China Natural Gas Inc · OTC:CHNGQ
China Natural Gas — Investor Presentation (July 2006)
22 slides from China Natural Gas's investor presentation, Jul 10, 2006
Slide 1: China Natural Gas, Inc.
China Natural Gas, Inc. The First China Based Natural Gas Public Company Traded in the US Capital Markets Stock Symbol: CHNG www.naturalgaschina.com 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains "forward-looking statements" within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual resul
Slide 3: China Natural Gas Snapshot
China Natural Gas Snapshot Revenue Breakdown By Year-End 2006 Provider of environmentally Construction & friendly natural gas services Installation: Wholesale Gas Residential & 12% Distribution: Proprietary pipeline artery Commercial: 5% 10% Diverse base of commercial, industrial, wholesale and resi
Slide 4: China Natural Gas Today
China Natural Gas Today Proprietary owner of 120 km high pressure natural gas pipeline in Shaanxi Province Sole authorized provider of natural gas to over 63,000 households in Xian Average daily sales of 20,000 cubic meters of compressed natural gas (CNG) to taxis and natural gas powered buses per s
Slide 5: Investment Profile
Investment Profile Developed infrastructure creates competitive barrier Expansion momentum driven by strong Chinese market demand for natural gas as alternative to gasoline Governmental promotion and favorable market dynamics support new market penetration initiatives Captive local residential and c
Slide 6: China's Economic Landscape
China’s Economic Landscape A land of rapid change and progress WTO 2001 - 21st century manufacturing powerhouse Foreign Direct Investment in 2004 – US$ 60 billion $1.5 trillion GDP Average annual GDP growth of 9.4% over last 20 years Political stability, pro-business environment 25 years of economic
Slide 7: Primary Addressable Market
Primary Addressable Market Xian: Modern Magnet of Foreign Investors Population of 7.8 million Beneficiary of PRC “Go West” policy Foreign investor diversification into central China 2005 foreign direct investment (FDI) > US$1.2B* 156 new foreign funded projects in 2005* Foreign and private participa
Slide 8: Natural Gas Growth Momentum
Natural Gas Growth Momentum Industry NG /Total Domestic Annual Size Energy Reserves Consumption Usage USA US$71B 24% 5.29Tcm 646.7Bcm PRC US$8B 3% 17.3Tcm 40Bcm CNG fueled vehicles emit 87% less nitrogen oxide, 70% less carbon monoxide and 25% less carbon dioxide than gasoline ** Natural gas usage i
Slide 9: Value Proposition: Pipeline Ownership
Value Proposition: Pipeline Ownership 120 km pipeline purchased directly from Shaanxi municipal government Direct natural gas supply from state- owned enterprise (SOE) Shaanxi Natural Gas to pipeline system Platform for expansion is eased through close relationships with local government Gas station
Slide 10: Key Competitive Advantage: Established Infrastructure
Key Competitive Advantage: Established Infrastructure Only non-SOE pipeline network in Shaanxi province Intrinsic value of established infrastructure creates strong competitive barrier to entry Compressor station facilitating compressed natural gas transport by tanker truck 10
Slide 11: Compressed Natural Gas: Xian Fuel of the Future
Compressed Natural Gas: Xian Fuel of the Future Total Demand = 1.5M Cubic Meters/Day* Future Existing filling stations pump approximately 640,000 Cubic Meters/Day* Increasing demand CNG is approximately 50% driven by government’s cheaper than gasoline at the clean energy policy pump* Estimated 46,00
Slide 12: CNG Station Revenue Model
CNG Station Revenue Model Average daily volume = 20,000 CM/station x 21 stations by YE 2006 = 420,000 CM total average daily volume x 1.26 RMB/CM (net of tax) = Approx. total daily revenue of US$66,000 12
Slide 13: Retail CNG Filling Stations: Expansion Model
Retail CNG Filling Stations: Expansion Model Organic Growth Growth by Acquisition 7 new stations 13 state-owned, 31 constructed in 1H06 privately-owned stations Capacity of 20,000 (excluding CHNG) CM/Day SOEs inefficiently Approx. building cost of operated; private US$600,000/station enterprises und
Slide 14: Residential and Light Commercial Sales
Residential and Light Commercial Sales Sole authorized provider of natural gas to residential and light commercial customers in certain parts of Xian area Pipeline network currently supplies natural gas to over 63,000 end user households Potential market of over 200,000 customers Negotiating to expa
Slide 15: Industrial and Wholesale Customers
Industrial and Wholesale Customers Profitable wholesale distribution to retail compressed natural gas (CNG) stations in Xian Supplier to privately owned and operated CNG filling stations Future plans to market natural gas to urea manufacturers, a fertilizer input 2007 entry into processing, distribu
Slide 16: Broad Competitive Landscape
Broad Competitive Landscape Big Three energy companies engaged in upstream supply of energy resources for redistribution by regional firms CNPC (China National Petroleum Corporation) SINOPEC Corp. (China Petroleum & Chemical Corporation) CNOOC (China National Offshore Oil Corp.) Xinjiang Guanghui LN
Slide 17: Revenue & Earnings Momentum
Revenue & Earnings Momentum $ in millions 17
Slide 18: Recent Performance and Outlook
Recent Performance and Outlook 1Q06 vs. 1Q05 Outlook Revenues up over 600% to Record year-over-year results $1.8M from $242,722 expected for 2Q06 and Gross profit of $944,702, from FY2006 Milestone initiatives to drive $61,570 accelerated market share Net income of $410,580, growth compared with net
Slide 19: Near-term Milestones
Near-term Milestones Up to 21 filling stations in 2006 Negotiating to purchase gas reserves from SOEs Expansion of pipeline into neighboring areas of Xian Develop LNG technology to expand geographical reach Projected Market Share Metrics: 35%-40% of the Xian compressed natural gas filling station ma
Slide 20: Management and Board
Management and Board Charles Qinan Ji, Chairman and CEO Mr. Ji joined China Natural Gas in February 2005. He has more than 20 years experience in the energy and petroleum industries in operational, administrative, management and government relations roles. Xiaogang Zhu, Chief Financial Officer Mr. Z
Slide 21: The China Natural Gas Opportunity
The China Natural Gas Opportunity Developed infrastructure creates competitive barrier Expansion momentum driven by strong Chinese market demand for natural gas as alternative to gasoline Governmental promotion and favorable market dynamics support new market penetration initiatives Captive local re
Slide 22: Contact China Natural Gas
Contact China Natural Gas Investor Relations: The Piacente Group, Inc. Debra Chen 212-481-2050 www.naturalgaschina.com 22
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