Towngas Smart Energy Company Limited · HKEX:1083
Towngas Smart Energy — Towngas China Company — FY2017 Earnings Presentation
22 slides from Towngas Smart Energy's earnings presentation, March 2018
Slide 1: Towngas China 2017 Final Results Presentation
Towngas China (1083.hk) 2017 Final Results Presentation
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 67.1% • Major city-gas company in Towngas China mainland China (1083.hk) 2
Slide 3: 6 projects added, total 108 projects in 19 provincial regions
As of 28 Feb 2018 Heilongjiang 6 project added, total 108 projects in 19 provincial regions Jilin TCCL Liaoning 4 New Projects Investment 1. Zhongxiang, Hubei 河北钟祥 100% Rmb61Mn City-gas Inner Mongolia Hebei 2. Liuzhou, Guangxi 广西柳州 100% Rmb79Mn Beijing 3 Midstream 3. Guyang, Inner Mongolia 内蒙古固阳 85%
Slide 4: Project count growth 2006-2018
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD 25 37 40 47 61 66 74 87 97 102 104 105 108 120 Injection from HKCG 3 3 2 100 Newly Acquired 6 10 Existing 80 14 8 5 60 6 8 102 102 105 96 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
Slide 5: Financial and Operational Performance
Financial and Operational Performance 5
Slide 6: Key operating highlights FY2017
Profit from Project Companies 15% Gas Sales Volume Total Projects Total Customers New Connections 18% +3 +0.9Mn 0.97Mn 6
Slide 7: FY2017 financial results summary
(HK$ Mn) FY2017 FY2016 Change Turnover Gas Sales & Others 6,996 5,518 27% Connection Fees 1,764 1,663 6% 8,760 7,181 +22% Operating Profit From Project Companies 1,677 1,457 +15% Corporate Finance Costs (371) (334) +11% Corporate Overhead (150) (149) +1% Operating Profit before one-off item 1,156 97
Slide 8: Segment Margin and RMB Impact
Segment Margin (HK$Mn) FY2017 FY2016 Piped-gas & related products 9.0% 8.2% Gas connection 45.7% 43.4% RMB Impact (HK$Mn) FY2017 FY2016 Exchange Gain/(Loss) 231 (259) Gain/(Loss) from hedging (364) 169 Net FX Gain / (Loss) (133) (90) Operating profit translation (Loss) (20) (77) 8
Slide 9: RMB exchange rate trend
2014 Average Rate 2015 Average Rate 2016 Average Rate 2017Average Rate 2018Average -0.2% -1.9% -5.3% -1.2% Rate +5.6% 7.2 7.0 6.8 6.6 -4.4% -2.4% 6.4 -6.5% 6.2 +7.6% 6.0 +2.7% 5.8 5.6 D M J S D M J S D M J S D M J S D 2018 2014 2015 2016 2017 Feb 9
Slide 10: Balance sheet, share data and credit ratings
TCCL (1083 HK) 31 Dec 31 Dec 31 Dec 31 Dec 2017 Change Change 2016 2017 2016 HK$ Bn HK$ Bn Total assets 32.8 28.0 +17% Share price (HK$) 6.28 4.08 +54% Market cap. Net asset value 17.2 14.7 +17% 17.4 11.1 +57% (HK$ Bn) Cash and Bank 1.7 1.6 +9% No. of Shares 2.77Bn 2.71Bn +2% Total borrowings 8.8 7.
Slide 11: Gas Sales Volume
(Bn m³) FY16 FY17 Change Industrial 3.9 4.8 +24% Commercial 1.3 1.5 +14% Residential 1.9 2.1 +10% Total 7.1 8.4 +18% 8.4 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 2015 2016 2017 11 *All JVs (100%)
Slide 12: Gas sales volume by subsidiaries, JCEs and associates
Volume (Mn m3) FY17 FY16 Change Subsidiaries 2,365 1,890 +25% JCEs & Associates 4,620 3,904 +18% Chengdu JV 1,432 1,326 +8% Total 8,417 7,120 +18% Note: Chengdu JV with 13% shareholding is classified as a financial investment 12
Slide 13: Gas Sales Volume Mix and Productivity
Gas Sales Volume Mix (%) Productivity Customers No. (LHS) Gas Volume/Employee (RHS) Residential Commercial Industrial (Mn) (‘000 m³) 16 378 400 25% 13 350 322 27% 10 300 250 17% 7 55% 58% 10.9 11.8 18% 200 4 150 FY16 FY17 - - FY16 FY17 * All JVs (100%) 13
Slide 14: Industrial and commercial customers
Industrial Customers Coal-to-Gas Conversion FY17 FY16 JVs with supporting 82 69 government policy Converted Customer 1,040 710 Capacity 4,830 4,154 (Steam tons) Annualized NG Demand 720 620 (Mn m³/p.a.) Commercial Customers FY17 FY16 Newly Acquired Customer 10,200 6,470 Annualized NG Demand 280 160
Slide 15: Leverage growing customer base and Hong Kong experience
► Leverage on growing customer base and capitalize HK’s successful experience ► Cumulative 227k units of Bauhinia gas appliances sold with gas clothes dryers launched in 2016 ► Expand gas applications installation and services ► Gas insurance, household and kitchenware, virtual customer centre … 15
Slide 16: CHP, space heating and gas clothes dryer potential
► 10 CHP potential projects NG consumption: 400Mn m³ p.a. ► Domestic space heating system Market potential: >15,000 units p.a. 10X gas consumption 15Mn m³ p.a. ► Gas Clothes Dryer Market potential: >6,000 units p.a. +30 to 50% gas consumption 16
Slide 17: Connection fees
► Connection fees Joint report on connection fees initiated by city-gas groups addressed to central government Government supports its importance on gas development and the rationale behind Connection fees now included in property prices reducing visibility Urbanization of 1% per year keeps
Slide 18: Reducing competition from small scale LNG
► Reducing competition from small scale LNG & direct supplies Acute LNG shortage in winter plus sky rocket price drove small scale LNG suppliers out of the market Government’s support to strengthen their control on safety and concession rights ► Manage to keep gas margin stable while lowering un
Slide 19: Winter gas shortage
► Winter gas shortage Nation wide gas shortage has aroused government great concerns on gas supply security Government supports in term of favorable policies and financial subsidies to be anticipated Jintan Gas Storage to be in business in mid 2018 Cooperation with PetroChina and Shanghai Ga
Slide 20: Target: 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
Slide 21: Thank you
3K MARCA) Expanding Towngas China Company Limited NEW HORIZONS k , * . Thank you 5d
Slide 22: Forward-looking statements disclaimer
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