ENN Energy (2688 HK) Is A Buy

• We’ve now cleared the one-year mark since ENN Energy (2688 HK) first announced a cash/scrip Offer from controlling shareholder ENN Natural Gas (600803 CH) (ENN NG).

• Apart from the ambiguity surrounding the value to be assigned to the scrip into newly-listed ENN-NG H-shares; CSRC, the listing watchdog, has yet to sign off. This should be forthcoming.

• By my calcs, I see at least 30% upside to ENN Energy’s shares here. The market is implying an unreasonable 67% discount for ENN NG’s Hs vs. the As.

The Trade:

• CSRC approval will not be an issue.

• No matter how I play around with my calcs, I see considerable upside to ENN Energy shares here.

• Plus the FY25 dividend of HK$2.35/share will (should) be added to terms.

• The market appears to be implying an unrealistic discount for ENN NG’s Hs vs As.

• From what I understand, A share borrow is available.