Transcript Document

Corporate Presentation
May 2011
1
Table of Contents
Section
Page
1
About China Gas
3
2
Natural Gas Business
8
3
Liquefied Petroleum Gas Business
12
4
Operational Highlights 1H FY2011
17
5
Financial Highlights 1H FY2011
24
6
FY2011-12 Guidance
27
2
About China Gas
China Gas Overview
 Principal Business Segments
1. Natural Gas Services Operator: Engages in the investment, operation and management of city gas pipeline
infrastructure, distribution of natural gas to residential, industrial and commercial users, and construction and
operation of natural gas refilling stations
–
Business started in 2002 when China decided to construct the West-East Pipeline
–
Operates in 146 city concessions with 30-year monopolistic operating right each
–
Possesses a pipeline network of more than 52,746 km serving approximately 5.6 million household users and
nearly 37,623 industrial and commercial users
2. LPG Supplier: The only vertically-integrated LPG operator in PRC
–
Entered into the LPG industry in September 2008
–
Owns 11 LPG receiving terminals, 275,000 m3 of LPG storage capacity, upstream to downstream distribution
network in PRC
–
Covering wholesale and retail LPG supply in Guangdong, Guangxi, Fujian, Zhejiang, Jiangsu and Anhui
provinces.
4
Strategic Partnerships
Strategic shareholders have partnered and helped China Gas’ growth through the years
SINOPEC
(Dec 2004)
Management
& Founders
(2002)
12.28%
GAIL
(May 2005)
4.82%
Oman Fund
(Nov 2007)
Oman Oil
(Jan 2006)
4.82%
SK
(June 2008)
ADB
(Oct 2006)
5.45%
3.44%
Public
3.71%
9.74%
55.74%
CHINA GAS
 Each of GAIL, Oman Oil, SK E&S and ADB has senior person on the board of China Gas, providing valuable insights
and advice from the international and diversified perspectives
As of 31 December 2010
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Natural Gas
Project Development Process
China Gas has a strong track record of developing city gas projects on time and on budget
Bid & award
Construction & development
12-18 months
Operation
30 years
About 15 projects
under review
Revenue: Gas connection fees
Revenue: Sales of piped gas
Investment criteria
include:
1. Project IRR > 15%
2. Industrial demand
3. Natural gas
accessibility
Projects under development
2007: 20 projects
2008: 18 projects
2009: 47 projects
2010: 35 projects
1HFY11: 43 projects
Projects in operation
2007: 37 sites
2008: 50 sites
2009: 63 sites
2010: 99 sites
1HFY11: 103 sites
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Natural Gas
Current Project Locations
Hebei Cangzhou, Cangzhou Economic
Development Zone, Nanpi, Qinghe, Leting,
Xinle, Gaocheng, Pingshan, Feng Nan, Neiqiu,
Wangdu, Nanbao, Bohai New Area, Hebei
Pipeline, Tang County
Henan 8 city gas concessions from
Heilongjiang Harbin, Jiamusi,
Zhongyu Gas
Shuangcheng, Mudanjiang, Jiagedaqi
Heilongjiang
Gansu Lingtai County
Jilin
Inner Mongolia Hohhot, Wushenqi,
Wushenqi Pipeline, Changmeng Pipeline,
Baotou, 4 counties, Etoke Banner, Etuokeqi,
Alashan, Zuoqi Tenggeli Industrial Zone
Liaoning
Xinjiang
Ningxia Zhongwei
Shaanxi Baoji, Qishan Xian, Yulin
Hubei Yichang, Xiaogan, Hanchuan,
Inner Mongolia
Gansu
Hubei
Sichuan
Guizhou
Yunnan
Anhui
Hunan
Jiangsu Pizhou, Yangzhong, Nanjing
Shanghai
Zhejiang
Guangxi Guangdong
(Jiang Bei, Pukou), Xuzhou (Jiawang),
Xuzhou (Xinyi), Yangzhou
Zhejiang Hangzhou (Xiaoshan),
Taizhou, Jinhua, Hangzhou Jiangdong
Industrial Zone
Fujian
Taiwan
Fujian 29 city gas concessions
Anhui Wuhu, Huainan, Shouxian,
Hainan
Suzhou, Wuhuxian, Nanling, Huoshan,
Fengtai, Wuwei, Xiuningxian
Guangdong Maoming, Conghua,
Guangxi Yuling, Qinzhou, Liuzhou,
Fongchenggang, Laibin, Baise, Nanning City,
Nanning Dongmeng Development Zone, Bobai
cities from Zhongyu Gas
Jiangxi
Dingwang purification, Chongqing Pipeline
Hunan Yiyang, Yuanjiang, Youxian
Shandong Dezhou, Qingdao, 3
Jiangsu
Chongqing
Yingcheng, Yunmeng, Suizhou, Tianmen,
Guangshui, Dangyang, Xiaogan Pipeline,
Dangyang Pipeline, Huanggang-Daye pipeline
Chongqing Dianjiang E&P, Yubei District,
Henan
Shaanxi
Tibet
Sujiatun(Shenyang), Jinzhou D. Zone,
Liaoyang, Gaizhou, Zhuanghe, Linghai,
Pulandian, Liaoyang Economic Zone,
Jinzhou Longxiwan New Zone
Tianjin Tianjin Pipeline
Beijing
Tianjin
Hebei
Shanxi Shandong
Ningxia
Qinghai
Liaoning Dalian, Fushun, Jinzhou,
Jiangxi Nanchang (Wanliqu)
Meizhou, Yunfu, Shanwei, Xinxingxian,
Fengshunxian, Pingyuanxian
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Natural Gas Business
Natural Gas
Business Model
Natural gas fields
City gate
National or provincial
pipelines
Storage tanks
(spherical or cylinder)
Assets owned by the Group:
Main pipelines
Branch pipelines
Industrial users*
Pressure regulating boxes
Switches
Processing stations
* Customers’ pipelines which are not owned by the Group are within
the customers’ premises and are not highlighted in this diagram
Residential
households*
Car refueling station
Commercial users*
9
Natural Gas
Revenue Model and Pricing
Natural gas business operates on a cost-plus pricing model
END-USER TARIFF COMPONENTS
Exploration
Transportation
Distribution
Wellhead price
Transmission tariffs
Distribution cost + margin
NDRC Approval
Local Price Bureau Approval
 2 main sources of revenue
–
Gas connection: one-off payment mainly from residential users, less so from industrial and commercial users
–
Sale of piped gas: recurring income at tariffs approved by the local governments
10
Natural Gas Supply Growth
 Growth made possible by:
Additional gas supply from PetroChina as a result of the
cooperation agreement
–
Commissioning of new gas fields
–
–
Xinjiang Province
–
Inner Mongolia
–
Sichuan Province
China Natural Gas Supply Projection
Billion m3
–
Commissioning of new national pipelines
–
Sichuan – East Pipeline
–
West – East Pipeline II
–
Import of piped gas from Central Asia, Russia and Myanmar
–
Completion of additional LNG terminals
Source: NDRC
11
Liquefied Petroleum Gas (LPG) Business
LPG Business
 China Gas is the largest and only vertically
integrated LPG supplier in the PRC covering retail
and wholesale
Heilongjiang
 Our LPG business covers:
Jilin
–
–
–
Upstream: Direct supply from refineries of
PetroChina and Sinopec; also import from the
Middle East;
Midstream: 11 receiving terminals, 275,000 m3
LPG storage facilities, fleets of vessels and
trucks, and distribution logistics in Guangdong,
Guangxi, Fujian, Zhejiang, Anhui and Jiangsu;
Downstream: Direct retail of bottled LPG to
households.
Xinjiang
Liaoning
Inner Mongolia
Gansu
Ningxia
Beijing
Tianjin
Shanxi
Qinghai
Henan
Shaanxi
Tibet
Hubei
Sichuan
Chongqing
Hunan
Guizhou
Yunnan
Hebei
Shandong
Jiangsu
Shanghai
Anhui
Zhejiang
Jiangxi
Fujian
Guangxi Guangdong
LPG receiving terminals and storage facilities
Taiwan
Hainan
13
LPG
Business Model
Oil Refinery
Class 1 Station
Class 2 Station
Import/
Domestic Supply
Class 3 Station
Bottling Station
LPG Receiving Terminal
Industrial users
Domestic supply
City gas companies
Storage Facilities
Assets owned by the Group
LPG vessels
LPG trucks
Trucks sending bottled LPG
Commercial users
Residential households
14
Value Chain of LPG Supply
4-5%
Class 1
Station
Oil Refinery
Gross Margin (%)
5-6%
LPG Wholesaler
Class 2 Station
6-7%
Bottled LPG Maker
Class 3 Station
Bottled LPG
Retailers
10-12%
Source: Company data
15
LPG
Supply and Demand in China
China LPG Demand by Sector
China LPG Supply and Demand
Source: Company data
16
Operational Highlights 1H FY2011
Piped Gas
Total sales volume (million m3)
Sales Volume (as at 30th Sep 2010)
Period
Sales Growth – Total
1H FY11
14.3%
1H FY10
106.0.%
1H FY09
110.9%
Period
Sales Growth – Natural Gas Only
1H FY11
21.8%
1H FY10
101.8%
1H FY09
138.0%
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Natural Gas Volume
Customer Breakdown (as at 30th Sep 2010)
Sales Volume Growth
in 1H FY11
% of Total
Volume
CNG Stations
72.5%
10.1 %
Commercial
62.6%
12.9%
8.3%
64.2%
42.0%
12.8%
Natural gas sales volume (million m3)
Sector
Industrial
Residential
19
Natural Gas
Customer Data (as at 30th Sep 2010)
Customer Growth
Organic
Acquired
1H FY11
Portfolio Total
Residential
386,500
409,581
5,633,517
34.2%
4,197,905
95
4
909
71.8%
529
Commercial
1,699
1,539
36,714
20.6%
30,454
CNG Stations
17
4
102
41.7%
72
Industrial
Customer Tariffs (ex-tax)
(RMB / m3)
Change from
1H FY10
1H FY10
Portfolio Total
1H FY11
Change from 1H FY10
1H FY10
1H FY09
Residential
2.06
12.0%
1.84
1.82
Industrial
2.16
6.4%
2.03
1.95
Commercial
2.48
7.4%
2.31
2.02
CNG Stations
2.37
10.7%
2.14
2.31
20
Natural Gas
Other Operational Data (as at 30th Sep 2010)
Urban Population Covered (m)
Urban population covered and penetration rate
Penetration Rate
(000 m3)
Natural gas daily consumption
21
Natural Gas
Other Operational Data (as at 30th Sep 2010)
1H FY11
Change from
1H FY10
1H FY10
1H FY09
Residential Connection Fee
(RMB per customer)
2,484
2.7%
2,418
2,228
Total Pipelines (km)
52,746
81.9%
28,990
17,073
22
LPG
Operational Data (as at 30th Sep 2010)
1H FY11
1H FY10
Sale tonnage (ton)
508,482
435,900
Gross Margin (%)
-0.14%
+8.40%
Operating Margin (%)
-3.67%
- 0.14%
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Financial Highlights 1H FY2011
Financial Summary
Income Statement
HK$ ('000)
1H FY11
% change
1H FY10
6,537,621
66.0%
3,937,292
Gas Sales
2,404,538
52.5%
1,577,112
Connection Fees
1,005,288
79.8%
559,269
LPG Sales
2,897,589
65.8%
1,748,104
230,206
340.0%
52,327
1,234,712
32.2%
934,031
EBIT
770,123
37.2%
561,507
Profit after tax
123,729
-74.8%
490,778
Core Earnings
296,169
25.5%
236,054
Gross Margin – Gas Sales
20.0%
-
22.9%
Gross Margin – Connection Fees
70.7%
-
74.8%
Gross Margin – LPG Sales
-0.1%
-
8.4%
Turnover
Other
Gross Profit
25
Financial Summary
Balance Sheet & Debt Position
HK$ ('000)
1H FY11
1H FY10
Total Assets
26,380,903
19,451,891
Total Equity
6,413,152
4,477,943
Shareholder's Equity
4,948,470
3,648,305
Cash
4,258,280
2,503,123
Short-term Bank Debt
5,410,759*
3,102,667
Long-term Bank Debt
8,937,959
7,968,539
* of which HK$2,851,490,000 was Zhongyou Huadian LPG trade finance related facilities
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FY2011-12 Guidance
FY2011-2012 Guidance
 Enhance organic growth of existing city gas and pipeline projects in terms of residential penetration,
industrial connections and CNG station rollout
 Continue upstream LPG integration with refineries Sinopec and CNPC and enhance imports through
Oman Oil’s connections in the Middle East
 Active rollout of LPG downstream retail distribution network through the newly established JV with
Oman Oil
Gas volume (m3)
New residential connections
CNG stations
LPG sales (million ton)
FY2011
FY2012
4.3 bn
5.0 bn
700,000
850,000
to reach 110
140
1.2
1.8
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Disclaimer
Statements in this presentation and handout that are not strictly historical are “forward-looking”
statements. Forward-looking statements involve risks and uncertainties, including, but not limited to,
continued acceptance of the Company’s product and services in the marketplace, competitive factors,
new products and technology changes, the Company’s dependence upon third party suppliers and other
risks detailed from time to time in the presentation, handout and other related documents. China Gas is
not responsible for the accuracy and completeness of the contents of such presentations and/or other
documents. The materials and information in the presentations and other documents are for
informational purposes only, and are not an offer or solicitation for the purchase or sale of any securities
or financial instruments or to provide any investment service or investment advice.
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