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1 Corporate Presentation May 2011. 2 Table of Contents SectionPage 1 About China Gas3 2 Natural Gas Business8 3 Liquefied Petroleum Gas Business12 4 Operational.

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Presentation on theme: "1 Corporate Presentation May 2011. 2 Table of Contents SectionPage 1 About China Gas3 2 Natural Gas Business8 3 Liquefied Petroleum Gas Business12 4 Operational."— Presentation transcript:

1 1 Corporate Presentation May 2011

2 2 Table of Contents SectionPage 1 About China Gas3 2 Natural Gas Business8 3 Liquefied Petroleum Gas Business12 4 Operational Highlights 1H FY Financial Highlights 1H FY FY Guidance27

3 About China Gas

4 4 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 m 3 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.

5 5 Strategic Partnerships 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 Strategic shareholders have partnered and helped China Gas growth through the years CHINA GAS Management & Founders (2002) SINOPEC (Dec 2004) Oman Oil (Jan 2006) GAIL (May 2005) Oman Fund (Nov 2007) ADB (Oct 2006) Public SK (June 2008) 12.28%4.82% 5.45% 4.82% 3.71% 3.44%9.74%55.74% As of 31 December 2010

6 6 Natural Gas Project Development Process Bid & award Construction & development months Operation 30 years About 15 projects under review Investment criteria include: 1.Project IRR > 15% 2.Industrial demand 3.Natural gas accessibility Revenue: Gas connection fees Projects under development 2007: 20 projects 2008: 18 projects 2009: 47 projects 2010: 35 projects 1HFY11: 43 projects Revenue: Sales of piped gas Projects in operation 2007: 37 sites 2008: 50 sites 2009: 63 sites 2010: 99 sites 1HFY11: 103 sites China Gas has a strong track record of developing city gas projects on time and on budget

7 7 Beijing Shanghai Heilongjiang Jilin Liaoning Inner Mongolia Xinjiang Tibet Qinghai Gansu Ningxia Shaanxi Shanxi Henan Shandong Hebei Jiangsu Anhui Zhejiang Fujian Jiangxi Hunan Guangdong Taiwan Guangxi Hainan Yunnan Guizhou Sichuan Chongqing Tianjin Hubei Natural Gas Current Project Locations Shaanxi Baoji, Qishan Xian, Yulin Hebei Cangzhou, Cangzhou Economic Development Zone, Nanpi, Qinghe, Leting, Xinle, Gaocheng, Pingshan, Feng Nan, Neiqiu, Wangdu, Nanbao, Bohai New Area, Hebei Pipeline, Tang County Hubei Yichang, Xiaogan, Hanchuan, Yingcheng, Yunmeng, Suizhou, Tianmen, Guangshui, Dangyang, Xiaogan Pipeline, Dangyang Pipeline, Huanggang-Daye pipeline Hunan Yiyang, Yuanjiang, Youxian Guangdong Maoming, Conghua, Meizhou, Yunfu, Shanwei, Xinxingxian, Fengshunxian, Pingyuanxian Guangxi Yuling, Qinzhou, Liuzhou, Fongchenggang, Laibin, Baise, Nanning City, Nanning Dongmeng Development Zone, Bobai Chongqing Dianjiang E&P, Yubei District, Dingwang purification, Chongqing Pipeline Inner Mongolia Hohhot, Wushenqi, Wushenqi Pipeline, Changmeng Pipeline, Baotou, 4 counties, Etoke Banner, Etuokeqi, Alashan, Zuoqi Tenggeli Industrial Zone Ningxia Zhongwei Fujian 29 city gas concessions Jiangsu Pizhou, Yangzhong, Nanjing (Jiang Bei, Pukou), Xuzhou (Jiawang), Xuzhou (Xinyi), Yangzhou Anhui Wuhu, Huainan, Shouxian, Suzhou, Wuhuxian, Nanling, Huoshan, Fengtai, Wuwei, Xiuningxian Zhejiang Hangzhou (Xiaoshan), Taizhou, Jinhua, Hangzhou Jiangdong Industrial Zone Liaoning Dalian, Fushun, Jinzhou, Sujiatun(Shenyang), Jinzhou D. Zone, Liaoyang, Gaizhou, Zhuanghe, Linghai, Pulandian, Liaoyang Economic Zone, Jinzhou Longxiwan New Zone Shandong Dezhou, Qingdao, 3 cities from Zhongyu Gas Tianjin Tianjin Pipeline Heilongjiang Harbin, Jiamusi, Shuangcheng, Mudanjiang, Jiagedaqi Jiangxi Nanchang (Wanliqu) Henan 8 city gas concessions from Zhongyu Gas Gansu Lingtai County

8 Natural Gas Business

9 9 Natural Gas Business Model Storage tanks (spherical or cylinder) 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 City gate Industrial users* Residential households* Commercial users*Car refueling station National or provincial pipelines

10 10 Natural Gas Revenue Model and Pricing 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 Exploration Wellhead price Transportation Transmission tariffs Distribution Distribution cost + margin END-USER TARIFF COMPONENTS NDRC ApprovalLocal Price Bureau Approval Natural gas business operates on a cost-plus pricing model

11 11 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 –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 Billion m 3 China Natural Gas Supply Projection Source: NDRC

12 Liquefied Petroleum Gas (LPG) Business

13 13 LPG Business China Gas is the largest and only vertically integrated LPG supplier in the PRC covering retail and wholesale Our LPG business covers: –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. Beijing Shanghai Heilongjiang Jilin Liaoning Inner Mongolia Xinjiang Tibet Qinghai Gansu Ningxia Shaanxi Shanxi Henan Shandong Hebei Jiangsu Anhui Zhejiang Fujian Jiangxi Hunan Guangdong Taiwan Guangxi Hainan Yunnan Guizhou Sichuan Chongqing Tianjin Hubei LPG receiving terminals and storage facilities

14 14 LPG Business Model Oil Refinery LPG Receiving Terminal Class 2 Station Assets owned by the Group LPG vessels LPG trucks Trucks sending bottled LPG Import/ Domestic Supply Class 1 Station Storage Facilities Domestic supply Class 3 Station Bottling Station Residential households Commercial users Industrial users City gas companies

15 15 Value Chain of LPG Supply Oil Refinery Class 1 Station LPG Wholesaler Class 2 Station Bottled LPG Maker Class 3 Station Bottled LPG Retailers 5-6%6-7%10-12% Source: Company data Gross Margin (%) 4-5%

16 16 LPG Supply and Demand in China Source: Company data China LPG Demand by SectorChina LPG Supply and Demand

17 Operational Highlights 1H FY2011

18 18 Piped Gas Sales Volume (as at 30 th Sep 2010) PeriodSales Growth – Total 1H FY1114.3% 1H FY % 1H FY % PeriodSales Growth – Natural Gas Only 1H FY1121.8% 1H FY % 1H FY % Total sales volume (million m 3 )

19 19 Natural Gas Volume Customer Breakdown (as at 30 th Sep 2010) Sector Sales Volume Growth in 1H FY11 % of Total Volume CNG Stations72.5%10.1 % Commercial62.6%12.9% Industrial8.3%64.2% Residential42.0%12.8% Natural gas sales volume (million m 3 )

20 20 Natural Gas Customer Data (as at 30 th Sep 2010) Customer Growth OrganicAcquired 1H FY11 Portfolio Total Change from 1H FY10 Portfolio Total Residential386,500409,5815,633, %4,197,905 Industrial %529 Commercial1,6991,53936, %30,454 CNG Stations %72 Customer Tariffs (ex-tax) (RMB / m 3 ) 1H FY11Change from 1H FY101H FY101H FY09 Residential % Industrial % Commercial % CNG Stations %

21 21 Penetration Rate Urban Population Covered (m) Natural gas daily consumption Urban population covered and penetration rate (000 m 3 ) Natural Gas Other Operational Data (as at 30 th Sep 2010)

22 22 1H FY11 Change from 1H FY10 1H FY09 Residential Connection Fee (RMB per customer) 2,4842.7%2,4182,228 Total Pipelines (km) 52, %28,99017,073 Natural Gas Other Operational Data (as at 30 th Sep 2010)

23 23 LPG Operational Data (as at 30 th Sep 2010) 1H FY111H FY10 Sale tonnage (ton)508,482435,900 Gross Margin (%)-0.14%+8.40% Operating Margin (%)-3.67%- 0.14%

24 Financial Highlights 1H FY2011

25 25 Financial Summary Income Statement HK$ ('000)1H FY11% change1H FY10 Turnover 6,537, %3,937,292 Gas Sales 2,404, %1,577,112 Connection Fees 1,005, %559,269 LPG Sales 2,897, %1,748,104 Other 230, %52,327 Gross Profit 1,234, %934,031 EBIT 770, %561,507 Profit after tax 123, %490,778 Core Earnings 296, %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%

26 26 Financial Summary Balance Sheet & Debt Position HK$ ('000)1H FY11 1H FY10 Total Assets26,380,90319,451,891 Total Equity6,413,1524,477,943 Shareholder's Equity4,948,4703,648,305 Cash4,258,2802,503,123 Short-term Bank Debt5,410,759*3,102,667 Long-term Bank Debt8,937,9597,968,539 * of which HK$2,851,490,000 was Zhongyou Huadian LPG trade finance related facilities

27 FY Guidance

28 28 FY Guidance FY2011FY2012 Gas volume (m 3 )4.3 bn5.0 bn New residential connections700,000850,000 CNG stationsto reach LPG sales (million ton) 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 Oils connections in the Middle East Active rollout of LPG downstream retail distribution network through the newly established JV with Oman Oil

29 29 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 Companys product and services in the marketplace, competitive factors, new products and technology changes, the Companys 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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