| Daiwa Research lifted its target price for ENN
Energy (02688) to HK$71 from HK$60, and reiterated its "buy" rating.
The research house noted that ENN on 15 February said all of its CBs had been either
converted or repurchased. With the CB expiry, Daiwa believes the last overhang on its
share price has been removed and expects the stock to be re-rated on its: (1) integrated
business model (self-imported LNG contract + distributed energy [DE]) which makes ENN gas
sales margin more resilient amid the industry-wide dollar-margin squeeze, and (2) lower
multiple than peers despite its highest long-term earnings visibility.
Despite that and its highest 2017-19 core EPS growth (16% versus 11-16%), Daiwa said
that ENN is only trading at a 12.6x 12-month forward PER, versus peers' 15-17x, which is
unjustified, and warrants a rerating of the stock. |
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