Enn Energy Holdings Limited · HKEX:2688
Enn Energy — H1 2018 Earnings Presentation
36 slides from Enn Energy's earnings presentation, August 2018
Slide 1: 2018 Interim Results
新奥能源控股有限公司 (股份代号：2688) 2018 Interim Results Company Presentation August 2018
Slide 2: Contents
CONTENTS ➢ 1. Operation Review 2. Financial Review 3. Development Strategies & Outlook 4. Appendix
Slide 3: First Half Results on Track
First Half Results on Track Retail Gas Sales Volume Up 22.7% Gas Sales Dollar Margin in 1H was 0.62/m3 8.49bcm Residential City-gate Price - ≥20% PetroChina Winter Gas Price Hike - Gas Cost Pass-through + Newly Installed Designed Daily Capacity for Import Offshore LNG + C/I Customers 8.23mil m3
Slide 4: Growing Customer Base
Growing Customer Base 1H 2018 1H 2017 Change Number of Piped Gas Customers New C/I Customers Development (site) 10,764 9,650 1,114 Accumulated C/I Customers (site) 102,643 78,329 24,314 Newly Installed Designed Daily Capacity for C/I Customers (m3) 8,228,222 6,957,575 18.3% Accumulated Installed Des
Slide 5: Strong Gas Sales Volume Growth
Strong Gas Sales Volume Growth Total Natural Gas Sales Volume Retail Gas Sales Volume Breakdown (million m3) 1H 2018 1H 2017 Change 11,062 Commercial & Industrial 6,264 5,038 24.3% 9,187 Residential 1,614 1,188 35.8% Vehicle Refuelling Stations 613 693 -11.7% 73.8% million m3 C/I Gas Sales accounted
Slide 6: Dollar Margin Analysis
Dollar Margin Analysis ASP & Gas Cost (RMB/m3) 1H 2018 2017 1H 2017 Residential 2.65 2.66 2.64 Commercial & Industrial 3.07 2.92 2.95 CNG Station 3.90 3.68 3.68 LNG Station 3.94 3.35 3.14 ASP 3.05 2.94 2.95 Average Cost 2.37 2.24 2.20 Dollar Margin (ex VAT) 0.62 0.63 0.66 5
Slide 7: Diversify Gas Supply through LNG Import
Diversify Gas Supply through LNG Import ➢Our 3 long-term LNG contracts with annual capacity of 1.44million tons will be imported (equivalent to 2bcm) ➢500,000 tons of LNG is expected to be imported in 2H 2018 (equivalent to 700mcm) through Zhoushan LNG Terminal Economic transportation distance ➢Alre
Slide 8: Winter Gas Supply Assurance – Construct or Lease Storage Facilities
Winter Gas Supply Assurance – Construct or Lease Storage Facilities ➢The 12million m3 storage facilities in Shijiazhuang have been put into operation. The total storage capacity of the Group Shijiazhuang Project 12 mil m3 amounts to 58million m3 ➢Strategically construct large-scale storage facilitie
Slide 9: Accelerated Development on Integrated Energy Business
Accelerated Development on Integrated Energy Business ➢ Revenue up 276.5% to RMB369million, gross profit significantly increased 354.5% to RMB28million, realized integrated energy sales of 1.0 bil kWh ➢ Signed 131 new IE projects with potential energy sales of 36.4 billion kWh/year ➢ Accumulated 53
Slide 10: Integrated Energy Project Highlight - Yuhang Project
Integrated Energy Project Highlight - YUHANG Project Beijing-Hangzhou YUHANG ECONOMIC & TECHNOLOGICAL Grand Canal ➢ National-level DEVELOPMENT ZONE industrial park spanning over HANGZHOU, ZHEJIANG G320 To Shanghai 77 km2 ➢ Quality C/I customers profile S211 comprising of over 200 Fortune 500 multina
Slide 11: Continuous Expansion of Citygas Concessions
Continuous Expansion of Citygas Concessions ➢ Acquired6 new projects and 19 new concessions nearby existing projects in 1H2018 ➢ The Group managed 178 city-gas projects in China with total connectable population of 88.6 million ➢ Average gas penetration rate is 58.6%. Connectable Provinces New Proje
Slide 12: Contents
CONTENTS 1. Operation Review ➢ 2. Financial Review 3. Development Strategies & Outlook 4. Appendix
Slide 13: Solid Results Achieved
Solid Results Achieved 1H 2018 1H 2017 Change Key Financial Highlights Revenue (RMB million) 26,530 21,424 23.8% Gross Profit (RMB million) 4,662 3,873 20.4% EBITDA (RMB million) 4,695 3,888 20.8% EBIT (RMB million) 4,076 3,330 22.4% Profit attributable to Shareholders of the 1,782 1,649 8.1% Compan
Slide 14: Strong Recurring Revenue Growth
Strong Recurring Revenue Growth (RMB million) 1H 2018 1H 2017 Change Connection Fee 2,988 2,897 3.1% Sales of Piped Gas 14,901 11,300 31.9% Wholesale of Gas 6,595 4,631 42.4% Vehicle Gas Refuelling Stations 1,400 1,521 -8.0% Sales of Integrated Energy and Services 369 98 276.5% Modified Revenue Mix
Slide 15: High Quality Profit Structure
High Quality Profit Structure Sales of Integrated Energy and Services Sustainable Profit Growth Drivers Modifying Profit Mix 0.6% Gross profit breakdown (RMB mil) Wholesale of Gas 4.1% Vehicle Gas Others1.4% 2.0% 1.4% 1.5% +115 +1 4,662 +138 +39 1H 2018 2.6% Connection Fee +496 Connection Others Sal
Slide 16: Strong Balance Sheet & Liquidity
Strong Balance Sheet & Liquidity (RMB million) As of 30 June 2018 As of 31 December 2017 Change Cash on Hand 6,266 7,972 -21.4% Total Debt 17,186 18,067 -4.9% - Short-term 7,528 8,368 -10.0% - Long-term 9,658 9,699 -0.4% Net Gearing Ratio 50.8% 49.9% 0.9ppt Net Debt/EBITDA 1.2x 1.3x -0.1x Rating Age
Slide 17: Healthy Debt Structure
Healthy Debt Structure Fixed Rate Dominated Debt Structure Balanced Debt Profile (as of June 2018) (as of June 2018) 4,135 3,946 2,923 5-year Zero 2,498 Coupon CB 2,399 (US$500 million) 16
Slide 18: Limited Currency Risk
Limited Currency Risk Foreign Currency Exposure Management – for USD Bonds As of 30 June 2018 As of 23 August 2018 2H 2018 RMB depreciate Cash Impact Non-cash Impact Sensitivity 1% Analysis RMB1.3-1.4 million RMB60-70 million FX Risk ➢ USD bank loans can be rolled over, thus cash flow will not be af
Slide 19: Growth CAPEX for Strategic Development
Growth CAPEX for Strategic Development ➢ Expand citygas concessions through M&A, targeting gas projects surrounding existing projects and small- medium gas distributors ➢ Expand operating areas by acquiring development zones and industrial parks at the outskirts of existing RMB bil projects 5.02 ➢ L
Slide 20: Aim at Increasing Return to Shareholders
Aim at Increasing Return to Shareholders Healthy Cash Flow Growing DPS & Payout Ratio RMB million RMB 2,471 1,874 19
Slide 21: Contents
CONTENTS 1. Operation Review 2. Financial Review ➢ 3. Development Strategies & Outlook 4. Appendix
Slide 22: Double Drivers to Maintain Growth Momentum
Double Drivers to Maintain Growth Momentum Opportunities Challenges ➢ Stable economic growth and strong energy demand ➢ Headwind for the development of CNG ➢ Upgrading economic structure and industrial park planning refueling business due to competition ➢ Government’s growing effort to promote clean
Slide 23: Opportunities
Opportunities Rapidly growing ➢ The proportion of natural gas in primary energy natural gas demand consumption will increase to 10% in 2020 ➢ “Three-year Action Plan to Win the Blue Sky Defense Development Strategy Stringent air War”expanded the coverage of key areas from “2+26” pollution control ci
Slide 24: Natural Gas Business Development
Natural Gas Business Development City-gas Business Energy Trading ➢ Actively develop C/I customers by eliminatin ➢ Continue to expand wholesale gas business g coal-fired boilers, and developing small-medium leveraging on its distinguish gas sources acquiring sized commercial customers driven by favo
Slide 25: Integrated Energy Business
Integrated Energy Business Develop integrated energy business leveraging on the opportunities arisen from the energy system reform and focus on selective markets Market Segment Strategy Industrial Parks： Focus on quality existing Strong industrial parks, tap into new parks Optimal market Urban Areas
Slide 26: Technological Advantages Create Differentiation and Competitiveness (1/2)
Technological Advantages Create Differentiation and Competitiveness （1/2） ➢ In the context of energy reform, companies with technological advantages will be able to take initiatives and win more opportunities ➢ Major technological features and competitiveness： Integrated energy solutions which are d
Slide 27: Technological Advantages Create Differentiation and Competitiveness (2/2)
Technological Advantages Create Differentiation and Competitiveness （2/2） Realizes business model from single station to a network， represents the development direction of energy sharing economy ， releases the energy sources/ times/locations/ facilities multi- dimensional value sharing ＞10% ＞30% ＞50
Slide 28: Create Synergy through Deepening Integration
Create Synergy through Deepening Integration 1+1>2 ENN Energy UEN • Select quality projects Customer base • Create business opportunities Core technology through technology marketing Planning and designing Market development • Accomplish large-scale and capability capability complicated projects wit
Slide 29: Outlook
Outlook 2 Synergize & Magnify Benefits ① Capitalize on available customer base to develop natural gas and integrated energy businesses Natural Gas Integrated Energy ② Increase gas sales volume & customer Business Business loyalty, and break through the barriers of gas Customer concession and regulat
Slide 30: Contents
CONTENTS 1. Operation Review 2. Financial Review 3. Development Strategies & Outlook ➢ 4. Appendix
Slide 31: Exchange Rate Movement
Exchange Rate Movement USD600mil Remaining RMB/USD 5-year Principal Amt Unsecured 6.9 Bonds 3.25% 6.8 USD600mil 6.7 - USD349mil USD750mil 6.6 10-year Senior Note 6% - USD35mil 6.5 USD366mil USD400mil 6.4 5-year 6.3 Unsecured Bonds 3.25% 6.2 - USD335mil USD65mil 6.1 30
Slide 32: ENN - One of the First Privately Owned Clean Energy Distributors in China
ENN - One of the First Privately Owned Clean Energy Distributors Company Overview in China ➢ Established in 1993, ENN is one of the leading privately owned clean energy distributors in the PRC ➢ ENN’s principal business includes sale and distribution of piped gas, investment in, and the operation an
Slide 33: Gas Delivery Process
Gas Delivery Process Vehicle & ship gas users 32
Slide 34: Simplified Model for a Typical City-gas Project
Simplified Model for a Typical City-gas Project Revenue/Cost ➢ Connection fee dominates in early years when the project companies are signing up new customers ➢ Gas usage increases as projects mature, becoming the major source of recurring income ➢ Prior to the completion of the whole pipeline netwo
Slide 35: Latest Benchmark City-gate Price
Latest Benchmark City-gate Price Province From 1 September From 25 May 2018 Province From 1 September From 25 May 2018 2017 2017 Unit: RMB/m3 (Incl. VAT) Henan 1.91 1.89 Beijing 1.90 1.88 Hubei 1.86 1.84 Tianjin 1.90 1.88 Hunan 1.86 1.84 Hebei 1.88 1.86 Guangdong 2.08 2.06 Shanxi 1.81 1.79 Guangxi 1
Slide 36: Disclaimer and Investor Relations Contact
Disclaimer The information provided to you in this presentation does not constitute or form part of any offer for subscription or sale of, or solicitation of any offer to subscribe for or sale of any securities of ENN Energy Holdings Limited (the "Company") nor shall it form the basis of, nor can it