Beijing Gas Blue Sky Announces 2020 Interim Results
HONG KONG,Aug. 31,2020 --
Highlights
For the six months ended 30 June 2020 (HY2020),the Group recorded revenue of HK$1,212.6 million
In HY2020,recorded total gas sales volume of 342.0 million cubic meters,of which gas sales volume of direct supply service increased significantly by 132.4% as compared to the corresponding period of last year to 52.3 million cubic meters
Gross profit and gross profit margin were HK$114.0 million and 9.4% respectively
As at 30 June 2020,the Group's natural gas projects covered 17 provinces,cities and autonomous regions in the PRC
The Group made good progress in its measure aiming to reduce cost and improve efficiency. In the first half of the year,administrative expenses decreased by 7.8% as compared to the corresponding period of last year to HK$[16.1 million
The Group made active effort to optimize financing structure with the assistance from its controlling shareholder. Finance cost decreased by 22.1% as compared to the corresponding period of last year to HK$106.2 million
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 2020. Affected by COVID-19 pandemic in the first half of 2020,global economic activities weakened and energy consumption was sluggish. Influenced by this,natural gas business of the Group experienced a certain extent of decline. In HY2020,212.6 million (HY2019: HK$1,882.6 million),which was due to decrease in gas sales volume and terminal selling price caused by the decline in natural gas demand. During the period,the Group recorded net profit of HK$81.5 million (HY2019: HK$160.1 million),
BUSINESS REVIEW
For the six months ended 30 June 2020,the Group's gas sales volume decrease by 34.4% as compared to the corresponding period of last year to 342.0 million cubic meters (HY2019: 521.5 million cubic meters). The gross profit decreased by 45.2% as compared to the corresponding period of last year to HK$114.0 million (HY2019: HK$207.9 million) with gross profit margin recording a year-on-year decrease to 9.4% (HY2019: 11.0%),mainly due to (i) decline in sales,(ii) drop in the gross profit margin for LNG business which accounts for a larger proportion of the sales and thus lower the overall gross profit margin.
In terms of expenses,the Group made remarkable progress in its measure aiming to reduce cost and improve efficiency. In the first half of the year,administrative expenses decreased by 7.8% as compared to the corresponding period of last year to HK$116.1 million (HY2019: HK$125.9 million),because the Group optimized its organization structure and imposed strict control on expense to realize a year-on-year decrease in all administrative expenses. Finance cost decreased by 22.1% as compared to the corresponding period of last year to HK$106.2 million (HY2019: HK$136.4 million),and the overall finance cost phenomenally recorded a year-on-year decrease even though the overall interest-bearing liabilities increased because the Group made active effort to optimize financing structure with the assistance from its controlling shareholder,and convertible bonds with higher financial cost were all paid off as of 30 June 2020,which resulted in increase in proportion of borrowing from commercial banks with lower financial cost.
As at 30 June 2020,the Group's natural gas projects covered a total of 17 cities and autonomous regions in the PRC,namely Liaoning,Jilin,Hubei,Hebei,Beijing,Shandong,Shanxi,Shannxi,Ningxia Autonomous Region,Shanghai,Jiangsu,Anhui,Zhejiang,Guizhou,Guangdong,Guangxi,and Hainan.
CITY GAS BUSINESS
As at 30 June 2020,the Group had 8 city gas concession rights. During the period,an additional city gas concession right located in Jilin Chagan Lake Ecological Town was granted. In the first half of the year,the Group connected gas pipelines for 24,990 new users and the cumulative number of users reached 502,433,of which 24,901 were new residential users and the cumulative number of residential users reached 499,850. The natural gas sold to residential users amounted to 36.2 million cubic meters (HY2019: 35.7 million cubic meters). The Group secured 89 new industrial and commercial users and the cumulative number reached 2,583 with natural gas sold to industrial and commercial users reaching 30.5 million cubic meters (HY2019: 51.9 million cubic meters). The gas sales volume of city gas projects of the Group was 66.7 million cubic meters (HY2019: 87.6 million cubic meters) during the period,representing a decrease of 23.9% as compared to the corresponding period of last year. The Group recorded a sales income of HK$332.7 million (HY2019: HK$465.4 million),representing a decrease of 28.5% as compared to the corresponding period of last year,of which income from connection projects increased by 155.0% as compared to the corresponding period of last year to HK$128.0 million (HY2019: HK$50.2 million). Among the city gas consumption combination,residential gas consumption recorded a year-on-year increment,while the non-residential gas consumption in contrast,experienced a year-on-year decline,the major reason is due to the impact of COVID-19 pandemic,residents stayed at home for longer period and resumption of production activities were postponed.
DIRECT LNG SUPPLY BUSINESS
During HY2020,gas sales volume of direct supply business increased significantly by 132.4% as compared to the corresponding period of last year to 52.3 million cubic meters (HY2019: 22.5 million cubic meters),and sales income increased by 92.0% as compared to the corresponding period of last year to HK$152.1 million (HY2019: HK$79.2 million). Benefiting from low and stable prices in LNG market in the first half of the year,LNG is more cost effective than other energies and pipeline natural gas,thus downstream end users,including direct supply industrial users and city gas users,had increasing intention to replace or a growing demand to increase the LNG supply. As such,the Group seized opportunities to attract new users. In the first half of the year,the Group put 2 new direct supply projects into production and restarted 2 old projects. As of 30 June 2020,the Group had 35 direct supply projects. During COVID-19 pandemic period,as most of the direct supply projects of the Group are located in the East China where downstream enterprises consuming gas resumed their work and production quickly with slight influence from the pandemic,the overall gas sales volume and income did not decrease but grew.
GAS REFUELING STATION BUSINESS
In HY2020,the Group owned 27 gas refueling stations,including 16 CNG refueling stations and 11 LNG refueling stations,with gas sales volume of 11.4 million cubic meters (HY2019: 17.1 million cubic meters). The Group recorded a sales income of HK$41.3 million (HY2019: HK$79.1 million),representing a decrease of 47.8% as compared to the corresponding period of last year,gas refueling station business experienced a drop mainly because demand from transportation industry weakened under the pandemic. The Group will develop regional LNG refueling stations based on its layout of the whole LNG industrial chain in the future.
TRADING AND DISTRIBUTION BUSINESS OF NATURAL GAS BUSINESS
In HY2020,gas sales volume of trading and distribution of natural gas business amounted to 211.6 million cubic meters (HY2019: 394.2 million cubic meters),representing a decrease of 46.3% as compared to the corresponding period of last year; sales income reached HK$686.5 million (HY2019: HK$1,259.0 million),representing a decrease of 45.5% as compared to the corresponding period of last year; Affected by COVID-19 pandemic in the first half of the year,supply in LNG market was adequate with fierce competition in prices. As such,the Group paid greater attention to the quality of trading business,and only retained key trading projects involving its layout of the whole LNG industrial chain to reduce the damage of low gross profit to the overall profit and cash flow of the Group,thus the business of this segment experienced a decline as compared to the corresponding period of last year.
LNG RECEIVING TERMINAL PROJECTS
PetroChina Jingtang (Caofeidian Jingtang Receiving Terminal)
In HY2020,the total throughput volume of LNG of Caofeidian Jingtang Receiving Terminal amounted to 2,556.8 million cubic meters,of which the gas volume transported to pipelines through gasification was 2,084.8 million cubic meters while the gas transportation volume of a tank truck was 472.0 million cubic meters. The throughput volume of LNG of Caofeidian Jingtang Receiving Terminal declined mainly because the total import volume of LNG of the receiving terminal decreased due to sluggish demand in the industry.
FUTURE PROSPECTS
Looking ahead to the second half of the year,the overall economic environment of domestic market are gradually recovering and demands for natural gas will increase steadily as the impact of COVID-19 pandemic weakens. The year 2020 is the final year for the 13th Five-Year Plan and the "Blue Sky Three-year Defensive plan". As a clean and environmentally friendly source of energy,natural gas receives great support from several national policies,so it is highly possible that it will grow in the long term with great probability for restorative growth in the short term. Consumption of natural gas in the second half of 2020 is expected to grow faster than that in the first half of the year. As China Oil and Gas Pipeline Network Group implemented several projects,market-oriented reform in natural gas industry will yield important development in the second half of the year,further boosting growth in consumption and promoting long-term healthy development for natural gas industry. It is expected that China Oil and Gas Pipeline Network Group will be put into service in this winter,a season requiring heat supply,thus the Group will also pay great attention to market opportunities brought by such change.
In the second half of the year,the Group will continue to implement the development strategy of "city gas+LNG",and seek city gas project both at home and abroad so as to seize opportunities for acquisition and merger. The Group will keep improving LNG industrial chain,and make great effort to develop businesses with great advantages in the whole LNG industrial chain. Benefiting from the historically low prices in LNG market,the downstream end market is filled with greater opportunities for expansion than previous years,and the Group is negotiating on several quality projects currently. On 3 July 2020,the Group entered into share purchase agreements with SK E&S,pursuant to which,both parties will conduct business cooperation in the East China. Levering advantages that SK E&S possesses in the whole LNG industrial chain,the Group is expected to get LNG resources with lower price and the window period for receiving terminal within Zhejiang,thus the Group can cooperate with SK E&S as the sole underwriter. In the second half of the year,the Group expects to cooperate with SK E&S for approximately 120-150 thousand tons of LNG business,further enhancing the Group's market position and increasing its competitive strength in natural gas business.
In terms of operation,as disclosed in the announcement dated 3 July 2020,the board of directors and core management of the Company were changed,showing that Beijing Gas Group will play a greater role in daily operation and management of the Group. In the future,major shareholder will provide the Group with full support in strategic synergy,business support,investment and financing arrangement,and personnel recruitment and management to help the Group embark on a new stage in its development with greater performance to reward shareholders and investors. In the second half of the year,the Group will continue to fully implement the concept of "reducing cost while increasing efficiency" to maximize its profitability. The Group will optimize organization structure and impose strict control on expense to control administrative expenses,and improve financing structure on an ongoing basis with assistance from major shareholder to expand financing channel and enhance financing strength,so as to reduce financing cost,increase value of assets for the Company,and improve 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.
With the national adoption of clean energy policies and the marketization reform of natural gas,the Group focuses 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 17 cities and autonomous regions in the PRC,and Hainan. 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.
(Incorporated in Bermuda with limited liability)
