Xinao revenue swells despite factory closures
Piped-gas utility Xinao Gas Holdings generated 30 per cent more revenue in the first three months of the year even after thousands of factories on the mainland went under as a result of the global financial crisis.
The first quarter showed a marked improvement in energy consumption from the rapid downturn near the end of last year, chairman Wang Yusuo said.
Mr Wang (right) said he was confident the country's economic recovery would gather steam in the third and fourth quarters, thanks to the 4 trillion yuan (HK$4.54 trillion) stimulus package aimed at achieving 8 per cent economic growth this year.
And the group was on track to hit a target of selling 13 per cent more natural gas to 2.9 billion cubic metres this year, he said.
'Without question, the factory shutdown situation was serious in the first quarter,' Mr Wang said. 'But we have seen the power of the economic stimulus package, which was shown in a gradual recovery in the industrial sector and energy consumption in the past three months.'
Xinao, which runs 72 gas projects across the mainland's coastal regions, revealed last week a better than expected 24.3 per cent jump in net profit to 630.7 million yuan on a 43.6 per cent rise in revenue to 8.26 billion yuan last year.
Mr Wang said the group, whose major industrial users were heavy industries and petrochemicals, was relatively shielded from the demand slump in export-reliant manufacturers such as garments and textiles and toys.
Mr Wang said Xinao would not take part in a US$700 million gas project in Vietnam, a plan originally considered by the group and his privately owned company, because of the poor economic outlook of the Southeast Asian country. The decision came several months after the companies and state-owned Vietnam Oil and Gas Corp reached an accord on energy co-operation.
As the mainland promotes the use of clean fuel, Mr Wang, through his private company, and Xinao would proceed with its 10 billion yuan investment in new energy sources and related businesses such as coal-produced dimethyl ether and solar energy equipment production.
Four billion yuan had been spent as of last year on projects such as a dimethyl ether plant in Inner Mongolia, which should start commercial operation in the second half of this year. Mr Wang said. The remaining 6 billion yuan would be spent by 2013.