2024-04-14 16:00Investment Rating - The report maintains an "Outperform" rating for ENN Energy Holdings (2688 HK) with a target price of HKD 73.99 per share [10][16]. Core Insights - In 2023, ENN Energy achieved a revenue of 113.86 billion yuan, marking a 3.5% increase year-on-year, while the gross margin decreased by 1.7 percentage points to 12.6% [11][12]. - The company's operating cash flow improved to 9.612 billion yuan, with a free cash flow of 2.132 billion yuan, and the dividend payout ratio increased by 37% to 40% year-on-year, with a dividend per share of HKD 2.95 [14][16]. - The natural gas retail business saw a revenue increase of 0.8% year-on-year to 60.57 billion yuan, while the pan-energy business revenue surged by 32.5% to 14.51 billion yuan [12][15]. Financial Summary - The operating margin for 2023 was 9.4%, an increase of 0.4 percentage points, while the net profit margin was 6.0%, down 0.7 percentage points year-on-year [11]. - The company reported a core profit of 7.586 billion yuan, a decline of 4.8% year-on-year, primarily due to a 36% drop in overseas LNG sales [11][12]. - The number of new household users decreased by 11.1% year-on-year, indicating pressure on the engineering installation segment, which saw a revenue decline of 10.3% to 5.34 billion yuan [13][16]. Future Outlook - The company expects to add 1.4-1.6 million new residential customers in 2024, with retail volume growth anticipated to exceed 5% [13]. - The overall operation of the company is considered stable despite the expected negative impact on future earnings from the decline in new connections [16].