ENN Energy on track to meet target

Wang Dongzhi, chief executive of mainland city-gas distributor ENN Energy said on Monday he saw “no problem” for the company to reach a 20 per cent target for full-year net profit growth.

On Friday, ENN Energy posted a 19.6 per cent year-on-year rise in first-half pre-tax profit to 2.09 billion yuan (HK$2.63 billion), excluding an accounting loss on the change in value of a convertible bond in the first half of last year.

The result was achieved despite a 3.3 per cent year-on-year fall in first-half profit in its nascent vehicular gas refuelling operation to 265 million yuan, as customer demand weakened after a gas price increase in July last year. Another increase will take effect at the start of next month.

Profit from fees charged to connect customers to its network surged 13.4 per cent year on year to 1.32 billion yuan, while that from piped gas sales grew 6.6 per cent to 1.31 billion yuan.

According to a Daiwa Securities research note, ENN’s first-half distribution profit margin for each cubic metre of gas sold fell by 12 per cent to 76 fen from 86 fen in the first half of last year.

This was due to a failure to pass through all of last July’s gas cost increase to end-users, which resulted in a 100 million yuan profit reduction.