Towngas Smart Energy Company Limited · HKEX:1083

Towngas Smart Energy — Towngas China Company — FY2016 Earnings Presentation

23 slides from Towngas Smart Energy's earnings presentation, March 2017

  1. Slide 1: Towngas China 2016 Final Results Presentation

    Towngas China (1083.hk) 2016 Final Results Presentation

  2. Slide 2: Towngas China as a major city-gas platform in China

    Towngas China as a major city-gas platform in China for Hong Kong & China Gas • Major utilities and energy Hong Kong & China Gas company in Hong Kong and (0003.hk) mainland China • A HSI constituent stock 64.15% • Major city-gas operator in Towngas China mainland China (1083.hk) 2

  3. Slide 3: 3 projects added, total in 19 provincial regions

    As of 28 Feb 2017 Heilongjiang 3 project added, total 105 projects Jilin in 19 provincial regions Liaoning TCCL Hebei New Projects Stake Investment Inner Mongolia Beijing 1 Sichuan Distributed Energy System 25% Rmb129Mn Shanxi Shandong 2 Distributed Energy Investment (Shenzhen) 100% Rmb100Mn Shaanxi

  4. Slide 4: Project growth: injection, acquired, existing

    2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 17Feb 25 37 40 47 61 66 74 87 97 102 104 105 120 Injection from HKCG 1 2 100 Newly Acquired 6 10 Existing 80 14 8 5 60 6 8 96 102 104 40 3 7 87 10 66 73 2 61 20 40 47 37 25 25 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Feb 4

  5. Slide 5: Financial and Operational Performance

    Financial and Operational Performance 5

  6. Slide 6: Operating highlights

    Operating Profit 3% 9% Gas Sales New Total Projects Total Customers Volume Connections 9% +2 +0.9Mn 1.09Mn 6

  7. Slide 7: Turnover and profit FY2016 vs FY2015

    FY2015 FY2016 Change Turnover (HKD Mn) Gas Sales 6,010 5,518 -8.2% Connection Fees 1,708 1,663 -2.6% 7,718 7,181 -7.0% Profit from Project Companies (Rmb Mn) 1,141 1,247 +9.3% Profit attributable to shareholders (HKD Mn) 807 974 +20.7% Basic EPS (HK cents per share) 30.45 36.26 +19.1% Dividend (HK c

  8. Slide 8: Segment margin and RMB impact

    Segment Margin (HK$Mn) FY2015 FY2016 Piped-gas & related products 7.6% 8.2% Gas connection 41.9% 43.4% RMB Impact (HK$Mn) FY2015 FY2016 Exchange Loss 301.5 258.7 Gain from hedging - (168.5) Net FX effect (to P/L) 301.5 90.2 Operating profit (translation) 80 29 Note: ► All the non-RMB borrowings had

  9. Slide 9: Re-financing savings on interest and exchange loss

    After Maintain (HKD Mn) Re-financing Off-shore Debts +/- Off-shore 237 153 +84 interest expenses Average interest cost 3% 2% Exchange Loss 90 518 -428 Total 327 671 -344 Saving 9

  10. Slide 10: Financial position and ratings

    TCCL (1083 HK) FY16 FY16 HK$ Bn HK$ Bn Total assets 28.0 P/B 0.9x Net asset value 14.7 P/E 12.7x A Market cap 12.0 Gearing (net) 31.7% Cash & bank 1.6 BBB+ Credit Total borrowings 7.8 Ratings Baa1 10

  11. Slide 11: Gas Sales Volume

    (Bn m³) FY15 FY16 Change Industrial 3.7 3.9 +7% Commercial 1.1 1.3 +16% Residential 1.8 1.9 +8% Total 6.6 7.1 +9% 8 7.1 7 6.5 6.6 5.9 6 Gas Sales Volume (Bn m³) 5.3 5 4.7 4.0 4 3.2 3 2.7 2.1 2 1 0 2007 2008 2009 2010 2011 2012 2013 2014 FY15 FY16 11 *All JVs (100%)

  12. Slide 12: Gas sales volume by subsidiaries, JCEs and associates

    Volume (Mn m3) FY15 FY16 Change Subsidiaries 1,719 1,890 +10% JCEs & Associates 3,576 3,904 +9% Chengdu JV 1,267 1,326 +5% Total 6,562 7,120 +9% Note: Chengdu JV with 13% shareholding is classified as financial investment 12

  13. Slide 13: Gas sales volume mix and productivity

    Gas Sales Volume Mix (%) Productivity Customers No. (LHS) Residential Commercial Industrial Gas Volume/Employee (RHS) (Mn) (‘000 m³) 13 322 340 308 27% 27% 11 280 9 56% 55% 7 220 17% 18% 10.0 10.9 5 160 FY15 3 FY16 1 100 FY15 FY16 * All JVs (100%) 13

  14. Slide 14: Industry reform and seasonal gas pricing

    ► Towards a more structured & market oriented industry ► Open up upstream & downstream (price flexibility); regulate midstream ► Seasonal gas pricing  Back to pre-November 2016 in mid-March 2017  Possible reduction in summer 14

  15. Slide 15: Coal-to-gas conversion and commercial customers

    Industrial Customers Coal-to-Gas Conversion FY15 FY16 JVs with supporting 33 69 government policy Converted Customer 485 710 Capacity 2,130 4,154 (Steam tons) Annualized NG Demand 320 620 (Mn m³/p.a.) Commercial Customers FY15 FY16 Newly Acquired 5,711 6,470 Customer Annualized NG Demand 140 160 (Mn

  16. Slide 16: Energy mix targets by 2020

    ► Energy mix targets by 2020  Target to lower coal to 58% (from 64% in 2015)  Natural gas target reaching 10% (from 6%) ► Promote clean space heating in the northern region  Replacement of using coal: >3 million households  Shut down all small coal-fired boilers at prefectural-level cities ► Fur

  17. Slide 17: CHP, space heating and gas dryer potential

    ► 10 CHP potential projects  NG consumption: 400Mn m³ p.a. ► Domestic space heating system  Market potential: >40,000 units p.a.  10X gas consumption  40Mn m³ p.a. ► Gas Clothes Dryer  Market potential: >6,000 units p.a.  +30 to 50% gas consumption 17

  18. Slide 18: 4-6 new projects per year

    Heilongjiang Jilin 4-6 new projects / year Liaoning Hebei o Target: Inner Mongolia Beijing Shanxi Qinghai Shandong o Penetration into neighboring cities Jiangsu Shaanxi Henan Anhui Sichuan Hubei o Focusing on new territories Chongqing Zhejiang Hunan Jiangxi Fujian Guizhou Yunnan Guangdong Guangxi Ho

  19. Slide 19: China's carbon commitments and natural gas share

     China’s Commitments on Carbon Emission Intensity Reduction  2020: ↘ 40 ~ 45%  2030: ↘ 60 ~ 65% (Emission amount capped)  Smog Issue Accelerates the Use of Cleaner Fuels  13-5 Plan: Natural Gas Share  2015: 6% - 193bcm  2020: 10% - 360bcm CAGR: 6.3%  2030: 15% (projection) - 480bcm 19

  20. Slide 20: 13-5 Plan natural gas consumption growth and supply

     13-5 Plan Natural Gas Key Consumption Growth bcm p.a.  Coal-to-gas conversion (boilers, furnaces) +45  Distributed energy centres (CHP) +60  Urbanization +27  Transportation fuel (land & marine) +25 +157  Abundant Supply; Sufficient Infrastructures  Indigenous PNG  Imported PNG  Imported L

  21. Slide 21: Business opportunities and regulatory regime

     Business Opportunities  4 to 6 new city-gas projects p.a.  Gas sales volume growth at mid-teen rate  Capitalising on 11 million strong customer base o Extended products/services  Market Regulatory Regime  Open up up-stream  Regulate mid-stream  More market oriented down-stream  Sufficient

  22. Slide 22: Thank You

    HANK YOU \N HOY HORIZONS

  23. Slide 23: Forward-looking statements

    This presentation and subsequent discussion may contain certain forward-looking statements. These forward-looking statements reflect the company’s view on some future events and involve known and unknown risks and uncertainties and other factors which may cause actual performance and development dif

Towngas China Company — FY2016 Earnings Presentation on 6ix