Towngas Smart Energy Company Limited · HKEX:1083
Towngas Smart Energy — FY2018 Earnings Presentation
24 slides from Towngas Smart Energy's earnings presentation, 2019
Slide 1: Towngas China 2018 Final Results
Towngas China (1083.hk) 2018 Final Results
Slide 2: statements reflect the company’s view on some future events
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
Slide 3: 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 67.45% • Major city-gas company in Towngas China mainland China (1083.hk) 3
Slide 4: 12 projects added, total in 20 provincial regions
As of 19 Mar 2019 Heilongjiang 12 project added, total 116 projects in 20 provincial regions Jilin 6 Liaoning Total Hebei projects New Projects Inner Mongolia Beijing 8 City-gas 97 1. Liuzhou, Guangxi Shanxi 5 2 9 4 Midstream 4 2. Jinan – Liaocheng, Shandong Shandong 3. Jiawang District, 8. Chengnan
Slide 5: Number of projects 2006-2019
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD 25 37 40 47 61 66 74 87 97 102 104 105 115 116 140 Injection from HKCG 1 120 Newly Acquired 11 2 3 100 Existing 6 10 80 14 8 5 60 6 115 8 96 102 102 104 40 3 7 87 10 66 73 2 61 20 40 47 37 25 25 0 2006 2007 2008 2009 2010 2011
Slide 6: Financial and Operational Performance
Financial and Operational Performance 6
Slide 7: 2018 highlights
• Operating Profit from JVs: HK$1,873Mn 12% • Profit before Extraordinary Items: HK$1,224Mn 6% Gas Sales Volume Total Projects Total Customers New Connections 19% +11 +0.9Mn +1Mn 7
Slide 8: Financial results summary
(HK$ Mn) 2018 2017 Change Turnover Gas Sales & Others 9,755 6,996 39% Connection Fees 2,032 1,764 15% 11,787 8,760 +35% Operating Profit before Corporate Expenses 1,873 1,677 +12% Finance cost (486) (371) +31% Corporate overhead (163) (150) +9% Profit before extra-ordinary item 1,224 1,156 +6% Fosha
Slide 9: Financial position and credit ratings
TCCL (1083 HK) 31 Dec 31 Dec 18 Mar 31 Dec Change Change 2018 2017 2019 2017 HK$ Bn HK$ Bn Total assets 34.0 32.8 +4% Share price (HK$)^ 6.29 6.28 -1.3% Net asset value 17.8 17.2 +3% Market cap. (HK$ Bn) 17.68 17.40 - Cash and Bank 1.7 1.7 - No. of Shares (Bn)^ 2.81 2.77 +1.4% Total borrowings 9.5 8
Slide 10: Gas Sales Volume (Bn m³)
(Bn m³) 2017 2018 Change Industrial 4.8 6.0 +24% Commercial 1.5 1.6 +11% Residential 2.1 2.4 +12% Total 8.4 10.0 +19% 12 10.0 10 Gas Sales Volume (Bn m³) 8.4 8 7.1 6.5 6.6 5.9 6 5.3 4.7 4.0 4 3.2 2.7 2 2.1 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 10 *All JVs (100%)
Slide 11: Gas sales volume by subsidiaries, JCEs and Chengdu JV
Volume (Mn m3) 2018 2017 Change Subsidiaries 3,046 2,365 +29% JCEs & Associates 5,375 4,620 +16% Chengdu JV 1,583 1,432 +11% Total 10,004 8,417 +19% Note: Chengdu JV with 13% shareholding is classified as a financial investment 11
Slide 12: Gas Sales Volume Mix and Productivity
Gas Sales Volume Mix (%) Productivity Customers No.(LHS) Gas Volume/Employee (RHS) Residential Commercial Industrial (Mn) (‘000 m³) 19 500 454 17 450 24% 15 378 400 25% 13 350 11 300 9 16% 250 17% 58% 60% 7 12.6 11.8 5 200 3 150 FY17 FY18 - - 2017 2018 * All JVs (100%) 12
Slide 13: Policy and natural gas outlook
1. NDRC policies and guidelines for healthy city-gas operations • More transparent and safer operation • Encourage pass-through mechanism 2. Expect more NG in coming years, % of total energy consumption Russia Gas 2018 2020 2030 280 Bn m³ 360 Bn m³ 480 Bn m³ 8% 10% 15% 3. Establishing National Grid
Slide 14: Policy trends: LNG access, Blue Sky, foreign investment
4. Open access to LNG terminals & importation 5. “Blue Sky” policy continues stimulating more coal-to- gas conversion, better living and higher quality products 6. Global economies turbulence, energy price hikes unlikely to suffocate business growth 7. Encourage foreign investment in energy sector 8
Slide 15: Market focus and opportunities and strategies
Market Focus HKCG Opportunities & Strategies • Jintan NG salt-carven storage Strengthen winter NG • JVs joint purchasing LNG supply • Inter-city pipeline network • Riding on this conversion to elevate energy Coal-to-Gas Conversion efficiency through DES 15
Slide 16: Steady gas volume growth
Steady gas volume growth • TCCL more industrial areas & more C&I customers 20% 15% 10% 5% 0% '14 '15 '16 '17 '18 TCCL HCIL 16
Slide 17: Reduction in small scale LNG direct suppliers
Significant reduction in small scale LNG direct suppliers due to • Safety issues • Security of supply • No price advantage 17
Slide 18: Stable and healthy business environment
• Stable and healthy business environment NG supplies satisfy strong demand Gas Volume Less capital investment Lower operating unit cost Unit Gas Margin Unit Operating cost 2010 2011 2012 2013 2014 2015 2016 2017 2018 18
Slide 19: Russian gas will spark volume growth in North-Eastern and Northern regions
Russian Gas Will Spark Volume Growth in North-Eastern & Northern Regions Russian NG arriving in Dec 2019 with volume of 38 Bn m³ p.a. by 2024 North-Eastern 2018 2022E Number of projects 25 >30 Volume (Bn m³) 1.7 4.0 Shaanxi Volume Growth CAGR: 24% Hubei Northern 2018 2022E Eastern South-Western Numb
Slide 20: TCCL customers gained and annualized volume
TCCL 2018 Annualized Volume Customers Gained (Mn m³) Commercial 10,025 250 Industrial 717 580 Total 10,742 830 2017 800 2016 700 20
Slide 21: Green Energy Integrated Services Business Growth
Green Energy Integrated Services Business Growth • Green Energy Integrated Services 3,500 • Enhance energy efficiency with more gas sales • Projects 2,800 Central space heating Central steam supply for industrial 2,000 parks Air-conditioning Electricity 1,000 50 60 Pipelines for steam supp
Slide 22: Gas storage in Jintan, Jiangsu
Gas storage in Jintan, Jiangsu • To meet winter demand through National Grid • Sharing investment cost Jintan Underground NG Storage among JVs Project Information Cumulative • National grid facilitates free • Phase 1-1 capacity: (3 caverns) 140Mn m³ flow of NG • Completion: Jan 2018 • NG trading opp
Slide 23: Expansion priorities: neighboring cities, new territories, DES
Heilongjiang Jilin Liaoning Hebei o Penetration into neighboring cities Inner Mongolia Beijing Shanxi Qinghai Shandong Jiangsu o Focusing on new territories Shaanxi Henan Anhui Hubei Sichuan Chongqing Zhejiang o Develop DES Hunan Jiangxi Fujian Guizhou Yunnan Guangdong Guangxi Hong Kong Hainan 23
Slide 24: Thank you
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Towngas Smart Energy Company — FY2018 Earnings Presentation on 6ix