By Yongchang Chin

ENN Energy Holdings Ltd. shares rose as much as 24% on Monday after the company reported stronger full-year profit on higher sales volumes of retail natural gas and said its integrated-energy business has a brighter outlook.

ENN Energy's profit rise came even as the Chinese natural gas distributor faced falling margins due to higher prices of natural gas amid a global energy shortage, Citigroup Research said. However, the growth in retail-gas revenues was more than enough to offset this for 2021, it said.

Citi Research said it expects ENN's natural gas margins to recover moderately, reflecting a lagged rise in retail selling prices compared with import prices.

Citi forecasts margins to rise to CNY0.48 per cubic meter in 2022 versus CNY0.46 per cubic meter in the second half of last year. This would still be lower than ENN's retail-gas-sales margin of CNY0.60 per cubic meter in 2020.

The company said 31 new integrated-energy projects--which include renewable-energy sources such as solar and others like steam power--were completed and put into operation in 2021, taking the total number of projects to 150. This helped push its integrated-energy generation 58% higher to 19.07 billion kilowatt-hours. It added that 42 new integrated-energy projects are under construction.

The company targets 50% revenue growth for its integrated-energy business this year, compared with a 55% gain to CNY7.8 billion in 2021, Citi noted.

ENN Energy pared some of its early gains and was last 19% higher at 118.20 Hong Kong dollars (US$15.11), trimming its year-to-date loss to 19%. Citi maintains a buy rating on the stock but lowers its target price to HK$125 from HK$155, citing likely elevated costs to import natural gas.


Write to Yongchang Chin at yongchang.chin@wsj.com


(END) Dow Jones Newswires

03-20-22 2343ET