Transcript 幻灯片 1

NASDAQ Global Market: CHNG
China Natural Gas Inc.
April 1, 2010
Safe Harbor Statement
This presentation contains "forward-looking statements" within the meaning of the
“safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995.
Such statements involve known and unknown risks, uncertainties and other factors
that could cause the actual results of the Company to differ materially from the
results expressed or implied by such statements, including changes from anticipated
levels of sales, future national or regional economic and competitive conditions,
changes in relationships with customers, access to capital, difficulties in developing
and marketing new products, marketing existing products, customer acceptance of
existing and new products, and other factors disclosed in the Company’s Annual
Report on Form 10K for the year ended Dec. 31, 2008 and all of the Company’s
subsequent Quarterly Reports on Form 10Q, especially in the “Risk Factors” sections
of these reports. Accordingly, although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, there can be no
assurance that such expectations will prove to be correct. The Company has no
obligation to update the forward-looking information contained in this presentation.
2
Company Overview
Business
China’s Leading Provider of Natural Gas Services
Headquarter
Xi’an, China
Capital Market
Timetable
• Established in January 2000
• Listed in OTC BB in December 2005
• Upgraded to NASDAQ Global Market in June 2009
Capital Structure
NASDAQ: CHNG
Price (4-1-2010): $9.89
Shares Outstanding.: 21.2 million
Three Month Avg. Trading Vol.: 298k
Market Cap: $209.51 million
Financials
Fiscal Year
Revenue
Net Income
2009 A
$81 million
$18.8 million
2008 A
$68 million
$15.2 million
3
Investment Highlights
Large & Growing Market Opportunity for Natural Gas
Strong Government Support For Clean Energy Industry
High Brand Recognition and Market Leadership
Strategic Cooperation with CNPC for CNG Expansion
Large LNG Project Augments Long-Term Growth
Proven Management Team – Strong Revenue Growth Trend since 2006
China Natural Gas is Uniquely Positioned to Capitalize on China’s
Expanding Natural Gas Market
4
Introducing CHNG
CHNG Overview
• A leading provider of compressed natural gas (CNG) for vehicular fuel and pipeline natural gas
(PNG) for industrial, commercial and residential use
• 36 fueling stations for taxis and buses in Shaanxi (24 stations) and Henan (12 stations)
• 176 million Nm3 sold for the year ended December 31, 2009
• CNG suppliers include PetroChina Changqing and Shaanxi Natural Gas Co. among others
Xi’an City, Shaanxi Province
• Population: 8.4 million(1)
• Number of Vehicles: 1 million(2)
• GDP CAGR 17.4% from 2003 to 2008
(national average of 17.2%)
Henan Province
• Zhengzhou, Kaifeng, Xuchang
• Higher retail pricing
• Higher potential as car conversion rate
increases
(1) Xi’an Municipal Government as at December 31, 2008
(2) Xi’an Vehicle Management Bureau statistics as of December 31, 2008
5
Growing Footprint in the Natural Gas Industry Supply Chain
Retailing of CNG
Processing
Tank Truck Fleet
CNG Fueling Stations
Distribution of
CNG
CNG
CNG
Residential, commercial, industrial consumers
Exploration /
Production
Transmission
PNG
Liquefaction/
Processing of LNG
Distribution/
Delivery of LNG
LNG
CHNG’s existing core businesses
Utility/Power Plants/Industrial
customers
LNG
CHNG’s core businesses under development (LNG plant currently under construction, expected to be
completed by second quarter of 2010)
6
Improving Delivery Infrastructure Will Drive Gas Usage Rate
Phase I of West East
Pipeline constructed in
2004
Phase 2
Phase II will be launched
in 2011
Phase 1
Three pillars of PRC’s gas
supply are onshore
(Northwest), imported (LNG)
and piped (gas from Russia)
Xi’An
Xi’an is the central hub for China’s gas delivery from
key Northwest region
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High Growth Through Sustainable Competitive Advantages
Operating History
2005
2006
2007
2008
2009
2010E
First CNG fueling
station business
in Xi'an
LNG project
launched
Construction of
LNG processing
and distribution
plant started
$40MM debt
financing with
Abax Lotus
completed
NASDAQ Global
Market Listed
Construction of LNG
Project expected to
be completed by Q2
2010
$4.9
1
$18.8
11
$35.4
24
$67.7
35
6.9MM nm³
39.3MM nm³
83.7 MM nm³
149.4 MM nm³
$81.1
36
164.3 MM nm³
Dominant Supply Position and Operations
• Strong Government Relations
• Supply Contracts with PetroChina and Shaanxi Natural Gas
• Perfect Safety Record
• Strategic Location near Natural Gas Supply Pipeline
• Successful Track Record of Organic and Acquisition Growth
8
Total Revenues ($MM)
CNG Fueling Stations
CNG Sold Through
Fueling Station
Increasing Diversification of Revenue Sources
2009
2010
CNG fueling
station
CNG fueling
station
Gasoline
Gasoline
Pipeline
natural gas
Pipeline natural
gas
Installation
Installation
Automobile
conversion
Automobile
conversion
LNG
Construction of LNG plant will complete in 2nd quarter of 2010
9
Business Segments
CNG Fueling Stations
Piped Natural Gas
LNG
10
Comprehensive Fueling Station Network Drives Volume
Key Locations
•Taxis refill 3-4 times a day; buses 1-2 times
•Our network must provide them with
accessible locations throughout the city
•Taxis take 2 minutes to refuel; buses take 6
minutes
Network Statistics
•Ownership of 24 stations in Shaanxi
Province
•12 owned stores in Henan Province
•36 stations in total
11
CNG Business Model: Strong Cash Flow Annuity
Fueling Stations / Sales Volume Analysis
Revenue and Gross Profit Margin Analysis
Revenue (millions)
12
Self Built and Acquired Stations Both Attractive
Shaanxi Province
Henan Province
*
(1)
*
(1)
Filling Station
Tankers (2); Locomotive (1)
$1,300
$400
$2,000
$400
$1,300
$400
$2,000
$400
Total Investment
$1,700
$2,400
$1,700
$2,400
Annual sale volume ('000 m3)
Average sale price net of VAT ($/m3)
4,889
0.34
4,889
0.34
4,037
0.41
4,037
0.41
Annual revenue
$1,673
$1,673
$1,675
$1,675
Gross margin (%)
52.5%
52.5%
54.1%
54.1%
751
751
793
793
44.9%
44.9%
47.3%
47.3%
2.26
3.19
2.14
3.03
USD '000
Self-built Acquired
EBITDA
EBITDA (%)
Cash Payback period (years)
(2)
Self-built Acquired
Historical cash payback between 2 and 3 years
(1)
Based on negotiated prices to date
(2)
Defined as EBITDA/Initial Capital Investment + Gas Inventory
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New Joint Venture with CNPC
中石油昆仑
CNPC Kunlun Limited
Scope
Initial Investment /
Ownership
CHNG Role
PetroChina Role
Co-development of CNG fueling stations along West East
Pipeline
CHNG invests $3.6m for 49% stake
CNPC invests $3.7m for 51% stake
CHNG has 2 of 5 board seats and CEO appointee rights
Day to day operation of fueling stations
10 planned by end of 2010
Gas supply
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Vehicle Conversion Businesses
Vehicle Conversion Service
• 4 CNG conversion workshops in Xi’an
• Target customers: taxis, public
transportation vehicles and fleet
vehicles
Daily Savings
Other Benefits
Daily taxi fuel cost (based on 250
miles per day)
•Significantly reduced harmful
emissions (87% less NO2; 70% less CO;
25% less CO2)
$20.8
50% savings
•Longer service life – up two to three
years over gasoline or diesel engines
Gasoline
$10.3
CNG
•Reduced maintenance requirements
* Data source: Honda
Motor Company
40 to 60 day payback period for taxi conversion
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Business Segments
CNG Fueling Stations
Piped Natural Gas
LNG
16
Piped Natural Gas Businesses
Piped Natural Gas
• 120 km high pressure natural gas pipeline
• Franchise monopoly rights for 40 years
• 108,423 residential and industrial users (growing 10% annually)
• 9 service areas including Lantian, Hongqing, Tianwang, Tangyu, Fangzhi Chen, International
Port Zone, the energy and chemical industry base, Xinzhu Town and Lingbao
• Gas provided by Shaanxi NG (SOE)
• Regulated pricing
17
Business Segments
CNG Fueling Stations
Piped Natural Gas
LNG
18
Our 150MM m3 Gas Liquefaction Project in Yulin, Shaanxi
Liquefaction/Processing
Upstream supply
sourced from Petro
China
Distribution/Delivery
• Net Capacity is 150 million normal m³
• 100% already committed
• EPC contractor is Chemtex
• Customer reach up to 1,600 km radius (Guangdong,
Guangxi, Fujian)
We are the only licensed supplier in Shaanxi Province
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LNG Project: Attractive Economics
• $50.4MM total cost for phase I; $42MM invested to date
• PetroChina supplying natural gas at their well head price
• 150MM m³ per annum commitment
• Strong government assistance for utility infrastructure
• Highly automated plant will save labor costs
• Retail price USD 0.48 per m³ includes transportation up to 1,600 km
We project to recover our $50.4 million total investment in less than
3 years from commencement of production
20
LNG Project on Track
Yulin, Shaanxi
LNG Project Completion Blueprint
• Center of the Ordos Basin
• 2 km from PetroChina Changqing
natural gas purification factory
• 35 acres of land for phase II and III
expansion
• 320 billion cubic meters reserves
• Expected to be the major transport
hub
Purchase
Contract for
Equipment
2Q’07
Commence
Construction
1Q’08
Trial Testing
2Q’10
2Q’08
Secure
Financing to
Fund Plant
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Liquefied Natural Gas (LNG) Target Customers
Key Target Customers
Key Target Geographic Markets
• Industrial Customers covering ceramic
factory, metal smelt, glasswork, etc.;
• City gas companies covering industrial,
commercial and residential pipeline end
users;
• LNG fueling stations in cities and ocean
ports;
• Natural gas power plants
• The industrialized and urbanized coastal
areas of China
East China
South China
22
Explicit Policy Support for Natural Gas
Central Government
•11th 5-Year Plan: Reemphasized natural gas usage at expense of coal
•2007 Energy Law: Provided legal infrastructure for natural gas market
Key PRC Mandates
National Development and Reform Commission
Increase the use
of natural gas
Reduce
consumption
of coal
Market
oriented price
mechanism
•Energy blueprint (2007)
•New policy submitted in May 2009 further supports
natural gas development
•CNG/Gasoline hybrid vehicles a top priority
Provinces and Cities
Subsidies and
beneficial tax
policies
•Demand driven support via conversion subsidies for
cabs and buses
•1999 Clean Auto program implemented in 12 key
cities
23
Robust Growth Since Broad Introduction 10 Years Ago
Natural Gas Consumption in China by Sector(1)
Volume in billions m3
80
Electricity P lants
70
Heat P lants
Energy Sector
60
50
40
Industry Sector
Transport Sector
Residential
Commercial, P ublic Services
Feedstock Use in Industry
30
20
10
0
2000
2001
2002
2004
2003
2005
2006
2007
Industry and residential sectors both demonstrate high demand
(1)IEA,
Natural Gas in China, Market Evolution and Strategy (June 2009)
24
Addressable Market Still Very Large
Annual Consumption
Total Reserve
Billion Cubic Meters
Billion Cubic Meters
750
7000
653
5,978
6000
5000
500
4000
3000
2,266
250
2000
70
1000
0
0
U.S.
U.S.
China
U.S. Natural Gas vs. Total Energy Usage
China
China Natural Gas vs. Total Energy Usage
Available supply, government motivated by environmental concerns
Source: US Energy Information Association, 2007; PRC Statistical Year Book, 2007
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Competition By Business Line
CNG fueling
stations
Xi’an City: Xi’an Municipal NG (15 stations), another 32 privately owned
(We dominate 1/3 Market)
Henan: Zhengzhou NG (8 stations)
Piped
Natural Gas
Xi’an City: Shaanxi Qinhua (JV with HK Town Gas – 0384.HK)
790,000 customers
LNG
Xinjiang Guanghui (600256.SH): 450MM m³ facility, FY08 sales of
306MM m³
Xinao Gas (2688.HK): 270MM m³ in two facilities (Shanxi and Ningxia),
Operations began in 2009
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Comparable Peer Valuation
Sales(1)
Ticker
Company Name
Share Price
Market Cap
(03/10/10)
EPS(1)
P/E(1)
2008A
2009E
2008A
2009E
2008A
2009E
China Natural Gas Inc
10.58
224.1 M
67.7
81.1
1.04
1.13
9.0x
9.4x
135 HK
CNPC Hong Kong Ltd
1.32
5,903.2 M
5,208.30
5,254.00
0.09
0.03
13.0 x
39.0 x
600256 CH
Xinjiang Guanghui
Industry
4.11
3,918.0 M
1,985.60
2,692.70
0.07
0.09
56.5 x
44.0 x
2688 HK
Xinao Gas Holdings Ltd
2.44
2,558.7 M
8,265.50
10,050.00
0.09
0.11
26.2 x
21.5 x
3928 HK
Zhengzhou Gas Co Ltd
2.05
256.8 M
1,028.80
1,196.00
0.17
0.22
11.3 x
8.7 x
1083 HK
Towngas China Co Ltd
0.46
894.2 M
4,409.20
3,166.90
0.01
0.02
41.8 x
20.9 x
CLNE
Clean Energy Fuels Corp
19.32
1,154.2 M
129.5
131.5
-0.9
-0.6
n/a
n/a
SNEN
Sinoenergy Corp
1.68
26.7 M
40.9
41.8
1.02
-0.82
1.8x
n/a
Avg (ex CHNG) :
25.1x
26.8x
Median (ex CHNG) :
19.6x
21.5x
CHNG
Peers
Figures in millions except per share data. Conversion rates: US$1.00 = CNY6.83 = HKD7.75
(1)
Source: Bloomberg; Company guidance;
27
Growth Strategies
Expand
Compressor
Station’s
Production
Capacity
Increase Market
Share in Existing
Markets
Ensure
Adequate
Supply of
Natural Gas
Expand
Geographical
Coverage
Pursue Strategic
CNG
Acquisitions /
Cooperation
Diversify into
LNG business
28
Robust Revenue Growth
Consolidated Revenues
(USD in millions)
$81.1
$67.7
$35.4
$18.8
29
Consistent Financial Margins
(USD in millions)
45.0
60.00%
40.0
49.10%
48.40%
49.50%
48.30%
50.00%
35.0
30.0
40.00%
25.0
40.2
29.40%
20.0
30.00%
32.7
25.80%
23.20%
22.40%
15.0
20.00%
17.4
10.0
18.8
15.2
5.0
10.00%
9.1
9.1
5.5
0.0
0.00%
2006
2007
Gross Profit
Source: Audited Financials
2008
Net Income
Gross Margin
30
2009
Net Margin
Solid Balance Sheet
Summary Balance Sheet
As of December 31
(USD In millions)
2007
2008
2009
$13.3
$5.9
$48.2
0.3
0.9
1.3
Current Assets
15.7
9.6
53.3
Total Assets
53.3
118.3
197.6
Total Current Liabilities
2.1
4.6
6.7
Long Term Liabilities
0.0
42.0
46.8
Shareholder's Equity
$51.2
$71.6
$144.1
Long Term Liabilities/Equity
0.0%
58.7%
32.5%
Cash
Accounts Receivable
31
Strong Working Capital Position
Compressed Natural Gas (CNG)
• CHNG prepays suppliers 15-30 days in advance
• Buses prepay CHNG 1 month in advance
• Taxis pay CHNG with cash
Liquefied Natural Gas (LNG)
• CHNG prepays suppliers 1 month in advance
• Customers pay CHNG 15-30 days in advance
Piped Natural Gas (PNG)
• CHNG prepays suppliers 15-30 days in advance
• Customers pay CHNG with cash
Consolidated DSOs
• FY2007 – 4.5
• FY2008 – 3.2
• FY2009 – 4.9
Cash Flow from Ops
• FY2007 – $10.5MM
• FY2008 – $20.9MM
• FY2009 – $25.4MM
32
Capital Expenditures
• FY2007 – $14.7MM
• FY2008 – $62.2MM
• FY2009 – $29.1MM
Experienced and Proven Management Team
Name
Qinan Ji
Chairman
and CEO
David She
Acting CFO
Bin Wang
Chief Engineer
Experience
•Acquired CHNG in 2003
•Over 20 years experience in the energy business
•Bachelor of Economic Management from Northwestern
University (Shaanxi)
•Joined CHNG in 2008
•Promoted to Assistant CFO in December 2008
•Master in Finance from State University of New York in Buffalo
•Joined former company in 2001
•More than 10 years in energy project engineering
•Responsible for maintenance, safety and new construction
•Bachelor in Engineering from Nanchang Hangkong Industry
College
33
Summary
Large & Growing Market Opportunity for Natural Gas
Strong Government Support For Clean Energy Industry
High Brand Recognition and Market Leadership
Strategic Cooperation with CNPC for CNG Expansion
Large LNG Project Augments Long-Term Growth
Proven Management Team – Strong Revenue Growth Trend since 2006
China Natural Gas is Uniquely Positioned to Capitalize on China’s
Expanding Natural Gas Market
34
Contact Info
Company – China Natural Gas, Inc.
Investor Relations – RedChip Companies, Inc.
Mr. David She – Acting CFO
19th Floor, Building B, Van Metropolis Tang Yan Rd
Hi-Tech Zone | Xi’an, Shaanxi, China
Tel: (86) 29-8832 7391
Email: [email protected]
Mr. Jon Cunningham
500 Winderley Place, Suite 100
Maitland, FL 32751
Tel: (800) 733 2447
Email: [email protected]
US Contact:
Tel: (718) 910 1231
Email: [email protected]
China Contact:
Tel: (86) 29-8845 4353, (86)1399 287 9998
Legal Counsel – The Crone Law Group
Auditor – Frazer Frost, LLP
Mr. Mark E. Crone
101 Montgomery St. Suite 1950
San Francisco, CA 94104
Tel: (415) 955 8900
Email: [email protected]
Ms. Susan Woo
135 South State College Blvd, Suite 300
Brea, CA 92821
Tel: (714) 990 1040
Email: [email protected]
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