Enn Natural Gas Co., Ltd. Class A · SSE:600803
Enn Natural Gas Co., Ltd. Class A — FY2023 Earnings Presentation
39 slides from Enn Natural Gas Co., Ltd. Class A's earnings presentation, March 2024
Slide 1: FY2023 Annual Results
FY2023 Annual Results March 2024
Slide 2: Content
Content Financial Results Development Highlights Review Strategy FY2023 Annual Results
Slide 3: 1.1 Resilient Results
1.1 Resilient Results Unit：RMB mil FY2023 FY2022 Change Total Revenue 143,842 154,169 -6.7% Gross Profit* 22,152 23,396 -5.3% EBITDA* 20,890 20,590 1.5% Total Profit 15,766 14,677 7.4% Net Profit Attributable to 7,091 5,844 0 21.3% Parent Core Profit* 6,378 6,067 5.1% Core EPS（RMB） 2.07 1.97 5.1% *
Slide 4: 1.2 Gross Profit Breakdown
1.2 Gross Profit Breakdown Unit：RMB mil FY2023 Gross Profit Breakdown FY2022 Gross Profit Breakdown Energy Production Others 0.6% Energy Production Others 0.5% 1.6% 9.1% Integrated Energy Integrated Energy & Value Added 20.8% & Value Added 16.5% Retail & Retail & Wholesale of Gas Wholesale of Gas 44
Slide 5: 1.3 Sustainable Growth of Core Profit
1.3 Sustainable Growth of Core Profit Unit：RMB mil Main excluded items in the calculation of core profit FY2023 FY2022 Net Profit Attributable to Parent 7,091 5,844 Bad debts and asset impairment 0 -1,709 -85 Changes in fair value of derivatives 0 -1,174 863 Non-cash factor Changes in FX gains and l
Slide 6: 1.4 Excellent Financial Management
1.4 Excellent Financial Management Unit：RMB mil CAPEX Total Debt & Cash on Hand Net Debt, EBITDA * and Net Gearing Ratio 13,613 300 1.00 36,123 33,436 25,167 4,275 9,772 20,590 20,890 1,101 200 709 19,968 48.8% 14,659 0.50 12,089 100 8,629 8,671 25.0% 0 0.00 FY2022 FY2023 FY2022 FY2023 FY2022 FY2023
Slide 7: 1.5 Sound Debt Structure and Ample Liquidity
1.5 Sound Debt Structure and Ample Liquidity By Maturity By Currency Total Credit Facilities: RMB67.0 bil Above 5 yrs USD Loans 20.4% 36.9% Within 1 yr Utillzed Hedge 35.4% Hedge Ration Hedge ration: ration: 36.1% 36.7% 36.7% 36.7% RMB Loans Unutillzed 1-5 yrs 63.9% 63.1% 44.2% Credit Ratings Rating
Slide 8: 1.6 Abundant Free Cash Flows and Steadily Rising Payout Ratio
1.6 Abundant Free Cash Flows and Steadily Rising Payout Ratio • Sustained growth in the principal business, coupled with prudent financial management, generated positive free cash flow for years, enabling a steady increase in dividend payout • Over the next three years, the annual increase in divide
Slide 9: Content
Content Financial Results Development Highlights Review Strategy FY2023 Annual Results
Slide 10: 2023 Highlights
2023 Highlights Direct gas sales by platform expanded rapidly Sustainable Growth of Core Profit Sales volume up 44.0% YOY to 5,050 mil m³ Core profit up 5.1% YOY to RMB6.38 bil Increased the acquisition of superior resources Improved cash dividends Signed new long-term LNG contracts for 2.8 mil tons
Slide 11: 2.1 Macro Environment - International Market Back to Normal Accompanied by Fluctuations
2.1 Macro Environment - International Market Back to Normal Accompanied by Fluctuations • In 2023, the global LNG supply capacity showed limited increase of 3.8 mil tons; however, the mild economic growth lower than expected and the increase of renewable and nuclear power generation under the expect
Slide 12: 2.1 Macro Environment - Domestic Natural Gas Consumption Returned to Growth
2.1 Macro Environment - Domestic Natural Gas Consumption Returned to Growth In 2023, major policies in the natural gas The natural gas market industry were frequently launched returned to the growth • Price Pass-through Policies • NDRC: supervised the establishment and improvement of the Pass-throug
Slide 13: 2.2 Actively Promoted the Sustainable Expansion of Natural Gas Sales Business
2.2 Actively Promoted the Sustainable Expansion of Natural Gas Sales Business Unit：mil m³ Direct Gas Sales by Platform Retail Gas Sales 25,941 5,050 -3.1% 25,144 44.0% 3,507 38,671 6.8% 36,204 5,050 3,507 6,756 8,477 FY2022 FY2023 FY2022 FY2023 25,941 25,144 2,814 13,065 12,876 12,982 12,162 2,236 2
Slide 14: 2.3 Retail Gas Sales Recovered Gradually
2.3 Retail Gas Sales Recovered Gradually • Residential gas volume grew steadily, while C/I gas volume declined due to power plants impacts • Continuously decreased natural gas procurement costs while reducing customer costs Retail gas sales (mil m³) Installation Residential C&I Residential C&I Desig
Slide 15: 2.4 Direct Gas Sales by Platform Expanded Rapidly
2.4 Direct Gas Sales by Platform Expanded Rapidly Domestic Sales vol Volume breakdown (mil m³) （mil m³） 3,113 3,163 1,887 1,480 FY2022 FY2023 PNG LNG Overseas Sales vol Core profit of DGSp* (mil m³) （RMB mil） 3,414 2,027 1,937 2,182 FY2022 FY2023 FY2022 FY2023 * DGSp refers to Direct gas sales by pl
Slide 16: 2.4 Widely Distributed Customers of Direct Gas Sales by Platform
2.4 Widely Distributed Customers of Direct Gas Sales by Platform Domestic Overseas Customer Structure Customer Structure 58% 41% Total Europe Total Customers Key markets Customers 45% 266 14 Zhejiang 55% 26% 14% 16% Guangdong 15% City Gas Companies Utility companies Energy Groups and Large Industrie
Slide 17: 2.4 Diversified and Competitive Resources
2.4 Diversified and Competitive Resources • Optimizing resource value through combinations of flexible and worldwide resources Diversified resource structure Steadily increasing LTA resources Unit: mil tons/yr 2.80 67% Domestic PNG includes： 5.30 23% • Three major oil companies 7.36 • LTA with CNPC
Slide 18: 2.5 Proactively Embraced Social Responsibility and Continuously Improved ESG Performance
2.5 Proactively Embraced Social Responsibility and Continuously Improved ESG Performance Environment Society Governance ESG Rating Performance Carbon emission reduction Occupational injury Corruption cases, Complaints, The MSCI ESG rating has been upgraded to 'A', marking (yoy) case/mil hrs Environm
Slide 19: Strived to Make Innovations in Clean Energy to Realize the Dream of Industrial Digital Intelligence
Strived to Make Innovations in Clean Energy to Realize the Dream of Industrial Digital Intelligence Upgrade: Integrated the entire natural gas Highest price: industry chain and made significant strides RMB23.06/share towards becoming an intelligent ecological Transformation: operator in the natural
Slide 20: Content
Content Financial Results Development Highlights Review Strategy FY2023 Annual Results
Slide 21: 3.1 Market and Customers - Natural Gas Market keeps growing
3.1 Market and Customers - Natural Gas Market keeps growing The global low-carbon transformation has been steadily advanced, and the natural gas market has maintained recovery growth • It is estimated that the global natural gas consumption will be about 4.16 tri m3 in 2024 and • It is estimated tha
Slide 22: 3.1 Market and Customers - Opportunities and Challenges Coexist
3.1 Market and Customers - Opportunities and Challenges Coexist Price fluctuations Attributes changes • International prices have returned to the • In addition to commodity attributes, normal range, but there are still many the financial attributes of natural gas uncertainties and frequent price flu
Slide 23: 3.1 Market and Customers - Return to Customer Sovereignty
3.1 Market and Customers - Return to Customer Sovereignty Market-oriented reform is deeply evolving in the direction of the return of customer sovereignty Linear trading pattern, resources Customer-centered More options for customers and pipelines are the key parts trading network Power Materials pl
Slide 24: 3.1 Market and Customers - Customer Growth Potential
3.1 Market and Customers - Customer Growth Potential Accumulate superior experience, gather ecology intelligence, and expand sales scale based on customer needs Ctiy gas companies Energy groups and large industries Distributors Group city gas operators Cooperated Cooperated Cooperated Large-scale ci
Slide 25: 3.2 Pivots and Capabilities - Strategic Pivots Connecting All-Scenario in Natural Gas Industry
3.2 Pivots and Capabilities - Strategic Pivots Connecting All-Scenario in Natural Gas Industry Advanced risk Diversified resources management systems Efficient delivery networks Massive customer demands 天津国际油气交易中心 • Overseas LTAs: Diversified natural gas trading 10 mil tons/yr • Processing capacity
Slide 26: 3.2 Pivots and Capabilities - Core Capabilities in All-Scenario Natural Gas Services
3.2 Pivots and Capabilities - Core Capabilities in All-Scenario Natural Gas Services Empowering intelligence ecosystem of natural gas industry Customer service Intelligent matching International trading Intelligent risk Delivery capability 履约交付能力 capability capability capability mangement capability
Slide 27: 3.3 Reconstructing the Business Model by Intelligent Capability to Help Customers Succeed
3.3 Reconstructing the Business Model by Intelligent Capability to Help Customers Succeed • ENN Natural Gas：Becoming the intelligent platform operator in the natural gas industry by leveraging the all-scenario strategic pivots, IoT data and building intelligent industrial LMs • Relying on the platfo
Slide 28: 3.4 Strategy - Domestic and International Business Cooperation
3.4 Strategy - Domestic and International Business Cooperation Market Target customers Customer demands Business strategies Strategies Stable, flexible, and low-cost resource Dynamic balance of resources combination Collaboration Expanding the direct gas sales scale Aggregation Small and medium-size
Slide 29: 3.4 Strategy - International Trade
3.4 Strategy - International Trade I n t ern at i o n al market mo d el f o r T h i rd p art y i n t ern at i o n al L T As man ag emen t t rad e mo d el ① When international spot prices remain ① ③ Fully utilize existing international relatively high, selling FOB resources from ② South-Asia ③ transp
Slide 30: 3.4 Strategy - Retail Sales Volume Expand
3.4 Strategy - Retail Sales Volume Expand Residential Commercial Industrial • Quickly developing customers by grasping the strategic • Developing no less than 300,000 exsiting • Seizing the opportunity of safety governance, emerging industry layout in coastal provinces and the households by leveragi
Slide 31: 3.4 Strategy - Unleash the pivot value of the Tianjin Oil & Gas Exchange Center
3.4 Strategy - Unleash the pivot value of the Tianjin Oil & Gas Exchange Center • Explore the formation of an efficient platform-based sales model, promote fair trading through market- oriented mechanisms, and expand the direct gas sales volume • Link international and domestic markets, introduce ad
Slide 32: Appendix 1: Company Overview
Appendix 1：Company Overview • ENN-NG (stock code: 600803.SH) was listed in 1994 and is determined to be an intelligent ecological operator in the natural gas industry by leveraging the all- scenario strategic pivots. The company aims to promote the industrial capability and efficiency by aggregating
Slide 33: Appendix 2: Details of Long-term LNG Contracts
Appendix 2：Details of Long-term LNG Contracts Contract vol Delivery No. Buyer Seller Signing Date Tenor （mil tons/yr） method Gas resources Start year Index-linked 1 ENN Energy Chevron 2016.08 10 years 0.66 DES Global resources 2018 JCC 2 ENN Energy Total 2016.07 10 years 0.50 DES Global resources 20
Slide 34: Appendix 3: Transfer of 100% Equity Interest in Xinneng Mining Company
Appendix 3：Transfer of 100% Equity Interest in Xinneng Mining Company Transaction consideration Transaction key milestones and processes 12th Sep, 2023 19th Oct, 2023 • Total：RMB10,505 mil • Obtained board approval Compled the transfer of Equity consideration：RMB6,670 mil • Signed the agreement equi
Slide 35: Appendix 4: Net Profits Deducting Non-recurring Profits and Losses
Appendix 4：Net Profits Deducting Non-recurring Profits and Losses Unit：RMB mil Main items excluded for calculating the profits FY2023 FY2022 deducting non-recurring profits and losses ü The government subsidies for aging pipeline Net Profits Attributable to the Parent 7,091 5,844 upgrades and urban
Slide 36: Appendix 5: Analysis of Core Profit Deductions - Exchange Gain or Loss
Appendix 5：Analysis of Core Profit Deductions - Exchange Gain or Loss ü Due to the refinancing of USD debt upon maturity, changes in FX gains and losses arising from currency fluctuations will not result in actual cash outflows ü For overseas subsidiaries reporting in USD, their USD monetary assets
Slide 37: Appendix 6: Analysis of Core Profit Deductions - Changes in Fair Value of Derivatives
Appendix 6：Analysis of Core Profit Deductions - Changes in Fair Value of Derivatives • The valuation of the mark-to-market gains and losses on commodity derivatives under accounting standards was reflected as a gain on changes in fair value, with the effect of physical and derivatives combination ex
Slide 38: Appendix 7: Simplified Model for a Typical City-gas Project & IE Project
Appendix 7：Simplified Model for a Typical City-gas Project & IE Project Cash flow break-even Cash flow break-even y1 y2 y3 y4 y5 y6 y7 y8 y9 y10 y11 y1 y2 y3 y4 y5 y6 y7 y8 y9 y10 y11 Revenue Gas Usage Fee Connection Fee CapEx Free Cash Flow CapEx Revenue Free cash flow 1. Stable & Recurring Income
Slide 39: Disclaimer
Disclaimer The information provided to you in this presentation is for reference only and does not constitute or form part of any offer for subscription or sale of, or solicitation of any offer to subscribe for or sale of any securities of ENN-NG (“the Company”), nor shall it form the basis of, nor