Enn Energy Holdings Limited · HKEX:2688
Enn Energy — H1 2016 Earnings Presentation
35 slides from Enn Energy's earnings presentation, August 2016
Slide 1: 2016 Interim Results
2016 Interim Results Analyst Presentation August 2016
Slide 2: Contents
CONTENTS 1. Financial Highlights 2. Operational Review 3. Company Strategies 4. Appendix
Slide 3: Financial Highlights
Financial Highlights (RMB million) 1H2016 1H2015 Change Revenue 15,639 15,887 -1.6% Gross Profit 3,732 3,243 15.1% EBITDA 3,650 3,086 18.3% EBIT 3,117 2,555 22.0% Profit attributable to owners of 1,587 1,227 29.3% the Company EPS - Basic (RMB) 1.47 1.13 29.3% 2
Slide 4: Revenue Breakdown
Revenue Breakdown 2015 1H2016 2014 1H2016 1H2015 Core Operating Segments Change (RMB mil) (RMB mil) Gas connection 2,900 2,557 13.4% Sales of piped gas 8,672 9,625 -9.9% Vehicle gas refuelling 1,621 1,959 -17.3% stations Wholesale of gas 2,138 1,553 37.7% Revenue attributable to gas sales accounte
Slide 5: High-Quality Customer Mix (By Revenue)
High-Quality Customer Mix (By Revenue) Residential customers Vehicle gas refuelling stations Commercial / Industrial “C/I” customers Wholesale of gas 1H2016 2015 2014 Gas connection Gas sales 4
Slide 6: Margin Analysis
Margin Analysis Gross profit margin Net profit margin 23.9% (1H2015: 20.4%) 13.0% (1H2015: 9.8%) Margin analysis Gross profit margin: Gross profit margin increased by 3.5ppt, due to citygate price downward adjustment in the end of 2015, which led to lower sales price of natural gas, thus, increasi
Slide 7: Financial Resources and Liquidity
Financial Resources and Liquidity (RMB billion) At 30 Jun 2016 At 31 Dec 2015 Change Cash on hand 5.40 7.36 -26.6% A/R Days 16 16 -- Total Debts 13.68 15.68 -12.8% - Short-term loans 1.13 3.10 -63.5% - Long-term loans 3.95 4.03 -2.0% - 10-year bonds 4.69 4.58 2.4% - Convertible bonds 3.48 3.56 -2.2%
Slide 8: Current Debt Structure
Current Debt Structure As of 30 Jun 2016 Terms & tenure (RMB billion) Total Debt 13.68 Short-term loans: Subsidiary level 1.13 • The average interest rate of short-term loans was 4.34% loans • 5-year medium term notes which will be expired in 2017 at 5.55% per annum (RMB700 million) • 7-year corpora
Slide 9: Debt Structure Analysis
Debt Structure Analysis USD million RMB million Hedged In response to RMB depreciation and onshore interest rate reduction, the Group repaid USD114 million IFC loans and hedged USD500 million principal amount of the convertible bond against exchange risk Currently, USD debt amounted to USD1,280
Slide 10: Non-residential gas tariff adjustment
Non-residential gas tariff adjustment Zhejiang Province Hunan Province Changsha-Zhuzhou-Xiangtan Provincial pipeline transmission tariff reduced by 0.1/m3 Established seasonal gas tariffs Average dollar margin reduced by 0.1- 8% 0.15/m3 Gas sales volume accelerated after tariff adjustment Pe
Slide 11: Residential gas tariff adjustment
Residential gas tariff adjustment NDRC proposed to establish tier pricing mechanism for residential gas usage in all city-gas projects Residential gas consumption is less affected by economic cycle, while improving living standards creates higher demand 104 projects already set up tier pricing
Slide 12: CAPEX
CAPEX 4.23 3.57 4 3.15 2.85 2.65 3 RMB billion 2.10 1.69 1.69 2 1.42 1.28 1.05 1 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1H2016 The Group recorded positive free cash flow of RMB407 million in 1H2016 (1H2015: cash flow break-even) 11
Slide 13: Contents: Operational Review
CONTENTS 1. Financial Highlights 2. Operational Review 3. Company Strategies 4. Appendix
Slide 14: Key Operational Data
Key Operational Data 1H2016 1H2015 Change Coverage & Gas Penetration Rates of PRC Projects Number of project cities 158 146 12 Connectable urban population coverage ('000) 72,136 65,625 9.9% Connectable households coverage ('000) 24,045 21,875 9.9% Piped gas (including natural gas) penetration rate
Slide 15: Key Operational Data
Key Operational Data 1H2016 1H2015 Change Gas Infrastructure Length of intermediate & main pipelines (km) 31,204 29,637 5.3% Natural gas processing stations 161 155 6 Combined daily capacity of natural gas 3 84,878 80,005 6.1% processing stations ('000 m ) CNG refuelling stations 315 294 21 LNG refu
Slide 16: New Projects Development
New Projects Development Province Project Total 158 citygas projects 6 New projects: Hebei Dingzhou (定州市) 138 industrial parks Shandong Changle County (昌樂縣) & peripheral regions Henan Gongyi Private Technology and Innovation Park (鞏義市民營科技創業園) Total connectable Guangdong Shenzhen Bao’an (Longchuan) I
Slide 17: New Projects Development
New Projects Development Province Project Connectable Stakeholding Major Industry Population Hebei Dingzhou 360,000 51% Energy, automobiles and components, coal (定州市) chemicals and food processing Shandong Changle County 240,000 70% Chemicals, construction materials, paper making, (昌樂縣) machinery an
Slide 18: Coal-to-gas Conversion
Coal-to-gas Conversion Connection to coal-based C/I users New C/I Connection Breakdown increased • Newly installed daily capacity of 2.67 1H16 million m3 were switched from coal 2015 usage 2014 • Share of coal-to-gas conversion amongst 2013 new C/I connection increased steadily Leveraged on supp
Slide 19: Distributed Energy Project
Distributed Energy Project NDRC promulgated the “Guiding Opinions on Promoting the Development of Internet + Smart Energy” on 29 Feb 2016, supported the establishment of distributed energy infrastructure 7 distributed energy projects are in operation, 4 projects under construction, 6 new project
Slide 20: North American Refuelling Business
North American Refuelling Business Total Fuel Sales Volume Payback calculation for LNG trucks ‘000 DGE Average diesel price1 (USD/gallon) 2.6 Average LNG price2 (USD/DGE) 1.8 Spread (USD/DGE) 0.8 Average miles travelled (miles/year) 100,000 Achieved cash break-even in 1H2016 LNG consumption (DGE/y
Slide 21: Excellent Management Campaign
Excellent Management Campaign Adopted the latest Reduced redundant technology into daily resources, increased The growth of SG&A slowed down from 12.8% to operations operational efficiency 5.0%, demonstrating improvement on operational efficiency and effective cost control Streamline Innovation Or
Slide 22: Contents: Company Strategies
CONTENTS 1. Financial Highlights 2. Operational Review 3. Company Strategies 4. Appendix
Slide 23: Favorable Industry Policies
Favorable Industry Policies Urbanization Progress • Target to increase urbanized population to 60% in 2020 from 55% currently Establish an Ecologically-balanced Society • China committed to achieve CO2 emission peak by 2030, CO2 emissions per unit GDP reduced by 60-65% compared with 2005 • 400,0
Slide 24: Become an Integrated Energy Supplier
Become an Integrated Energy Supplier Further develop existing core businesses Continue to Expand Operational Areas • Acquire small to medium sized projects and industrial parks • Expand into new development zones and regions surrounding existing projects Develop C/I Customers • Coal to gas, oil
Slide 25: Become an Integrated Energy Supplier
Become an Integrated Energy Supplier Expand into synergistic businesses Energy Trading • Access to market-priced LNG resources ENN’s overseas LNG suppliers • Asset-light model to enhance the Group’s bottom line L N G Distributed Energy Projects and Electricity Sales • Through distributed energy
Slide 26: © ENN
© ENN
Slide 27: Contents: Appendix
CONTENTS 1. Financial Highlights 2. Operational Review 3. Company Strategies 4. Appendix
Slide 28: Latest Benchmark City-gate Price
Latest Benchmark City-gate Price Province From 1 April 2015 From 20 Province From 1 April 2015 From 20 November 2015 November 2015 onward onward Unit: RMB (RMB/m3 Incl. 13% VAT) Henan 2.71 2.01 Beijing 2.70 2.00 Hubei 2.66 1.96 Tianjin 2.70 2.00 Hunan 2.66 1.96 Hebei 2.68 1.98 Guangdong 2.88 2.18 Sh
Slide 29: Economics of Natural Gas as Transportation Fuels
Economics of Natural Gas as Transportation Fuels Payback calculation of a CNG taxi Payback calculation of a new LNG truck Number of CNG stations operated by ENN 315 Number of LNG stations operated by ENN 272 Average gasoline price (RMB/litre) 5.8 Average diesel price (RMB/litre) 5.3 Average CNG pric
Slide 30: Gas Delivery Process
Gas Delivery Process Vehicle & ship gas users 29
Slide 31: Immediate Revenue Inflow upon Connection
Immediate Revenue Inflow upon Connection Revenue / Cost Simplified model for a typical matured project 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 recurrent income Prior to
Slide 32: Conversion factors
Conversion factors Conversion of NG to Fuels other fuels in terms of Coal Heavy Oil LPG Diesel Gasoline Electricity same heating capacity Heating capacity 4,500kcal/kg 10,000kcal/kg 11,000kcal/kg 10,930kcal/kg 10,264kcal/kg 860kcal/kWh 1 cubic meter of NG* = 2.0kg 0.90kg 0.82kg 0.82kg 0.88kg 10.47kW
Slide 33: Awards & Honors
Awards & Honors 2016 All-Asia Executive Team Ranking: 2013 China’s Best CEO Best CFO, Rank no.2 (Power Sector) Forbes 2012 Asia’s Fab 50 Best Analyst Days, Rank no. 3 (Power Sector) “Top 100 for Investor Relations in Greater China” for 2013, 2015 All-Asia Executive Team Ranking: IR Magazine 2014, 20
Slide 34: Share Price Performance
Share Price Performance Market Capitalization (as at 12 August 2016): HK$44.2 billion 4,500 4,000 ENN Energy 3,500 3,000 2,500 2,000 Hang Seng China Enterprise Index Hang Seng Index 1,500 1,000 500 0 ENN Energy HSI HSCE 33
Slide 35: Disclaimer
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