2020 Annual Results Company Presentation
22nd March 2021 Resilient Performance amid Challenging Environment
Retail gas sales volume up 10.2% to 21.95 bcm
Added C/I customers with 17.08 mil m3 installed designed daily capacity & 2.29 million new residential customers
Added 20 City-gas projects & 21 IE projects Further expanded operating regions
Core profit up 18.2% to RMB6.24 bil
Free cash flow up 12.0% to RMB3.02 bil
DPS up 25.7% to HKD2.10 + Special Dividend HKD0.32 1 Corporate Social Responsibility
Employees Customers Society
• Disinfected workplace, arranged COVID • Strengthened safety inspection to ensure • Solicited and delivered emergency supplies Test and provided personal protective safe operation and stable gas supply to Wuhan equipment for employees • Ensured gas safety in the rural areas • Donated RMB16 million to medical • Organized live online psychological • Arranged urgent construction of gas workers on the front line of epidemic counseling classes for employees to help pipelines for crucial users on the front line prevention and control them regulate their physical and mental of epidemic prevention and control such as • Launched ENN Charity Day “Food stress hospitals, to meet their gas demand to fight Saving” online campaign • Provided free medical counseling for against the epidemic • Joined the Earth Hour campaign and employees • Promptly responded to flooding threats and proactively invited all employees and • Social media online check-in activity to took urgent measures to eliminate potential business partners to save energy and encourage employees to exercise hazards reduce emissions
2 Enhanced ESG Performance & Governance
Environment Society Governance ESG Rating
Included in GHG Anti- 22.1% corruption emissions Percentage of women training for Hang Seng ESG50 Index above mid-level 1,766 key roles Hang Seng Corporate Sustainability 20.2% management 2019：21.6% All Benchmark Index Helped society Completed compliance & clients reduce training & pledged emissions A BBB 42.11 mil tons Corruption case, Hang Seng Corporate MSCI ESG Rating 94.1% Sustainability Index 2019：35.11 mil tons Complaint, Customer satisfaction Environmental 0 2019：A 2019：BB No. of member 2019：93.0% illegal case company obtained ISO Plan to identify climate change risk certifications 17 1.27 & opportunity, quantify impacts, progressively align with 2019：6 Occupational injury case/mil hrs Modify ESG policies & Trenchless 2019：1.04 disclosure, strive to achieve TCFD pipe laying 34.31 international best practices Charity engagement ratio mil m3 283,580hrs Whistle-blower 35% BOG protection policy 8,176persons Climate change policy 3 Growth·Value Creation
Total gas sales volume (mil m3) Core profit (RMB mil) DPS(HKD) + Special dividend
6,237 2.42 29,569
26,963 23,328 5,278 19,617 4,474 1.67 3,731 1.19 14,329 3,212 1.08 0.83
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
Share price performance (HKD) Effective business development strategy creates growing returns for shareholders Total shareholder return* in 2020 36.5%
Total shareholder return = (Share price movement + total dividend payment)/base price (closing price on 31 Dec 2019 HKD85.15) 4 Content
1. Results Review 2. Financial Highlights 3. Development Strategy 4. Appendix Higher Operating Profits
（RMB mil） 2020 2019 Change
Key Financial Data Revenue 71,617 70,183 2.0% Segmental Revenue Retail Gas Sales 40,510 40,049 1.2% Higher vol，lower gas price 83.4% Higher utilisation, new projects IE Business 5,042 2,749 commenced operation Value Added Business 1,685 1,988 15.2% Affected by COVID-19 Wholesale of Gas 17,936 18,465 2.9% LNG price down，wholesale vol up Construction & Installation 6,444 6,932 7.0% Less connections，stable fees Gross Profit 12,332 11,265 9.5% EBITDA^ 12,207 10,960 11.4% Profit attributable to 6,278 5,670 10.7% Shareholders Core Profit* 6,237 5,278 18.2% Core DPS (RMB) 5.55 4.70 18.1%
^ EBITDA = Incl. JCE, Asso, excl. one-off items * Core profit= Profit attributable to shareholders – other gains & losses (excluding net settlement amount realised from commodity derivative contracts) and amortisation of share option expenses 6 Retail Gas Sales Business
Citygate price reduced, coupled with lower LNG import cost, stimulated gas demand from customers Volume growth driven by our C/I-focused clientele which benefited from rapid work resumption policy and lower winter temperatures
2020 Gross profit (RMB mil) Performance
C/I vol Residential vol Vehicle gas refuelling vol Yoy change -28.5% +13.5% +10.1% 12,332 3 3 3
16,878 1,245 mil m mil m 4,185 3,264 mil m 890 14,877 362 3,802 1,312 2019 2020 2019 2020 2019 2020 903 Dollar margin increased by 0.01/m3 Diversified gas source
(RMB/m3) 2020 2019 Imported 1.95 mil tons of LNG Average all-in import cost was 6,491 +820 +14.5% Residential 2.81 2.88 10-15% below citygate prices C/I 2.76 3.14 Non-majors conventional & Large customer* 2.34 2.77 unconventional gas purchase 56 member companies were Small-mid customer 3.14 3.36 2020 qualified to use PipeChina’s Vehicle gas station 3.41 3.93 transmission capacity, lowering ASP 2.79 3.14 Retail gas sales IE business gas cost Value added business Wholesale of gas Average cost 2.14 2.50 Intelligent dispatching system Construction & Installation optimised gas supply & demand Dollar margin (ex. VAT) 0.60 0.59 matching
* Large customer refers to annual gas consumption capacity of over 50 mil m3 7 Construction & Installation Affected by COVID-19, number of new residential connection reduced by 104,000 households, newly installed C/I daily designed capacity reduced by 1.08 mil m3 Continue to explore C/I users development potential, push forward industrial coal replacement progress Urbanisation & people’s pursuit of quality life, brings huge opportunity of urban residential users development 2020 Gross profit (RMB mil) Performance
Accumulated C/I installed capacity Accumulated residential customers Yoy change ’000 m3/day （ ） 141,787 (‘000 households) 23,213 12,332 +17,078 +2,293
3,264 -455 -12.2% 124,709 20,920 362 1,312 903 FY2019 FY2020 FY2019 FY2020
6,491 New C/I customers breakdown New residential customers breakdown
2020 59% 28% 13% 2020 74% 5% 21%
2019 58% 32% 10% 2019 67% 12% 21% 2020 2018 55% 36% 9% 2018 70% 10% 20% 2017 54% 36% 10% 2017 72% 12% 16%
Retail gas sales IE business 2016 52% 40% 8% 2016 83% 17% Value added business Wholesale of gas Construction & Installation 2015 51% 39% 10% 2015 84% 16% New site Coal LPG & others New building Old building Rural 8 Integrated Energy Business (IEB)
Projects gradually ramped up, integrated energy (cooling & heating, electricity, steam) sales volume increased significantly Developed IE projects incorporating the use of low-carbon sources such as biomass, solar & geothermal heat, and tapped into distributed clean heating projects around Yangtze River areas
2020 Gross profit (RMB mil) Performance
IE Sales Vol（mil kWh） Operational Under Construction Yoy change (No. of projects) (No. of projects) 12,042 +75.9% 12,332
3,264 6,847
362 1,312 119 24 903 +430 +90.9% Energy Sales Potential FY2019 FY2020 >30 bil kWh 6,491 Steam Cooling & Heating Electricity Clean energy solutions for customers: Positive environmental impact for customers:
(No. of projects) 21 6 Energy Consumption CO2 Emission 2020 Industrial Waste Solar (standard coal) Heat Retail gas sales IE business 6 110 Value added business Wholesale of gas Construction & Installation Biomass Natural Gas & 1,476,085 tons 4,444,264 tons others clean energy 9 IEB – Typical Projects
According to the local resources available and customer needs, choose the best technical route and provide customers with low-carbon energy solutions based on renewable energy 30% out of 143 IE projects in operation and under construction adopt renewable energy such as biomass, photovoltaic and geothermal energy
Hainan Yangpu Industrial Inner Mongolia Deyu Biomass Park Project Phase I Cogeneration Project
Solution: Designing & Planning + Integrated Energy Station Solution: Biomass cogeneration unit + steam Construction + PV + Heating Network pipeline network Standard coal Standard coal Steam Steam 170,000 tons/yr 107,000 tons/yr 160,000 tons/yr 600,000 tons/yr Reduce CO Reduce CO2 Clean power 2 Clean power emissions emissions 66 million kWh/yr 16 mil kWh/yr 280,000 tons/yr 426,000 tons/yr
Pharmaceutical evaporation and concentration process – Low-temperature drying room for furniture production – Shijiazhuang Weisheng Pharmaceutical Qidong Zhuolang Furniture ENN managed gas boilers for this Using air source heat pumps to 60℃ 30℃ customer which is not located in our replace biomass boilers to supply boiler GGH boiler concessions energy for the drying room, resolved exhaus exhaus Installed GGH+lithium bromide heat pump customers' pain points due to t t to recover flue gas waste heat from the 35℃ hot 25℃ hot environmental non-compliance, boilers water water developed customers outside our It’s expected to save 870,000 cubic 90℃ hot concessions Return metres of gas per annum Lithium Bromide Heat water Continued to retrofit other drying hot water Pump Unit We will continue to explore more business supply room energy facilities, strive to tap opportunities with this customer in into electricity sales and develop terms of waste heat recovery & central Low- integrated energy business in this Condensate control of more gas boilers pressure industrial zone steam 10 10 IEB – Green and Low-carbon Heating Solutions Adaptive to Local Conditions
Reduce total energy consumption through energy saving on demand-side and waste heat re-use
Reduce CO2 intensity by adjusting energy structure; priority use of zero carbon resources such as waste heat re-use and geothermal energy, supplemented by low carbon energy such as natural gas Based on users’ distribution and demand, incorporating centralised, distributed and individual heating methods to reduce energy
loss, and achieve CO2 reduction, energy saving and economic benefits, through multi-technology use and integration, ensuring sustainable development of the project Tapped into traditional heating areas incl. Hebei, Shandong, Henan, emerging heating areas incl. Jiangsu, Anhui, Zhejiang and Shanghai, contracted heating areas of approx. 20 million sq.m. and have been supplying heating covering over 5 million sq.m.
Conventional energy consumption Energy supply
Waste heat recovery Energy saving on demand-side Adjust energy structure Integration of technologies
Waste heat utilisation Clean and low-carbon energy
Assist customers to achieve Reduce energy consumption Carbon intensity of natural gas is the Enhance energy efficiency using multi- energy saving for buildings, by recycling condensed heat lowest amongst fossil fuels, gas can be technology guide them to adopt energy from cogeneration plants and used to replace higher-carbon energy waste heat from industrial Reduce energy transmission and conservation practices distribution loss through flexible plants Deep geothermal heat can be used instead of fossil fuels in areas with suitable “collective & dispersed” layout resources
After retrofitting: Co2 ↓40% Co2 ↓50% Co2 ↓15% CO ↓30% 2 Heat supply project in Xinxiang Qingyunlinhai (deep Qingdao Wanda Cinema Complex Applicable to more than Xinxiang County, Henan geothermal heat) (seawater source heat pump + gas 90% of our projects Bengbu Chunhua Garden (gas heat boiler) pump) Qingdao Fairview City (gas boiler) 11 Value Added Business (VAB) Grounded on our superior customer services and products, provided one-stop solutions for customers, enhanced per customer value Expanded the width & depth of our product mix, innovated new business model to create value
2020 Gross profit (RMB mil) Performance
Penetration Rate Enriched Product Mix Yoy change New customers 360° 12,332 Products Heating Products Products 20% Kitchen 3,264 2019: 15% Cooking stove, range hood, Space heater, heat pump… gas heater 362 Floor heating pipes, heating Existing customers Kitchen cabinet, electronic plate 1,312 +76 +6.1% appliaces 903 7% SafetySecurity & Products Products Extended Products Products 2019: 6%
6,491 Solar-powered heater, “Gratle”Sales Vol ventilation system Automatic shut-off valve, +8.4% alarm, insurance (Gas Water-proof materials, insurance, home ceramic tiles, thin-film solar insurance) cells 2020 467,613 Services Design, installation, repairing, maintenance… Retail gas sales IE business Value added business Wholesale of gas 431,268 Construction & Installation Customer base Partnering Brands FY2019 FY2020 sharing
12 VAB - Create Value with Services
Formed a value creation cycle, through regular customer service to explore business opportunity, expand product mix to meet customer demands, and after-sales services to enhance customer loyalty and stickiness, thus, creating a 1+N multiplier effect for value creation
Northern Areas Coal-to-Gas Maintenance Platform Product Cooperated with government and gas companies to build an B after-sales service platform, undertaking customer services of other companies, to increase service revenue and create secondary sales opportunity 1 Design
Increase loyalty CUSTOMISATION 2 Installation Heating Installation Service Platform In response to the increasing demand for heating in the Product Customer 3 Warranty Product southern areas, we enriched our heating product line, A Demand C established a dedicated team to provide one-stop heating installation solutions for users 4 Repairment
5 Customisation Product Repurchase
Four Key Servicing Platforms 6 Digitalisation Gas company's own servicing team Product Third-party contractors D 95158 national call center 400 service hotline Through in-home services to offer an array of products & services for customers
13 Expanding Operational Footprint
Heilongjiang 1 Added 20 new city-gas projects and 21 new integrated energy projects, covering 21 provinces, cities and autonomous regions
Total New Projects Inner Mongolia 2 Projects Liaoning City-gas 1. Zhejiang Rui’an Project 11. Jiangsu Ning-Huai Special Project 2. Zhejiang Pujiang County Cooperation Zone 3. Ganyu District in Lianyungang 12. Anhui Guzhen Township Project Hebei 235 4. Tianjin China-Germany 13. 10 Townships in Xinghua 14 Tianjin Daqiuzhuang Eco-City Park 14. Shenshan Area, Jianggao Town, 1 5. Tumd Right Banner in Baotou Baiyun District, Guangzhou City 15. Township in Linying County Shandong 6. Henan Yima Coal Chemical 16. Qiuchuan Township in Changshan Industry Cluster County 11 7. Linyi Luoxi Jinshan Low-carbon 17. Zhejiang Yuhuan Industrial Park Industrial Park 18. 7 Townships in Tinghu District of 8. Hunan Qu Yuan Management Yancheng Shaanxi Henan Jiangsu Area 19. 3 Townships in Wuchuan 5 Shanghai 9. Henan Dingzhou Township 20. 3 Townships in Ningjin 14 3 Project Anhui 10. Shuangcheng District in Harbin 15 Zhejiang 1. Shanghai Zhongfen 12. The Fourth Hospital of Shijiazhuang Integrated Sichuan 11 Energy 2. HainanYangpu Development 13. Tianying Township in Jieshou City Jiangxi Zone 14. Qingdao Red Star International Fujian Project 3. Neimeng Chifeng Plaza 5 119 4. Mudanjiang Biomass Project 15. Greater Bay Area No.1 in Dongguan Hunan 5. Neimeng Wuhai Xilaifeng 16. Shuangxing Tire Factory 11 6. Guangxi Longzan 17. Chuzhou Anbang Polymer High 7. Lufthansa Foods Tech Yunnan Guangxi Guangdong 8. Flower Street Town 18. Qingdao Qinggang Town 4 21 9. Ning Hua Building Materials 19. Xinxiang Xiaoji Group 10. Guangzhou Jiaheng Industry 20. Quanzhou Weibo Food 11. Shijiazhuang Medical Products 21. Dongguan Chubang Paper Administration New project Existing project Hainan 1 14 Operational Excellence - Reduce Costs and Increase Efficiency
In 2020, we established a new operational excellence mechanism and four implementation rules involving more than 3,800 people, completed 434 projects, contributed to an annualised return of RMB150 million, and promoted 193 outstanding projects, forming a corporate culture of full participation and encouraging innovation and value creation Operational Excellence Implementation Ecosystem Rules Bringing Vitality
Deduct 0.1% of the assessment income to establish a fund pool, with no cap on the return Activate the organisation Self-driven organisations increased to 84 Fund Protection of value creation by project Share 2%-20% of project revenue to project Participants totaled 3,800 Value Sharing members, depending on project level and value Activate employees 80% of whom were front-line employees creation results
Operational Expert Grant incentives based on the number of expert Expanded expert pool with more than 40 Activate experts Excellence Empowerment reviews and the effectiveness of project experts in 2020 Mechanism promotion and empowerment 2020 Resource Trading Match providers with adopters of quality projects Release the value of outstanding projects and for improvements and share revenues Activate projects promoted 193 cases so far
Case Study Construction cost reduction Pipeline operation Customer service Safety operation
Replace excavators with Replace old regulator by parts Activate bill reminder and bill Apply intelligent warning pile to grooving machines in part to to avoid overall replacement payment functions via WeChat achieve real-time monitoring of reduce construction costs and reduce operating costs official account to reduce pipeline network and reduce the phone and printing costs pipeline loss
15 Content
1. Results Review 2. Financial Highlights 3. Development Strategy 4. Appendix Increasing Operational Efficiency
Gross profit & gross profit margin (RMB mil) SG&A, SG&A to revenue ratio (RMB mil)
12,332 11,265 4,075 4,181
17.2% 16.1% 5.8% 5.8%
FY2019 FY2020 FY2019 FY2020
EBITDA & EBITDA margin (RMB mil) Core profit & core profit margin (RMB mil)
12,207 6,237 10,960 5,278
17.0% 15.6% 7.5% 8.7%
FY2019 FY2020 FY2019 FY2020
17 Superior Financial Management
CAPEX (RMB mil) Account receivables & turnover days (RMB mil) 8,922 1,470 2,362 6,741 2,184 2,230 1,227 1,489 12 days 5,222 11 days 4,025
FY2019 FY2020 FY2019 FY2020 Citygas Projects IEB New Project Acquisition Within 90 days Over 90 days Turnover day
Net debt & net gearing ratio (RMB mil) Total debt & cash on hand (RMB mil)
19,684 11,772 19,145 11,054
8,630 37.9% 7,373 30.6%
FY2019 FY2020 FY2019 FY2020 Long-term debt Short-term debt Cash on hand 18 Cash Flow Analysis
Business activities resumed normal in 2H20, operating cash flow increased significantly Free cash flow increased by RMB322 mil
(RMB mil) +670
Dividend from JCE & Fin. charges Asso, Sinopec Mktg Op cash flow & other investment - 609 in 2H20 +6,483 CAPEX
3,016 Op cash flow in 1H20 - 6,741 FY20 Free cash 3,213 flow
19 Ample Financial Resources & Liquidity
Foreign Currency Risk Exposure Debt Structure Management (by currency) – long-term USD debt Interest rate was lowered due to loans with preferential rates were obtained by some project companies 8% 56% 59% 2020 2019 2018 Change Avg. effective 3.63% 3.90% 4.05% 27 bps interest rate 36% 41%
USD Bonds USD Bank Loans RMB Bonds & Loans Unhedged Hedged
Investment-Grade Credit Ratings Sufficient Financial Resources
Rating agency FY2020 RMB mil Available Quota
BBB Unutilised credit facilities 12,001 Green bond quota approved Baa2 5,000 by NDRC BBB
20 Content
1. Results Review 2. Financial Highlights 3. Development Strategy 4. Appendix New Opportunities and Challenges
Targets of “peaking carbon Accelerated energy reform dioxide emissions and carbon neutrality”
Dual-circulation economy Rapid development of digitalisation
Macro Factors
Profound changes in the Changes in customer Opportunities for industry demands integrated energy business Integration of digitalisation
• Accelerated energy structure • Increasing diversification, • Decarbonisation, energy • Accelerated integration of adjustment personalisation and complexity conservation, and energy industry digitalisation into the energy of demands liberalisation, to drive our business industry, reinvent business logic & • Accelerated gas industry reform development scenarios towards a more diversified and • Cooperate with ecosystem competitive market partners to meet customer • Create value with the combination • Accelerate digitalisation to demands of “gas + integrated energy” enhance our core competitiveness
22 Expand and Strengthen Gas Distribution Business
Market understanding ①Expand customer base
• Innovate customer service for large users • Complete quality projects • Strengthen cooperation with acquisitions ③Smart matching of customers • Strengthen cooperation supply & demand • More choices are available for • Optimise the development of with different distribution customers, and there is a residential users, small and companies strong demand for medium-sized C/I users differentiated services
• Diversified resources are • Precise forecast of customer gas load available with an increasing trend of pipelines • Optimise the matching of liberalisation ②Coordinate gas sources customer-resources-channels • Flexible pricing • Develop innovative • Optimise procurement from the distribution model based on oil majors digitalised products • Advanced planning for the • Strengthen cooperation in use of key pipelines offshore gas, unconventional capacity gas and other diversified • Flexible access to resources storage/pipeline capacity • Innovate procurement model
23 Improve the Efficiency of Pipeline Transmission and Distribution
Improve infrastructure construction Improve pipeline efficiency
Diversify transmission and distribution channels to ensure gas supply Life cycle management of pipeline networks
Add resource download Ensure operational stability points in the city Connect to the surrounding Plan Design Construction Maintenance gas pipeline network Construct core available pipeline network Management of city gas pipeline network
Optimise the pipeline network to Smart dispatching management improve utilisation Collaborate with the Reduce costs and improve government on special city efficiency gas planning Focus on customer Comprehensive prognosis | Integrated control | Adaptive optimisation distribution and make rational Pipeline planning and deployment of Real-time Online Dispatch network gas network monitoring simulation balancing optimisation
24 Develop Integrated Energy Business Adaptive to Local Conditions
Develop integrated energy Provide “Service + Energy” product Case Study business under the guidance of portfolio based on customer demands the integrated energy concept Flue gas waste heat recovery – Jingbin Integrated Energy Station Based on customer demands Design & Plan Integrated energy solutions Bill Develop the entire Installed lithium bromide heat pump to recover waste optimisation value chain of energy Facility O&M heat from gas boiler exhaust gas, increasing gas
Service efficiency by 7%, saving ~330,000 cubic metres of Process /improvement for energy natural gas in one heating season, equivalent to optimisation increasing heating areas by 24k sq.m. conservation Integrated Adapt to Suitable for gas-fired hot water or steam boilers and Energy local can reduce visual pollution from smokes conditions Concept Achieve synergy and promote mutual Glass furnace waste heat recovery – development Nanjing ARC Prioritise clean energy Facility Investment and operations operation of heat/ power distribution Integrated utilisation of networks Newly developed integrated energy and direct gas supply multi-energy sources customer. Deployed waste heat recover boilers to recycle high Energy Investment temperature flue gas waste heat from customer’s glass kilns, to and operation Smart power produce steam for surrounding paper mills, and provide hot of energy trading water for domestic use and for heating in winter Integration of demand Realised synergy of energy consumption and supply in a single and supply stations project, enhancing project value
25 Develop Digitalised Products to Support Business Upgrade
Digitalisation is an effective means to connect and serve customers. ENN develops digitalised products for all business scenarios to strengthen our core capabilities to expand business content, improve service quality and optimise customer experience
• Products derived from Customer Understanding Expand • Smart Distribution Platform business • Smart Energy Consumption System content • Smart Power Trading Platform • …… • Integrated Energy Simulation Platform • Digitalised Engineering Support all value Systems creation • Smart Operation System scenarios with digitalised • Customer-oriented Service • Smart Dispatch Platform Optimize • Customer Service Control System for pipeline network Improve products quality and customer • Virtual Assistant • Pipeline Network Integrity experience System efficiency • Online Customer Service System • Safety Map • …… • ……
26 Strive to Achieve CO2 Emissions Peak and Carbon Neutrality
（1）Serve the community, innovate solutions for CO2 emissions peak and carbon neutrality
• Carbon footprint • Leverage IoT+energy diagnosis, help management through IoT Demand-side customers reduce energy consumption and & IE scorecard system, to perspective carbon emissions Assist optimise energy system & • Leverage digitalisation to tailor Satisfy customer establish decarbonisation integrated energy solutions and customers, needs of clean, safe, mechanism, release the Carbon Optimise optimise operations, modify energy value of carbon assets Direction energy distribution & storage, thereof cities & the Management economic, efficient & & use enhancing energy security & efficiency • Leverage digitalised tools in country to convenient energy Measures demand response, drive the • Develop distributed energy system using solutions use of renewables in renewables, and supplemented by gas, achieve both demand-side Supply & Multi- facilitate the use of local renewable targets • Assist customers accurately energy sources forecast energy load & price, demand interaction sources • Leverage digitalisation to satisfy optimise trading strategy, personalised customer needs, encourage facilitate green energy / efficient & extensive use of gas carbon trading
（3）Digitalisation to support IE Scorecard IE Simulation Smart Delivery Smart Operation Smart Trading Smart Consumption others targets achievement Platform
Strive to System energy saving & Strengthen methane emissions Multi-measures to offset （2） decarbonisation management & control carbon emissions achieve net • Energy technology+digitalisation to • Comprehensive management+smart • Plantation Decarbonisation optimise energy saving at our citygates, operation ensure pipelines safety • CCUS zero CO2 from us IE stations & other facilities • Adopt visualisation system to conduct • Conduct building energy saving, 100% pipelines safety check emissions by green buildings for new construction • BOG recycle use, reduce methane venting the Group • Electrify vehicles with smart dispatching
27 2021 Guidance
Proactive New Customers Development Ensure Volume and Quality of NG business Growth
New C/I development of at least 18mil m3 daily installed capacity Volume growth at least 15% New residential development of at least 2.4mil households 20-30 new city-gas projects Dollar margin stable & 20 new IE projects in operation
Accelerate New Businesses Development Create Higher Returns for Shareholders Customer- oriented IE business revenue at least Core earnings growth at least 15% RMB 8-10 bil
VAB gross profit up at least 30% Dividend payout 35%
28 & ENN – To Build an Industry-leading Integrated Energy Service Provider
Company Overview Established in 1993, ENN is one of the leading privately-owned clean energy distributors in the PRC ENN’s principal business includes sale and distribution of piped gas, investment in, and the operation and management of gas pipeline infrastructure, vehicle/ship gas refuelling stations, integrated energy business, sales and wholesale of piped gas, as well as sales of LNG and multiple energy forms. It also develops integrated energy business and wholesale of gas business, while providing other energy-related value added business ENN was listed on the GEM in 2001 and transferredto the Main Board of HKEX (stock code: 2688) in 2002 Key Business Segments Retail Gas Sales Business Integrated Energy Business Value Added Business Wholesale of Gas Construction & Installation
Sell piped gas to residential Based on customers’ need, provide Provide energy-saving technologies, Conduct natural gas wholesale • Conduct gas pipeline construction households and C/I customers multi-energy products according to retrofitting services, and facilities business to fully utilize its advanced and installation for residential and Construct and operate CNG/LNG energy sources available locally, and inspection and maintenance services dispatch system, logistics fleet and C/I customers gas refuelling stations customise integrated energy Provide gas-related products and upstream resources solutions for users material sales
19932000 20012010 20112017 2018 2019 2020
235 217 187 172 70,183 71,617 90 60,698 4 48,269
26,963 29,569 19,617 23,328 11,215 17 122 4,149
2000 2010 2017 2018 2019 2020
Total Natural Gas Sales Volume(million cm) Revenue (RMB million) # Number of City-gas Projects 30 Explore the Application of Low-carbon Energy – Distributed Solar Case Study –Yangkou Distributed Solar Station in Shandong Shouguang Government’s front：“14 ‧ 5 Year Plan” is Summary expected to continue to drive the use of clean . Installed capacity：11.33MW energy, and to implement renewable power . Utilized customer’s rooftop of 146,000 m2 generation quotas and license waiver policies . Investment amount：RMB70.98mil . Operation：Grid connection & all-on-grid Customer’s needs：Pressure to digest . Generation Capacity：16mil kWh in 2019 renewable-generated power, demand for cost . Tariff Subsidy：RMB0.98/kWh reduction and efficiency enhancement . Return：IRR 12% Competitive Edge： . ENN Energy possesses tremendous C/I customers resources （>3GW rooftop resources） . Gas concession areas, IE projects, and incremental power distribution networks will create synergy, able to reduce operating costs & mitigate receivables issues
31 Explore the Application of Low-carbon Energy – Hydrogen
Government’s front：China pledged to reach peak level Hydrogen Supply Project – A Pharmaceutical of carbon emission by 2030, and carbon neutral by 2060 Company in Liaoning Huludao Characteristics of H ：High heat value, zero emission, 2 Summary burns fast 3 . H2 production capacity：1,500m /h 3 Competitive Edge： . Customer’s need：12.48mil m /year . Use of existing pipelines, factories and land for free, . H2 can be blended into natural gas pipelines at specific reduced investment cost, revitalized customer’s assets concentration (10% or below according to international . Investment amount：RMB17.39mil . Expected return：IRR 20% practice) and pressure, can be supplied to commercial . Status：Under construction, expected commencement in and residential users as fuel, reduce carbon emission April 2021
. ENN’s technological know-hows of operating CNG & Natural Gas to LNG transportation & storage provide support to Hydrogen： 1. Compressed and develop compressed H2 or liquified H2 business gasified feedstock . Possesses resources and technology of natural gas to gas hydrogen production 2. Desulphurization 3. Conversion Founding member of “Yangtze River Delta Hydrogen 4. PSAH2 extraction Infrastructure Industry Alliance”, aims at exploring the development of hydrogen refuelling infrastructure following the policy of “Yangtze River Delta G60 Hydrogen Corridor”
32 Typical Industrial Park IE Project - 1. Stable & Recurring Income Cash Flow Projection • Integrated energy solutions reduce customers' overall energy bills 10% • Selling the types of energy customer need increases their stickiness
Cash flow break-even 2. Rapid Cash Flow Generation
• Capex are invested by stages depending on the number of customers and their energy consumption scale • Our projects are mostly industrial parks with existing customers, once the energy stations completed, energy sales can be generated • Payback period: 7-8 years
3. Low Risk
• Diversified customer base in industrial parks helps reduce cyclical risks of certain industry • Sign minimum energy offtake volume and establish automatic passthrough mechanism with customers • Market-oriented business model with low regulatory risk
33 Simplified Model for a Typical City-gas Project Revenue/Cost
Cash flow break-even
Connection fee dominates in early years when the project companies are signing up new customers Gas usage increases as projects mature, becoming the major source of recurring income Prior to the completion of the whole pipeline network in cities, revenue will be generated as soon as gas supply becomes available in certain districts. Each connection contract normally takes 6–12 months to complete In general, gas projects would generate positive free cash flow after 5 years of operation
34 Gas Delivery Process
Vehicle & ship gas users
35 Latest Benchmark City-gate Price
Province From 25 May 2018 From 1 April 2019 Province From 25 May 2018 From 1 April 2019 Unit: RMB/m3 (Incl. VAT) Henan 1.89 1.87 Beijing 1.88 1.86 Hubei 1.84 1.82 Tianjin 1.88 1.86 Hunan 1.84 1.82 Hebei 1.86 1.84 Guangdong 2.06 2.04 Shanxi 1.79 1.77 Guangxi 1.89 1.87 InnerMongolia 1.23 1.22 Hainan 1.53 1.52 Liaoning 1.86 1.84 Chongqing 1.53 1.52 Jilin 1.65 1.64 Sichuan 1.54 1.53 Heilongjiang 1.65 1.64 Guizhou 1.60 1.59 Shanghai 2.06 2.04 Yunnan 1.60 1.59 Jiangsu 2.04 2.02 Shaanxi 1.23 1.22 Zhejiang 2.05 2.03 Gansu 1.32 1.31 Anhui 1.97 1.95 Ningxia 1.40 1.39 Jiangxi 1.84 1.82 Qinghai 1.16 1.15 Shandong 1.86 1.84 Xinjiang 1.04 1.03
Source: NDRC
36 Disclaimer
The information provided to you in this presentation 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 Energy Holdings Limited (the "Company") nor shall it form the basis of, nor can it be relied on in connection with, any contract or commitment whatsoever.
Investor Relations Contact: Ms. Shirley Kwok / Ms. Grace Wei / Ms. Olivia Xia Tel：+852 2528 5666 / +86 316 2599928 Fax：+852 2865 7204 Email： [email protected] Website：www.ennenergy.com
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