Beijing Gas Blue Sky Announces 2019 Interim Results

Net profit and revenue increased by 70.8% and 123.4% respectively year-on-year

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Highlights

• Total gas sales volume increased significantly by 121.3% to 548.5
  million cubic meters as compared with the same period of the previous year.
• Revenue increased significantly by 123.4% to HK$1,882.6 million as
  compared with the same period of the previous year.
• Gross profit increased significantly by 156.8% to HK$207.9 million as
  compared with the same period of the previous year. Gross profit margin
  increased to 11.0%.
• Profit for the period attributable to owners of the Company
  significantly by 70.8% to HK$134.3 million as compared with the same period of
  the previous year.
• Closing cash balances increased significantly by 74.1% to HK$490.3
  million as compared with the same period of the previous year.
• Operational cash flow turned to positive, net operational cash flow
  increased by HK$355.5 million to HK$99.2 million.
• Earnings per share increased by 33.8% to
  HK1.03 cents.

Financial
Highlights

	6 months ended 30 June
HK$ ‘000	2019	2018	Change
Revenue	1,882,630	842,645	123.4%
Gross Profit	207,912	80,958	156.8%
EBITDA	368,100	270,600	36.03%
Profit for the period attributable to owners of the Company	134,346	78,668	70.8%
Basic earnings per share (HK cents)	1.03	0.77	33.8%

 

HONG KONG, CHINA - Media OutReach - 29 August 2019 - Beijing Gas Blue Sky Holdings Limited (“the Company” or “Beijing Gas Blue Sky”,
together with its subsidiaries, the “Group”, HKSE stock code: 6828) announced
its interim results for the six month ended 30 June 2019 (“HY2019”). In HY2019,
the Group recorded total revenue of HK$1,882.6 million (HY2018: HK$842.6
million), representing a growth of 123.4% year-on-year, and recorded a profit
attributable to owners of the Company amounted to HK$134.3 million (HY2018: HK$78.7
million), representing an increase of 70.8%.

 

During the Reporting Period, earnings per
share were HK1.03 cents (HY2018: HK0.77 cents).

BUSINESS REVIEW

 

For the six months ended 30 June 2019
(“HY2019”), the Group’s total gas sales volume increased by 121.3% as compared
to the corresponding period of last year to 548.5 million cubic meters (HY2018:
247.9 million cubic meters) on the back of the gradual betterment of the
Group’s whole LNG value chain. In HY2019, the gas sales volume from the
subsidiaries amounted to 521.5 million cubic meters, representing a significant
increase of 166.1% as compared to the corresponding period of last year (HY2018:
196.0 million cubic meters). In addition, the gas sales and throughput volume
from the associates of the Group amounted to 3,267.3 million cubic meters. It
was mainly attributable to natural gas throughput volume from Jingtang Liquefied
natural gas (LNG) receiving terminal.

 

As at 30 June 2019, the Group’s natural
gas projects covered a total of 16 provinces, city and autonomous region in the
PRC, namely Liaoning, Jilin, Hubei, Hebei, Shandong, Anhui, Zhejiang, Shaanxi,
Guizhou, Hainan, Guangxi, Guangdong, Ningxia Autonomous Region, Shanxi, Beijing
City and Shanghai City.

 

CITY GAS BUSINESS

 

As at 30 June 2019, the Group connected
gas pipelines for 33,113 new users of 5 city gas projects during the period and
the cumulative number of users reached 465,514, of which 32,987 were new residential
users and the cumulative number of residential users reached 463,152. The Group
secured 126 new industrial and commercial users and the cumulative number of
industrial and commercial users reached 2,362. The gas sales volume of city gas
projects of the Group was 91.1 million cubic meters, representing an increase
of 28.3% as compared to the corresponding period of last year. The Group
recorded a revenue of HK$465.4 million, representing an increase of 43.7% as
compared to the corresponding period of last year, primarily due to the
increase in gas consumption of newlydeveloped industrial and commercial users
of Shanxi and Liaoning projects and the increase in value-added service income.

 

DIRECT LNG SUPPLY
BUSINESS

 

During HY2019, the Group provided
industrial and commercial users with direct supply service covering Guangdong
Province, Shanghai City, Shandong Province, Anhui Province, Hainan Province,
Guizhou Province and Zhejiang Province, and 22.5 million cubic meters of
natural gas (HY2018: 38.3 million cubic meters) were sold, recording sales
income of HK$79.2 million (HY2018: HK$138.2 million). In HY2019, the decrease
in gas sales volume of the business segment was due to the Group’s business
intergration. In order to improve the operation quality of individual project
and coordinate the strategic development of newly acquired projects, the Group
proactively reduced several direct LNG supply projects which have poor
operation quality and little synergy. The Group provided stable gas sources for
existing industrial and commercial users of direct supply service by
establishing the productive partnership with LNG suppliers from the Bohai
Economic Rim and the Yangtze River Delta Economic Zone which will also be two
focused market regions for the Group to conduct business in the future. At the
end of May 2019, the Group completed the acquisition of Zhejiang Bo Xin project
serving nearly 100 industrial customers of direct supply service. As there is
high demand for LNG at the location of Zhejiang Bo Xin project, the Yangtze
River Delta region, which is characterised by steady upstream gas sources and
regular downstream industrial and commercial customers, the project has become
a significant contributor to LNG consumption growth of the Group since the
completion of the acquisition.

 

GAS REFUELING
STATION BUSINESS

 

The Group sold natural gas to LNG vehicles
(trucks and buses) and compressed natural gas (“CNG”) vehicles (taxis, buses
and private cars). In HY2019, the Group owned 30 gas refueling stations
including 17 CNG refueling stations and 13 LNG refueling stations (30 June
2018: 34 gas refueling stations including 20 CNG refueling stations and 14 LNG
refueling stations), mainly covering Hainan Province, Anhui Province, Shandong
Province, Guizhou Province, Jilin Province, Shanxi Province and Liaoning
Province. The Group recorded a gas sales volume of 39.8 million cubic meters
(HY2018: 40.7 million cubic meters) and sales income of HK$79.1 million
(HY2018: HK$65.0 million), representing an increase of 21.7% as compared to the
corresponding period of last year. The number of the Group’s gas refueling
stations reduced by 4 as compared to the corresponding period of last year due
to active adjustment. However, leveraging on good operation management, the
business volume of gas refueling stations maintained growth and its operation quality
was further improved.

 

LNG TRADING AND
DISTRIBUTION BUSINESS

 

As at 30 June 2019, the Group distributed
natural gas to downstream customers with gas sources from LNG receiving
terminals in China’s coastal regions and gas sources from LNG plants and recorded
a total trading volume of 395.0 million cubic meters (HY2018: 97.9 million
cubic meters), representing a significant increase of 303.5% as compared to the
corresponding period of last year through distributing LNG by 67 self-owned natural
gas transportation vehicles (HY2018: 67 natural gas transportation vehicles).
The revenue was HK$1,259.0 million (HY2018: HK$315.5 million), representing a
significant increase of 299.0% as compared to the corresponding period of last
year. The increase during the period was mainly because the Group imported a
shipload of LNG in the second half of 2018 and approximately 88 million cubic
meters of which were sold during the period. Meanwhile, with the good
partnership with upstream gas source suppliers, the Group had  gas sources with lower prices than average
market cost. Therefore, the Group’s market development capability increased
rapidly and its business scale expanded quickly. In addition, due to the
completion of the acquisition of Zhejiang Bo Xin project in HY2019 by the Group,
a significant LNG business project in the Zhejiang region which had better
upstream gas sources and a huge trading network, contributing to stronger
growth of the Group during the period.

 

LNG RECEIVING
TERMINAL PROJECTS

 

PetroChina
Jingtang (Jingtang LNG Receiving Terminal)

 

In HY2019, the total throughput volume of
LNG of Jingtang Receiving Terminal amounted to 3,243.7 million cubic meters, of
which the gas volume transported to pipelines through gasification was 2,837.7
million cubic meters while the gas transportation volume of a tank truck was
406.0 million cubic meters. 4 new storage tanks of the receiving terminal are
currently under interior construction and the emergency peak adjustment project
is expected to be completed and put into operation in the second half of 2020,
which will turn the receiving terminal into China’s largest LNG receiving
terminal with higher peak adjustment and supply assurance capacity for the time
being.

 

New Project
Development

 

The Group completed the acquisition of
Zhejiang Bo Xin and Xin Te project in June 2019, the consideration of which was
RMB205,000,000 (equivalent to approximately HK$239,174,000).

 

The principal business of Zhejiang Bo Xin
included (i) direct supply of LNG to industrial users; and (ii) trading of LNG.
It receives stable gas supply from CNOOC’s Zhejiang Ningbo LNG terminal and
mainly distributes and supplies to large scale industrial users. Zhejiang Bo
Xin’s major sales network covers Yangtze River Delta region, which is the key
LNG consumption area in the PRC with developed regional economy and numerous
industrial and commercial enterprises. This area has a strong market demand and
the LNG consumption is expected to have considerable growth potential in the
future. Xin Te is principally engaged in direct supply of LNG to industrial
users. For the year ended 31 December 2018, Zhejiang Bo Xin had 68 direct
supply and trading customers with sales volume of approximately 104,132 tons,
whereas Xin Te had 23 direct supply and trading customers with sales volume of
approximately 14,653 tons. The acquisition was completed in late May 2019,
Zhejiang Bo Xin is undergoing the change of name to ?????????? (Beijing Gas Blue
Sky Bo Chen Energy Limited) and will be engaged in the development of LNG
trading and distribution, direct supply and relevant businesses in eastern
China.

 

The acquisition of Zhejiang Bo Xin demonstrated
the Group’s strategic layout of whole LNG industry chain and replenished the
market share and influence of the Group in the midstream and downstream market
of the LNG business in the Yangtze River Delta region, enhancing the overall LNG
distribution capacity and sales capacity of the Group. It will be easier to
achieve economies of scale through increasing the total trade volume, thereby
improving the bargaining power of the Group in the upstream market. The
Acquisition will help the Group to achieve cooperation in the Yangtze River
Delta region with upstream gas suppliers and terminals, coupled with the
Group’s established distribution advantages in the Beijing-Tianjin-Hebei region
and other markets, the Group will achieve its strategic planning of importing
gas from overseas sources independently in the future and capture more revenue
under the great opportunity of the fast-growing market of imported LNG.

FUTURE PROSPECTS

 

Looking forward to the second half of
2019, the domestic natural gas consumption will continue to maintain a steady
growth. With the accelerated reform of oil and gas system, and the increasing supply
capacity of natural gas, the natural gas industry will usher the important
development opportunities. Benefiting from the established system of the whole
LNG value chain business, the Group recorded the considerable growth of gas
sales from LNG segment, compared to the same period last year. The Zhejiang Bo
Xin project acquired in the first half of the year is an important step for the
Group’s layout of the whole LNG value chain, which will help the Group to
cooperate closely with the upstream gas sources in the Yangtze River Delta
region, further enhance existing customers’ dependence on us, and promote the
expansion of markets of new customers.

 

In the Bohai Rim, the Group is also
focusing on the development opportunities of the whole LNG value chain, and has
achieved the overall market layout of the Group’s strategy of “North-South
Connection”. The Group will give full play to the business advantages of the
whole LNG value chain and promote the synergistic effects among upstream,
midstream and downstream sectors. By expanding business development in the
midstream and downstream, the Group will gain more imported offshore gas
sources and improve bargaining power. Under the market environment where the
LNG is developing rapidly, the Group will seize the opportunity of the industry
and strive to increase its ranking within the industry.

 

In addition, in terms of management, the
Group will strengthen its operation and management, and reduce the costs and
improve efficiency through “multi-tasking strategy”. The Group will also effectively
reduce the management expenses through the management measures such as
optimizing organizational structure, optimizing personnel and strictly
controlling expenditures. By continuing to strengthen cooperation with
commercial banks, the Group will lower the financial cost of loans. Through the
targeted acquisition of quality projects and enhanced scale advantage, the
Group will thereby improve the overall profitability.

About Beijing Gas Blue Sky Holdings Limited

Beijing Gas Blue Sky Holdings Limited (“Beijing Gas Blue Sky”, HKSE
stock code: 6828) is an integrated natural gas provider, distributor and
operator, with an emphasis on the midstream and downstream natural gas
development. Our natural gas business includes: (i) construction and operation
of compressed natural gas (“CNG”) and liquefied natural gas (“LNG”) refueling
stations for vehicles; (ii) construction of natural gas pipelines and operation
of city gas projects by providing piped gas; (iii) direct supply of LNG to
end-users; and (iv) trading and distribution of CNG and LNG.

 

The Group has adapted to the “One Belt One Road” policy, and focus on
operating and investing natural gas business. The Group is actively expanding
its business development and distribution, as well as continues to gradually
expanding the scale of operations. Currently, the Group’s natural gas
projects covered 16 provinces, city and autonomous region in the PRC, namely
Liaoning, Jilin, Hubei, Hebei, Shandong, Anhui, Zhejiang, Shaanxi, Guizhou,
Hainan, Guangxi, Guangdong, Ningxia Autonomous Region, Shanxi, Beijing City and
Shanghai City. The Group is committed to its vision: “develop clean
energy, enhance customer value, create a beautiful blue sky”. In the
future, it will continue to actively investing and developing natural gas
business, as well as participating in the development of natural gas industry
value chain.