Citigroup has revised its price target for ENN ENERGY (ASX: 02688) downward by 6%, moving from HK$50 to HK$47, while reaffirming its Neutral rating on the stock.

Despite this adjustment, management continues to project a minimum annual dividend per share of HK$3 for 2026, which would imply a yield of 6.9%.

The firm has initiated a 90-day negative catalyst watch, anticipating that consensus earnings estimates will be revised lower. Citigroup itself has cut its net profit forecasts for the company for the years 2026 through 2028 by a range of 6.3% to 8.9%.

With the cancellation of the privatization plan by its parent company, ENN Natural Gas Co., the share price of ENN ENERGY is now expected to be primarily driven by its fundamental performance.

Citigroup projects the company's core profit for 2026 to decline by 4.3% year-on-year. This anticipated decrease is attributed to several key factors.

Firstly, retail natural gas sales volume is expected to see only modest growth, increasing by approximately 2% compared to the previous year.

Secondly, unit margins are forecast to contract sequentially in the second quarter of 2026, pressured by rising natural gas costs linked to conflicts in the Middle East.

Thirdly, the number of new household customer connections is predicted to fall by 15% year-on-year, a consequence of the ongoing downturn in the real estate market.

Furthermore, sales volume for the integrated energy business is anticipated to drop by 5% year-on-year, also impacted by higher natural gas costs.

Finally, revenue from value-added services is expected to decrease by 10% year-on-year, driven by the reduction in new customer connections.