Investment Rating - The report assigns a "Buy" rating to the company, New Energy (2688 HK), with a target price of HKD 74.60, indicating a potential upside of 21.4% from the current price of HKD 61.45 [4][9]. Core Insights - The first quarter of 2025 saw gas sales remain stable, influenced by a warm winter, with retail gas volume showing a year-on-year increase of 0.3%, outperforming the mainland's natural gas apparent consumption decline of 2.2% [2][7]. - The management indicated that the warm winter impacted gas sales by approximately 2-3 percentage points, with residential gas sales increasing by 1.1% year-on-year [2][7]. - The privatization plan is progressing steadily, with expectations to seek shareholder approval in the fourth quarter of this year [7][8]. Financial Overview - Revenue projections for the company are as follows: - 2023: RMB 113,858 million - 2024: RMB 109,853 million - 2025E: RMB 116,552 million (6.1% YoY growth) - 2026E: RMB 122,701 million - 2027E: RMB 129,239 million [3][11]. - Net profit estimates are: - 2023: RMB 6,816 million - 2024: RMB 5,987 million - 2025E: RMB 7,174 million (3.2% YoY growth) - 2026E: RMB 7,782 million - 2027E: RMB 8,098 million [3][11]. - The company is expected to maintain moderate profit growth over the next three years, with a compound annual growth rate of approximately 5% from 2024 to 2027 [7][8]. Operational Performance - The company’s retail gas sales volume is projected to grow as follows: - 2023: 25,145 million cubic meters - 2024: 26,200 million cubic meters - 2025E: 26,782 million cubic meters (2.2% growth) - 2026E: 27,588 million cubic meters - 2027E: 28,421 million cubic meters [8]. - The company has also seen a 9.9% year-on-year increase in its diversified energy sales volume, reaching 100 billion kWh in the first quarter [7][8]. Market Position - The company’s market capitalization is approximately HKD 68,286.31 million, with a 52-week high of HKD 79.30 and a low of HKD 45.25 [6][9]. - The stock has shown a year-to-date change of 10.03% [6].

Investment Rating - The report assigns a "Buy" rating to the company, New Energy (2688 HK), with a target price of HKD 74.60, indicating a potential upside of 21.4% from the current closing price of HKD 61.45 [4][9]. Core Insights - The first quarter of 2025 saw gas sales remain stable, influenced by a warm winter, with retail gas volume growing by 0.3% year-on-year, outperforming the mainland's natural gas apparent consumption decline of 2.2% [2][7]. - The management indicated that the warm winter impacted gas sales by approximately 2-3 percentage points, with residential gas sales increasing by 1.1% year-on-year [2][7]. - The privatization plan is progressing steadily, with expectations for shareholder approval in the fourth quarter of this year [7][8]. Financial Overview - Revenue projections for the company are as follows: - 2023: RMB 113,858 million - 2024: RMB 109,853 million - 2025E: RMB 116,552 million (6.1% growth) - 2026E: RMB 122,701 million (5.3% growth) - 2027E: RMB 129,239 million (5.3% growth) [3][11]. - Net profit estimates are: - 2023: RMB 6,816 million - 2024: RMB 5,987 million - 2025E: RMB 7,174 million (3.2% growth) - 2026E: RMB 7,782 million (8.5% growth) - 2027E: RMB 8,098 million (4.1% growth) [3][11]. - The company maintains a dividend yield of 4.6% in 2023, projected to increase to 7.0% by 2027 [3][11]. Operational Performance - The company expects retail gas volume and energy sales to grow by 2.2% and 12% respectively in 2025, despite the warm winter's impact [7][8]. - The number of new residential connections decreased by 16% year-on-year to 287,000, with a ratio of new to old homes at 3:1 [7][8]. - The energy business saw a sales volume increase of 9.9% year-on-year to 10 billion kWh, with 14 new projects becoming operational [7][8]. Market Position - The company's market capitalization stands at approximately HKD 68,286.31 million, with a 52-week high of HKD 79.30 and a low of HKD 45.25 [6][9]. - The stock has shown a year-to-date change of 10.03% [6].

Investment Rating - The report maintains a "Buy" rating for the company [7] Core Views - The company demonstrates strong operational resilience, with a high dividend yield leading to a potential revaluation of its value [1] - The privatization transaction is progressing normally, with the current stock price implying a potential discount of 41% for the company's H shares [4] - The expected dividend yield for 2025 is 5.4% [1] Summary by Relevant Sections Retail Gas Volume - In Q1 2025, the company achieved retail gas volume of 7.258 billion cubic meters, a year-on-year increase of 0.3%, outperforming the national natural gas consumption growth rate of -2.2% [2] - The company expects a 6% year-on-year growth in gross profit from retail gas in 2025 [2] Comprehensive Energy Sales - The company reported a comprehensive energy sales volume of 10.039 billion kWh in Q1 2025, a year-on-year increase of 9.9% [3] - The expected gross profit growth for comprehensive energy in 2025 is projected to be 12% [3] Smart Home Services - The penetration rate for smart home services reached 3.7% in Q1 2025, a decrease of 0.3 percentage points year-on-year [3] - The expected gross profit growth for smart home services in 2025 is projected to be 10% [3] Financial Forecasts - The company slightly adjusted its profit forecasts, with core profits for 2025-2027 expected to be 7.220 billion, 7.655 billion, and 8.039 billion RMB respectively, reflecting a CAGR of 5% over three years [5] - The target price has been slightly revised down to 68.6 HKD, based on a 10x PE for 2025E [5] Key Financial Metrics - The company’s revenue for 2025 is projected at 113.873 billion RMB, with a year-on-year growth of 3.66% [6] - The expected EPS for 2025 is 6.38 RMB [6]

Investment Rating - The report maintains a "Buy" rating for the company [7] Core Views - The company demonstrates strong operational resilience, with a high dividend yield leading to a potential revaluation of its value [1] - The privatization transaction is progressing normally, with the current stock price implying a potential discount of 41% for the company's H shares [4] Summary by Sections Sales and Revenue - In Q1 2025, the company achieved a total gas sales volume of 7.258 billion cubic meters, representing a year-on-year increase of 0.3%, outperforming the national natural gas consumption growth rate of -2.2% [2] - The company expects a 6% year-on-year growth in gross profit for retail gas in 2025 [2] Energy Sales and Smart Home Services - The company reported a 9.9% year-on-year increase in comprehensive energy sales volume, reaching 100.39 billion kWh in Q1 2025 [3] - The penetration rate for smart home services decreased to 3.7%, with a year-on-year decline of 0.3 percentage points [3] - The company anticipates a gross profit growth of at least 10% for smart home services in 2025 [3] Financial Projections - The company slightly adjusted its profit forecasts, with core profits for 2025-2027 expected to be 7.220 billion, 7.655 billion, and 8.039 billion RMB, respectively [5] - The target price is set at 68.6 HKD, based on a 10x 2025E PE ratio [5] Key Financial Metrics - The company is projected to have a revenue of 113.873 billion RMB in 2025, with a year-on-year growth of 3.66% [6] - The expected EPS for 2025 is 6.38 RMB, with a projected ROE of 15.32% [6]

Core Viewpoint - The performance of four major gas companies in 2024 shows mixed results, with two companies reporting profit increases and two experiencing declines in net profit [1] Group 1: Financial Performance - Xinao Energy (02688.HK) reported a revenue of 109.85 billion yuan, a decrease of 3.5% year-on-year, and a net profit of 5.99 billion yuan, down 12.2% [1] - Kunlun Energy (00135.HK) achieved a revenue of 187.05 billion yuan, an increase of 5.5%, with a net profit of approximately 5.96 billion yuan, up 4.9% [1] - China Resources Gas (01193.HK) had a revenue of 102.68 billion HKD (approximately 96.70 billion yuan) and a net profit of 4.09 billion HKD (approximately 3.85 billion yuan), reflecting a significant decline of 21.7% [1] - Honghua Smart Energy (01083.HK) reported a revenue of 21.31 billion HKD (approximately 20.07 billion yuan), an increase of 7.4%, and a net profit of 1.61 billion HKD (approximately 1.51 billion yuan), up about 2% [1] - Overall, the four companies' net profit totaled approximately 17.31 billion yuan, a decrease of 1.59 billion yuan year-on-year, representing an 8.4% decline [1] Group 2: Gas Sales and Revenue Sources - Gas sales remain the primary revenue source for urban gas companies, with limited growth in natural gas revenue across the four companies [1] - Kunlun Energy led in total natural gas sales volume at 54.17 billion cubic meters, a year-on-year increase of 9.91% [1] - China Resources Gas reported natural gas sales of 39.91 billion cubic meters, up 2.9% year-on-year [1] - Xinao Energy's natural gas sales volume was 33.65 billion cubic meters, showing a slight increase of 0.09% [1] - Honghua Smart Energy's gas sales volume rose by 5% to 17.20 billion cubic meters [1] Group 3: Non-Gas Business Performance - The gas connection business revenue for urban gas companies declined due to the impact of the real estate market [1] - China Resources Gas saw a 15% decrease in gas connection revenue, while Honghua Smart Energy's connection sales fell slightly by 0.15% [1] - Xinao Energy's gas connection installation revenue dropped by 23.3%, and Kunlun Energy does not engage in gas connection business [1] - In non-gas business areas, the four urban gas companies showed better growth [1] - Xinao Energy's diversified energy business revenue grew by 5.2%, and its smart home business revenue increased by 24.1% [1] - China Resources Gas's comprehensive service revenue rose by 4%, with net profit increasing by 2.3% [1] - Honghua Smart Energy's renewable energy business revenue surged by 76.5%, with net profit increasing fivefold [1] - Kunlun Energy added multiple users, boosting industrial user sales and achieving profitability in its newly unified management of renewable and comprehensive energy businesses [1]

Operational Growth - The company operates 261 city gas projects, an increase from 259 in 2023, demonstrating continuous growth in its operations[14] - The number of urban gas projects in China increased to 261 in 2024, up from 259 in 2023, representing a growth of 0.8%[26] - The total number of household users connected reached 31,379 thousand, an increase of 5.4% from 29,775 thousand in 2023[26] - The company has 356 comprehensive energy projects, up from 296 in 2023, indicating expansion in its service offerings[14] - The company added 1.217 million cubic meters per day of industrial customer gas volume, reaching a total of 18.5 million cubic meters per day, promoting a 5.2% growth in industrial user gas volume[54] - The company developed 25,000 commercial users in 2024, with a cumulative total of 227,000 commercial users and an opening gas volume of 2.93 million cubic meters per day, resulting in a 4.5% growth in commercial user gas volume[55] Financial Performance - The total revenue for 2024 was RMB 109,853 million, a decrease of 3.5% compared to RMB 113,858 million in 2023[38] - The core profit from domestic infrastructure business increased by 10.2% to RMB 6,712 million from RMB 6,091 million in 2023[31] - The annual profit attributable to the company's owners was RMB 5,987 million in 2024, a decrease of 12.2% from RMB 6,816 million in 2023[38] - The gross profit margin for the energy business increased to 16.4% in 2024, up from 13.9% in 2023, reflecting improved operational efficiency[31] - The company's total operating revenue for 2024 was RMB 110.051 billion, a decrease from RMB 113.858 billion in 2022[57] - The profit attributable to shareholders was RMB 5.987 billion, down 12.2% year-on-year, with basic earnings per share of RMB 5.35, a decrease of 11.6%[73] Environmental Performance - The company achieved a carbon emission intensity of 6,103 tons of CO2 equivalent per billion cubic meters, down from 6,969 tons in 2023, indicating improved environmental performance[14] - The proportion of renewable energy projects within the comprehensive energy projects increased to 42.4% from 44.9% in 2023[14] - In 2024, the company achieved natural gas sales of 33.651 billion cubic meters, equivalent to a reduction of 15.13 million tons of standard coal, resulting in a decrease of 45.2 million tons of CO2 emissions[69] - The company has established a climate risk dynamic management mechanism and aims for a full-scenario net-zero pathway[69] Customer Satisfaction and Service Quality - Customer satisfaction rate improved to 92.5%, up from 90.8% in 2023, reflecting enhanced service quality[14] - The online gas purchase ratio increased to 97%, up from 85% in 2023, showcasing digital transformation efforts[14] - The company aims to enhance customer satisfaction by restructuring its service system, utilizing smart technology to optimize customer service processes[67] Safety and Compliance - The company invested 1,252 million RMB in safety measures, a decrease from 1,430 million RMB in 2023, suggesting a focus on cost efficiency[14] - The company has 86 project companies certified with ISO 14001 and ISO 45001, an increase from 76 in 2023, highlighting commitment to quality and safety standards[14] - The company has developed a safety digital management system covering all business scenarios, enhancing safety risk prevention capabilities[66] Strategic Initiatives and Future Plans - The company plans to expand its urban gas projects and aims to increase the number of connected users in the coming years[24] - The company aims to leverage AI technologies like DeepSeek to enhance energy service ecosystems and drive growth in the smart era by 2025[44] - The company plans to expand its comprehensive energy solutions for major energy-consuming customers, achieving an additional installed capacity of 1.7 GW[62] - The company is actively pursuing market expansion and operational efficiency in the natural gas sector, with a focus on full-scenario business collaboration[111] Governance and Management - The company has established a comprehensive risk management policy and commodity hedging system to mitigate price volatility risks associated with LNG procurement[84] - The board consists of 11 members, including 6 executive directors, 1 non-executive director, and 4 independent non-executive directors[164] - The company has received eight awards in the 2024 Institutional Investor's Asia Best Management Team awards, including "Best CEO" and "Best CFO," showcasing recognition in management and investor relations[86] - The company is committed to improving corporate governance, emphasizing transparency and stakeholder engagement to create long-term value[134] Employee and Talent Management - The company emphasizes employee performance and provides comprehensive benefits, including medical coverage and retirement plans[88] - The company aims to enhance its human resources strategy to align closely with business objectives, ensuring effective talent retention and performance management[130] - The company has implemented a policy to promote gender diversity, aiming for 25.6% female employees by the end of 2024[167] Financial Health and Debt Management - The net debt ratio improved to 23.2% in 2024, down from 25.3% in 2023, indicating better financial health[31] - As of December 31, 2024, the company's total borrowings amounted to RMB 195.32 billion, a decrease of RMB 23.91 billion from the previous year[78] - The company has hedged USD 820 million of its borrowings, achieving a hedging ratio of 78.9% for long-term USD debt[79]

Investment Rating - The report maintains a "Buy" rating for the company [7] Core Views - The company reported a revenue of 109.9 billion RMB for 2024, a decrease of 3.5% year-on-year, with a net profit attributable to shareholders of 5.99 billion RMB, down 12.2% year-on-year. However, core profit exceeded expectations at 6.95 billion RMB, primarily due to better-than-expected sales and gross margins in the energy sector [1][2] - The major shareholder plans to privatize the company and achieve an "A+H" listing, indicating an acceleration in the integration of the natural gas industry chain, which is expected to unlock long-term value [1][4] - The company’s domestic core profit for 2024 increased by 10.2% to 6.71 billion RMB, driven by growth in retail gas volume and energy sales [2] Summary by Sections Financial Performance - The company’s free cash flow increased by 20% year-on-year to 3.73 billion RMB, supported by rising operating cash flow and reduced capital expenditures. The total dividend for 2024 reached 3 HKD per share, with a payout ratio of 45%, and a projected increase to 48% in 2025 [3] - The report slightly lowers the profit forecast for 2025-2026 by 2.7% and 6.7% to 7.23 billion RMB and 7.68 billion RMB respectively, with an estimated core profit of 8.08 billion RMB in 2027 [5][21] Market Position and Strategy - The privatization plan includes a cash payout of 24.5 HKD per share and the issuance of new H shares, which is expected to enhance operational efficiency and reduce costs through better integration of resources [4] - The company’s retail gas volume for 2024 is projected to grow by 4.2% to 26.2 billion cubic meters, with a stable gross margin expected to maintain a 6% increase in 2025 [2][21] Valuation Metrics - The target price for the company is set at 69.5 HKD, based on a 10x PE ratio for 2025 estimates, reflecting a slight adjustment from the previous target of 71.1 HKD [5][7] - The company’s market capitalization is approximately 74.66 billion HKD, with a current share price of 66.00 HKD as of March 27 [7]

Group 1 - The core viewpoint of the news highlights the performance of Xin'ao Energy, which saw a significant increase in its stock price, closing at 66.0 HKD per share, up 11.02% on the day, with a trading volume of 45.15 million shares and a turnover of 2.935 billion HKD [1] - Over the past month, Xin'ao Energy has experienced a cumulative increase of 9.89%, and a year-to-date increase of 6.45%, which is lower than the Hang Seng Index's increase of 17.07% [2] - Financial data shows that as of December 31, 2024, Xin'ao Energy achieved total operating revenue of 109.853 billion RMB, a year-on-year decrease of 3.52%, and a net profit attributable to shareholders of 5.987 billion RMB, down 12.16% year-on-year, with a gross margin of 12.2% and a debt-to-asset ratio of 50.52% [2][5] Group 2 - Institutional ratings indicate that Dongwu Securities Co., Ltd. has given a "Buy" rating for Xin'ao Energy [3] - In terms of industry valuation, the average price-to-earnings (P/E) ratio for the public utility sector (TTM) is 2.23 times, with a median of 5.4 times. Xin'ao Energy's P/E ratio stands at 10.4 times, ranking 36th in the industry [3] - Xin'ao Energy is recognized as one of China's largest clean energy distributors, serving nearly 30 million households and over 240,000 enterprises across 21 provinces, operating 259 urban gas projects, and covering a population of 140 million with an existing high and medium-pressure pipeline network of 82,000 kilometers [3] Group 3 - The company aims to create a modern energy system, improve the quality of life for people, and become a respected innovative smart enterprise, actively seizing opportunities and promoting ecological integration while ensuring energy security and sustainable development [4] - Xin'ao Energy is committed to utilizing quality, green, and intelligent approaches to drive the construction of a modern energy system and enhance new productive forces for a prosperous future [4]

Group 1 - The proposed transaction values Xin Ao Energy Holdings Limited at approximately $11.6 billion (HKD 90.5 billion) based on a privatization offer from a subsidiary of Xin Ao Group [1] - Xin Ao Gas Co., Ltd. currently holds 34.28% of Xin Ao Energy and is making an offer that includes an exchange ratio of 2.9427 shares plus a cash payment of $3.15 (HKD 24.50) per share for the remaining shares [1] - As of the announcement date, Xin Ao Energy has issued 1,131,224,275 shares, leading to a theoretical value of the entire issued share capital of approximately HKD 90.5 billion, or $11.6 billion [1] Group 2 - Xin Ao Gas Co., Ltd. is one of China's largest private energy companies, operating over 250 city gas projects nationwide with an annual LNG distribution capacity exceeding 10 billion cubic meters [2] - The company operates China's first large-scale private LNG receiving terminal, the Zhoushan LNG terminal, and is involved in the entire natural gas value chain, including distribution, trading, storage, transportation, production, and engineering [2] - The privatization proposal for Xin Ao Energy represents a significant development in China, the world's largest importer of oil and LNG, aiming to enhance energy security [2]

Core Viewpoint - New Oriental Holdings plans to privatize New Oriental Energy through its wholly-owned subsidiary, New Energy Hong Kong, offering a combination of share exchange and cash payment to shareholders [1][2] Group 1: Transaction Details - The proposed transaction involves a total of 743 million shares, with shareholders receiving 2.9427 new H-shares and HKD 24.50 in cash per share [1] - The estimated total amount involved in the transaction is approximately HKD 595.19 billion, assuming all stock options are not exercised [1] - If all stock options are exercised, the total amount involved would be approximately HKD 599.24 billion [2] Group 2: Share Structure and Control - Post-transaction, New Oriental Holdings will issue up to 2.188 billion H-shares, increasing total shares from 3.097 billion to 5.285 billion, representing 41.58% of the total post-transaction share capital [2] - Wang Yushuo and his concerted parties will hold 2.243 billion shares, reducing their ownership from 72.44% to 42.32%, while still remaining the controlling party [2] Group 3: Financial Performance - New Oriental Holdings reported a revenue of HKD 135.84 billion for 2024, a decrease of 5.5% year-on-year, with a net profit of HKD 4.49 billion, down 36.6% [2] - New Oriental Energy's revenue for 2024 was HKD 109.85 billion, with a net profit of HKD 5.99 billion; post-transaction, New Oriental Holdings' net profit could increase to HKD 8.14 billion [3] - The transaction will be financed entirely through bank loans, leading to an expected increase in the debt-to-asset ratio to 67% [3]