The "A Chihong" model reappears: ENN-NG plans to sprint for Hong Kong stocks through "privatization + introduction listing"

Recently, A-share gas leader ENN Energy Holdings (600803.SH) submitted an application to the Hong Kong Stock Exchange.

Unlike many companies, ENN Energy's purpose for listing in Hong Kong is not to raise funds; the core objective is to privatize its subsidiary, ENN Energy (2688.HK), which is already listed in Hong Kong.

In short, ENN Energy is acquiring the shares of minority shareholders in ENN Energy through a "newly issued H shares + cash compensation" method, thereby achieving its listing in Hong Kong.

Shareholders of ENN Energy will receive two parts of compensation: first, a cash payment of HKD 24.50 per share (this amount is funded by ENN itself, not raised through an IPO), and second, a proportional allocation of newly issued H shares of ENN Energy.

This is not common in the A-share market.

The last company to take a similar path was Haier Smart Home, which privatized its H-share subsidiary Haier Electrical Appliances in 2020 and achieved a listing in Hong Kong through an introduction.

Five years later, ENN Energy is the second A-share company to attempt this highly challenging capital integration model, potentially providing more references for other companies in the market looking to take a similar path.

The market is watching to see if ENN Energy can successfully land on the Hong Kong stock market.

The Second Case of "Privatization + Introduction Listing"

The core logic of ENN Energy's listing path lies in achieving the Hong Kong listing of the parent company through the privatization of its subsidiary.

Specifically, ENN Energy will issue H shares and cash as payment to privatize its controlling subsidiary ENN Energy and achieve an introduction listing in Hong Kong.

The transaction price is set at "HKD 24.5 cash + 2.94 shares of newly issued ENN Energy H shares" for each share of ENN Energy.

After the transaction is completed, shareholders of ENN Energy will hold H shares of ENN Energy, while ENN Energy will delist from the Hong Kong Stock Exchange and become a wholly-owned subsidiary of ENN Energy.

"After the privatization proposal is completed, shareholders will not only continue to invest in ENN Energy, which has a series of competitive advantages and can fully enjoy the benefits of global energy transformation (as part of the expanded ENN Energy Group), but they will also share in the potential synergies and business growth potential that may be realized after further integration between the company and ENN Energy," ENN Energy pointed out.

This is the second case of "A-share parent company issuing H shares to privatize Hong Kong-listed subsidiary and achieve dual listing" in the A-share market after Haier Smart Home.

In 2020, Haier Smart Home successfully listed on the Hong Kong Stock Exchange, marking the first major unprecedented project in the A-share market to achieve "A+H" listing through the privatization of an H-share subsidiary.

In terms of specific operational paths, Haier Smart Home introduced its listing in the Hong Kong market by issuing H shares to shareholders of Haier Electrical Appliances as compensation to privatize Haier Electrical Appliances.

After this transaction was completed, Haier Electrical Appliances was privatized and delisted, becoming a wholly-owned subsidiary of Haier Smart Home. Haier Smart Home not only achieved the overall listing of its home appliance business segment but also effectively resolved long-standing issues of industry competition and governance structure.

ENN Energy's approach this time is very similar to Haier's capital operation path.

The core advantage of the "privatization + introduction listing" plan for achieving dual listing lies in the controllable cash cost of privatization. According to the closing price on the trading day before the transaction disclosure (March 25, 2025), the total market value of ENN Energy reached 62.1 billion yuan, making it unrealistic for ENN Group to privatize this subsidiary in cash.

However, in this plan, the cost of share payment accounts for nearly 70%, which greatly reduces the cash cost for ENN Group to privatize ENN Energy.

The key to gaining support from minority shareholders of ENN Energy in this transaction lies in the premium of the payment consideration.

Based on the closing price of ENN Group at 19.65 yuan per share on the trading day before the transaction disclosure (March 25, 2025), the payment consideration could reach 79.93 yuan per share, representing a significant increase of 34% compared to the closing price of ENN Energy on the same day.

However, challenges also exist.

The current liquidity of the Hong Kong stock market is facing challenges, with new stocks frequently breaking their issue price, and there remains uncertainty about whether investors can profit from this privatization plan.

For the four new stocks listed on December 22, the first-day price drop rates were 29%, 49%, 24%, and 35% for Huazhang Biotechnology, Mingji Hospital, Nanhua Futures, and Impression Dahongpao, respectively.

This means that if ENN Group's H-shares encounter a cold market after listing, the arbitrage space for investors may face challenges.

Enhancing Integration Level

This transaction is expected to further enhance the business synergy of ENN Group.

ENN Group's natural gas business covers three major segments: upstream gas sources, midstream facilities, and downstream distribution.

In the upstream sector, ENN Group has signed long-term contracts for resources exceeding 10 million tons per year, making it the largest private enterprise in China in terms of overseas LNG long-term contract volume;

In terms of midstream facilities, the Zhoushan LNG receiving station operated by ENN Group will have an actual processing capacity of 7.5 million tons in 2024, and with the advancement of Phase III, it will exceed 10 million tons per year;

The downstream natural gas sales and other businesses primarily managed by ENN Energy are significant sources of income for ENN Group.

In 2023 and 2024, the natural gas retail business contributed revenues of 69.453 billion yuan and 67.241 billion yuan to ENN Group, maintaining a share of over 50%.

Among them, some natural gas from ENN Energy is purchased from ENN Group, with the amount for 2024 being 1.675 billion yuan.

After ENN Group privatizes ENN Energy, the procurement of natural gas and other products by ENN Energy from ENN Group will shift from market-based related procurement to internal resource coordination, breaking the previous synergy barriers across listed companies, and no longer being subject to pricing constraints and approval processes for related transactions in two locations. This is expected to further lower the procurement costs of downstream businesses, allowing ENN Group's "upstream resources + midstream facilities + downstream terminals" closed-loop advantages to be fully realized.

This year, ENN Group's revenue has seen a slight decline due to factors such as fluctuations in natural gas prices and phased adjustments in downstream demand, with revenue for the first three quarters of 2025 being 95.893 billion yuan, a year-on-year decrease of 2.92%.

Now, ENN Group is seeking diversification in its business structure.

Beyond natural gas, ENN Group is accelerating the implementation of photovoltaic, energy storage, and smart home businesses In the first half of 2025, ENN-NG added photovoltaic and energy storage grid connections of 324.46 MW and 45.75 MWh, respectively.

The pan-energy business has now grown to become ENN-NG's second largest business line, accounting for 10.8% in the first half of 2025.

The smart home business relies on the over 32 million users covered by ENN-NG, mainly providing various products such as smart IoT, although its revenue share remains relatively limited, only 3.2% in the first half of 2025.

With its listing on the Hong Kong stock market, ENN-NG is expected to further establish a business closed loop of "natural gas main business + pan-energy + smart home," transforming from a natural gas operator to a global integrated energy and smart living service provider