[ET Net News Agency, 22 June 2018] Daiwa Research raised its target price for ENN
Energy (02688) to HK$86 from HK$85, and maintained its "outperform" rating.
The research house made a site visit to ENN's Zhoushan LNG terminal and Yuhang natural
gas integrated energy project. It noted that ENN's LNG terminal is on track to start
operations in 2H18 with a targeted receiving volume of 300-500k tonnes in 2018.
Daiwa sees ENN benefiting from self-imported LNG primarily as: 1) it can profit from the
higher winter LNG price which is market-based, 2) it can achieve gas cost savings outside
of Zhejiang as it is negotiating with CNPC to exchange gas in Zhejiang for gas in Henan
and Hunan, and 3) this will allow for a higher level of supply reliability and hence ENN
can acquire more clients. Also, management is confident in getting approval to expand
the handling capacity by 5mtpa by the end of 2020 for a total of 10mtpa in the long run.
To put this in context, if ENN can contract half of its 8 mtpa capacity in 2020, it can
self-import 5.6bcm of gas every year, representing 22% of its retail sales volume in 2020.
(HL)