New | ENN Energy shares rebound after finance chief seeks to ease concerns

Shares of ENN Energy rebounded 7.6 per cent to close Friday’s morning trading session at HK$49.85 after its finance chief sought to calm the nerves of investors who sold down the company’s shares in reaction to a controversial US$200 million acquisition in North America.

ENN, one of the mainland’s largest natural gas distributors, on Tuesday announced it was buying from its chairman Wang Yusuo a loss-making natural gas refuelling stations business.

Chief financial officer Wang Dongzhi said the nascent business’ losses will see substantial decline in the next few years, as ENN plans to import much cheaper equipment from the mainland to help customers retrofit vehicles to swap diesel for natural gas, to shorten their pay-back period and stimulate gas demand. Safety certification for such imports has already been obtained in the US, he added.

The business runs 29 gas refuelling stations in the United States and four in Canada.

“As gas volume picks up, we expect the losses to further decline next year after narrowing this year from last year,” Wang Dongzhi told a media teleconference on Friday morning. “Substantial one-off costs were booked this year, such as costs spent to attract new talent.”

Analysts earlier quoted management as saying ENN expects the operation to break even in 2016 and turn profitable in 2017. They have slashed their forecasts on the firms’ net profit next year by 3 to 6 per cent.