china gas holdings limited corporate presentation july 2013
TRANSCRIPT
CHINA GAS HOLDINGS LIMITED Corporate Presentation
July 2013
China Gas Overview
Natural Gas Services Operator
Operates in 184 city concessions (not inclusive of 11 city concessions owned by Fortune Gas, the acquisition of which is expected to complete soon) with 30-year monopolistic operating right each
Possesses intermediate and arterial gas pipeline networks of 37,408 km, serving more than 8.5 million household users and 52,050 industrial and commercial users
LPG
The largest LPG retailer in PRC
Owns 8 LPG receiving terminals and 285,000 m3 of LPG storage capacity in PRC
Distributes LPG in 12 provinces such as Guangdong, Guangxi, Fujian, Zhejiang and Jiangsu
Owns a 49% stake in Panva Gas which controls 450 self-owned retail stores and 120 franchised outlets located in provinces such as Jiangsu, Hubei, and Zhejiang. The Company retains an option to acquire the remaining 51% of Panva Gas
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Natural Gas – Business Model
Natural gas fields
Assets owned by the Group:
Main pipelines
Branch pipelines
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
National or provincial pipelines
City gate
Storage tanks(spherical or cylinder)
Residentialhouseholds*
Car refueling station Commercial users*
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Natural gas business operates on a cost-plus pricing model
Natural Gas Pricing System
END-USER TARIFF COMPONENTS
ExplorationWellhead price
TransportationTransmission tariffs
DistributionDistribution cost + Return
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
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CNG/LNG Refueling Stations
Strongest growth
Most profitable
Currently owns:
165 CNG stations in 38 cities & 5 LNG stations in 3 provinces
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OPERATIONAL PERFORMANCE – NATURAL GAS
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PIPED GAS SALES VOLUME
To
tal s
ale
s vo
lum
e (
mill
ion
m3)
Period Volume Growth: Total
FY13 21.6%
FY12 25.0%
Period Volume Growth: Natural Gas
FY13 22.7%
FY12 25.0%
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NATURAL GAS SALES VOLUME:CUSTOMER BREAKDOWN
Na
tura
l ga
s sa
les
volu
me
(m
illio
n m
3)
Customer
Sales Volume Growth in
FY13
% of Total Volume
FY13 FY12
Residential 18.5% 12.2% 12.7%
Industrial 23.0% 66.8% 66.6%
Commercial 32.1% 12.4% 11.5%
CNG Stations 14.5% 8.6% 9.2%
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NATURAL GAS CUSTOMER & TARIFF DATA
Customer
Growth
FY13Portfolio Total
FY12Portfolio Total
Change from FY12Organic Acquired
Residential 1,225,863 25,234 8,438,991 7,187,894 17.4%
Industrial 518 8 2,155 1,629 32.3%
Commercial 6,389 205 49,895 43,301 15.2%
CNG/LNG Stations 37 – 170 133 27.8%
Customer Tariffs (ex-tax) (RMB / m3) FY13 FY12Change from
FY12
Residential 2.18 2.12 +2.83%
Industrial 2.45 2.36 +3.81%
Commercial 2.48 2.46 +0.81%
CNG Stations 2.73 2.65 +3.02%
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OTHER OPERATIONAL DATA
FY13 FY12 Change from FY12
Residential Connection Fee (RMB per customer)
2,550 2,473 3.1%
Urban Population Covered (million) 65.7 62.5 5.1%
Household Penetration Rate 42.0% 37.4% 12.3%
Total Intermediate & Main Pipelines (km) 37,408 33,505 11.6%
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NEW CITY CONCESSIONS WON
27 new concessions since 1st April 2012 bringing the total to 184 city gas concessions as at 15 June 2013 (not inclusive of 11 city concessions owned by Fortune Gas)
New concessions won in Liaoning, Heilongjiang, Hubei, Inner Mongolia, etc.
Focus on industrial cities and customers, high volume users
More concessions, largest portfolio in China
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NATURAL GAS PROJECT LOCATIONS
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POLICY ENVIRONMENT
In Oct. 2012, NDRC issued the natural gas application policy, promoting the use of natural gas (CNG/LNG) for vehicles and vessels
The PRC’s “12th Five-Year Plan” for energy development published in Jan. 2013 indicates natural gas supply in China will surpass 260 billion m3 by 2015, increasing by 20% per year.
Strong government support
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OPERATIONAL PERFORMANCE – LPG
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LPG: DOWNSTREAM RETAIL FOCUS
FY13 FY12
Sales Volume (tonnes) 889,342 894,000
Gross Margin (%) 5.7% 5.5%
Operating Margin (%) -0.2% 1.0%
Largest downstream retailer of LPG in China (via 49% owned Panva Gas)
Shifting the LPG focus from wholesale to downstream business to improve overall profitability and cost efficiency
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FINANCIAL PERFORMANCE
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FINANCIAL SUMMARY – INCOME STATEMENTHK$ millions FY13 % change FY12
Revenue 21,250.3 12.2% 18,933.6
Piped Gas Sales 9,348.9 22.0% 7,662.5
Connection Fees 3,300.7 17.7% 2,803.7
LPG Sales 7,959.2 -0.4% 7,992.8
Others 641.4 35.2% 474.5
Gross profit 4,374.0 21.3% 3,605.7
Profit after tax 2,041.3 78.8% 1,141.9
Net profit attributable to shareholders of the Company
1,764.3 84.9% 953.9
Basic EPS (HK cents) 39.37 80.9% 21.76
Basic DPS (HK cents, full year) 8.48 116.3% 3.92
Dividend payout ratio 21.5% +3.5%pts 18.0%
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FINANCIAL SUMMARY – BALANCE SHEET
HK$ millions FY13 FY12
Total Assets 35,367.6 31,874.4
Total Equity 12,836.7 10,799.0
Shareholder's Equity 11,484.6 9,742.2
Cash 4,948.8 5,528.2
Short-term Bank Debt 9,082.1 8,963.4
Of which LPG trade finance related facilities
4,805.3 5,097.6
Long-term Bank Debt 6,862.7 6,406.8
Net Gearing Ratio* 48% 44%
* Net gearing ratio is computed based on total net borrowings (total borrowings less cash and trade finances in relation to LPG business) as a percentage of net assets
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FINANCIAL SUMMARY – MARGINS
FY13 FY12
EBIT Margin 15.2% 13.5%
EBITDA Margin 18.7% 16.7%
Net Profit Margin 9.6% 6.0%
Return on Equity 15.4% 9.8%
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FY2014 – 2015 GUIDANCE
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FY2014 - 2015 Guidance Enhance organic growth in existing city gas projects
Increase industrial and commercial customer connections as upstream supplies increase
Expand “Hub-Satellite City” investment program to add more concessions to our portfolio
Expedite the rollout of CNG and LNG stations for vehicles and vessels
Focus on higher margin retail LPG distribution
For the year ended March 31 FY2014 FY2015
Total piped gas volume (m3) 8.5 bn 10 bn
New residential connections 1.3 m 1.3 m
CNG stations 370 600
Downstream LPG sales (including Panva Gas) 900,000 tons 1.1m tons
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DISCLAIMER
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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. All the directors of China Gas jointly and severally accept full responsibility for the accuracy of the information contained in these materials and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in these materials have been arrived at after due and careful consideration and there are no other facts not contained in these materials, the omission of which would make any statement in these materials misleading. 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.