividend of HKD 2.31 per share was declared. Turnover amounted to RMB 113.86 billion, an increase of 3.5% over the same period last year, gross profit margin down 1.7% to 12.6%. (Announcement Date: 22 Mar 2024) Business Review - For the year ended December 31, 2023 Practical Essence of Safety, Continuously Building a Strong Safety Brand Safety is paramount to ENN Energy in fulfilling its social responsibilities and ensuring the development of the Company. The Company consistently strives to enhance safety foundation throughout the entire energy operation scenario by adopting new technologies and innovative safety intelligence models. To ensure indoor gas safety, the Company employs gas alarms and AI shut-off valves. Additionally, the Company ensures the stable operation of the pipeline network through the implementation of IoT sensing, intelligent inspections, and other effective methods. The Company utilises cloud-based laser and remote control systems to support the intelligent operation of stations. Systems such as Engineering Smart Eyes enable the monitoring of the engineering process. By continuously promoting intelligent coverage across various scenarios and the entire value chain, the Company elevates safety to a new level characterised by visibility, focus, and effective management. These efforts further enhance the Company’s leading position in safety branding. By the end of 2023, a total of 76 member companies within the Group have obtained ISO45001 safety management system certification. The State Council’s“Opinions on Comprehensively Promoting the Construction of a Beautiful China”(the“Opinions”) explicitly states that the country’s economic and social development has entered an accelerated phase of green, low-carbon and high-quality growth. The Opinions propose a faster transformation of green development. It will work actively and prudently toward the goals of reaching peak carbon emissions and carbon neutrality, and speed up the planning and development of a system for new energy sources. Additionally, the Opinions suggest continuing to intensify pollution prevention and control efforts. It will make further efforts to keep our skies blue, adopt measures such as clean energy and centralised heating substitution according to local conditions, and continue to control the pollution from scattered coal, coal-fired boilers, and industrial furnaces. It will implement total coal consumption control in key areas continuously. ENN Energy is dedicated to aligning with the trends of green and low-carbon development. It is focused on strengthening natural gas business while simultaneously expanding integrated energy business. In doing so, the Company actively contributes to the“dual carbon”goals and the realisation of a beautiful China. Natural Gas Sales Business: Stabilised and Consolidated Business Foundation In 2023, economic recovery supports the continuous rebound of the natural gas market. However, issues such as weak exports and a sluggish real estate sector have structurally suppressed the demand for natural gas. In terms of prices, the decline in corporate profits has directly led to an increased sensitivity to costs. In 2023, revenue from the retail gas business slightly increased by 0.9% to RMB60,611 million. The Group’s total gas sales volume reached 33,621 million cubic meters, a year-on-year slight increase of 2.8%. Retail gas sales volume decreased by 3.1% year-on-year to 25,144 million cubic meters. Among this total, total volume of natural gas sold to C/I customers reached 19,486 million cubic meters, representing a year-on-year decrease of 4.4% and accounting for 77.5% of retail gas sales volume; total volume of natural gas sold to residential households increased by 3.8% to 5,348 million cubic meters, accounting for 21.3% of retail gas sales volume.. In 2023, the Group’s revenue and gross profit from gas wholesale business decreased by 0.9% and 60.0% respectively compared to last year, reaching RMB29,695 million and RMB1,095 million. This was mainly due to the international natural gas prices retreat from high level, which resulted in a substantial reduction in international market opportunities for the Group. In 2023, the Group’s construction and installation business is under significant pressure. During the year, the Group developed 18,706 C/I customers (gas appliances installed with daily designed capacity of 17.56 million cubic meters) and completed the construction and installation for 1.854 million new residential households.By the end of 2023, the Group has served a total of 243,168 C/I customers (gas appliances installed with daily designed capacity of 200.89 million cubic meters) and has developed 29.77 million residential households cumulatively, with an average piped-gas penetration rate of 65.2%. The Group has been pursuing a prudent and strategically synergistic merger and acquisition strategy. During the year, the Company obtained 5 new city gas projects. By the end of 2023, the Group had a total of 259 exclusive operating rights for city gas projects, covering 20 provinces, cities and autonomous regions. Integrated Energy Business: Focused on Core Business Scenarios and Maintained Rapid Growth Driven by a combination of policy guidance, market forces, and technological advancements, various enterprises are actively exploring and leading the way in the green and low-carbon transformation. Through collaborative efforts and practical experiences with them, the Company has witnessed the immense potential of the integrating digitalisation and decarbonisation. It is evident that the emerging green wave, centered around renewable energy, low-carbon technologies, and digital innovations, will continue to drive profound economic and social transformations. From the perspectives of high efficiency and energy conservation, substitution of green energy, and efficient utilisation of resources, ENN Energy supports customers in creating low-carbon factories and low-carbon buildings by using“Load-Source-Grid-Storage”as a critical measure. Additionally, the Company seizes the window of opportunity presented by industrial upgrading and the emergence of new industrial parks to expand its competitive advantage and concentrate efforts on scaling up the integrated energy micro-grids. During the year, 86 integrated energy projects were completed and put into operation, which lifted the number of total projects in operation to 296, generating sales of a total of 34,700 million kWh of integrated energy including cooling, heating, electricity and steam, up 56.0% year-on-year. In 2023, revenue from integrated energy business surged 32.5% to RMB14,513 million, and gross profit also increased by 22.6% to RMB1,907 million. Value Added Business: Enriching the Product Portfolio and Achieving Scalable Growth As household incomes rises and consumer preference evolves, there is a growing demand among individuals for high-quality, customised, and innovative products and services. Enhancing the quality of life and meeting customised needs guide the development of value added business. In light of vast household consumer market, the Group is committed to enhancing customer awareness and vigorously promoting gas-related products that encompasses security, heating, kitchen and sanitation. Also, the Group continues to encourage member companies to provide innovative products according to local conditions, by expanding the promotion and sales of digital intelligence products such as safety intelligence, gas alarms, and LoRa digital intelligence IoT. The Group currently provides gas supply to over 29.77 million residential household customers and 243,168 commercial and industrial customers. To enhance customer service experience, the Group has been committed to gaining deep insights into customer needs since the beginning of the year. It focuses on various scenarios such as safety, kitchen, and community, and addresses multidimensional customer demands. By combining online sales with offline service experiences, the Group accelerates the implementation of innovative value added business models to increase business output scale. In 2023, the Group’s revenue from the value added business amounted to RMB3,702million, representing an increase of 18.9%, and the gross profit increased by 21.1% to RMB2,517 million. Revenue from the value added business per customer reached RMB124, representing an increase of 5.1% compared to last year. Business Outlook - For the year ended December 31, 2023 2024 is an important year for achieving the objectives of the“14th Five-Year Plan”. The Company will firmly seize opportunities presented by China’s high-quality economic development and realise the steady performance, structural optimisation, and intelligent upgrade of our core business. The Company will fully leverage our customer advantages, diversified natural gas resources, and leading position in the broader energy sector. The Company will make best efforts to consolidate our natural gas business, expand the scale in the broader energy sector, and deepen our presence in the value added business. By promoting synergy among business segments, the Company aims to achieve resilient development and sustained growth across different economic cycles. Seize the“Dual-carbon”Opportunity to Expand the Natural Gas Business The natural gas business will ensure healthy and sustainable growth through intelligent upgrades and innovative models. By implementing flexible sales strategies and pricing mechanisms tailored to customers’needs, the Company can effectively meet their requirements. Through the coordination of domestic and international markets and the utilisation of downstream scale advantages, the Company can establish a diversified and low-risk gas supply structure. By leveraging the intelligent platform of the natural gas industry, the Company can achieve precise matching of supply and demand while fully unlocking the value of resources.Furthermore, by enhancing the intelligent operation of the pipeline network, the Company can ensure essential safety measures and improve operational efficiency. Support Integrated Energy Business by Diversified Products and Make a Breakthrough in Electricity Business Following the concept of integrated energy, the Group has achieved rapid development in its integrated energy business by meeting customer demands and providing diversified energy sources such as gas, electricity, cooling, and heating according to local conditions. With the implementation of China’s dual-carbon policies, economic development and industrial upgrading, small and micro industrial parks that attracted specialised and innovative enterprises emerged. The adjustment of energy structure and the increasing demand for enhanced ESG orientation in enterprises have led customers to shift their single-product demand for natural gas towards a multi-product demand for diversified energy sources, safety, and carbon services. With the deeper power reforms, advancements in energy storage technologies and the application of digital intelligence, the Group has innovatively proposed an integrated energy micro-grid model with electricity as its core.Leveraging the Group’s three core capabilities in customer understanding, solution development, and intelligent operations, the Company has implemented the source-generation-network-storage solution.Furthermore, the Company provides a range of services to end users, including energy and carbon consulting, energy efficiency diagnosis, operation management, and energy trading. In the next stage, the integrated energy business will rely on the innovative integrated energy micro-grid model to seize strategic opportunities for fast expansion. It will target three typical scenarios: low-carbon factories, low-carbon buildings, and low-carbon parks, to rapidly acquire customers, further explore customer demands, aggregate industry ecosystems, promote the creation of value through multiple energy and carbon products, and achieve significant development in the integrated energy business. Keep Upgrading the Value Added Business with an Aim of building a Safe, Intelligent, Warm and Green Life Following rapid economic development, accompanied by the fulfillment of basic consumption and shifts in consumer subjects and household demographics, resident consumption has increasingly gravitated towards high-quality, specialised, and digitised experiences. The Company will upgrade the value added business by consolidating customer trust and creating value with diversified products. By leveraging IoT and intelligent technologies to upgrade gas services, the Company aims to provide customers with improved experiences and enhanced safety in gas usage. This will enable the Company to earn their trust and establish a new customer connection that goes beyond gas. To meet the rational consumption demands of households, the Company aggregates ecologically preferred products and utilises intelligent connectivity throughout the industry chain.This enable the Company to achieve product quality with transparent and reliable information, alongside more competitive pricing. Additionally, the Company addresses the quality living demands of families in terms of safety, health, and home environment by undertaking product and model innovations through partnership with ecological alliances. The ultimate goal is to transform the value added business into a key driver for growth. Source: ENN Energy (02688) Annual Results Announcement

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