ENN Energy Slumps After Buying Chairman’s Gas StationsAibing Guo
ENN Energy Holdings Ltd. plunged the most in six years after the Chinese natural gas supplier agreed to buy gas refueling stations in North America from company Chairman Wang Yusuo and his wife.
The stock dropped as much as 14 percent in Hong Kong, the most since Sept. 18, 2008. It was down 12 percent to HK$47.70 as of 12 p.m. The benchmark Hang Seng Index gained 1.4 percent.
ENN Energy agreed to pay Wang and his wife $200 million for 33 gas refilling stations in the western U.S. and Canada, according to a statement. The deal allows the company to tap into the growing North American gas market and diversify its operational risk, ENN said in the statement.
The purchase is likely to cause short term losses, UOB Kay Hian’s analysts Shi Yan and Terry Zhou said in an e-mailed research note.
“The announcement would exert near-term share price pressure for ENN Energy,” they said. “In the long-term, we maintain our positive view for the company given its stable operation in China and positive long-term perspective for the liquefied natural gas business in both U.S. and Canada.” Both analysts maintained a buy rating with a target price of HK$70.
Hedy Shen, ENN Energy’s Hong Kong-based Investor Relations manager said the company has no further comment beyond yesterday’s statement.
China Gas Holdings Ltd., and Beijing Enterprises Holdings Ltd., two other major city gas suppliers in China, stayed flat and gained 0.5 percent respectively in Hong Kong trading today.