Towngas to spend up to HK$2b on new projects
Towngas China, the mainland city-gas division of Hong Kong and China Gas (Towngas), plans to spend HK$1.5 billion to HK$2 billion this year to add 12 to 15 projects, even though sales growth may dip slightly due to a slower economy.
The firm has already obtained 10 projects in this year's first quarter, including two in Shandong, one in Anhui and one in Sichuan province. It had 84 projects as of the end of April.
The company's chairman, Alfred Chan Wing-kin, said after the Towngas annual meeting: "Besides forming single-project joint ventures, we will also consider acquiring companies that have a certain portfolio size, like eight to 10 projects."
Chan said he expected this year's gas sales to grow at least 12 per cent, which could be higher if economic growth picks up. Last year, sales rose 13.9 per cent, to 5.32 billion cubic metres. This year's first-quarter gas sales were up 11 per cent year on year.
"In the short term, we need to be mindful of the impact of slower mainland industrial output growth on the back of weak demand from Western economies," Chan said. "With economic growth picking up and coal and oil's partial replacement by natural gas, we are bullish on China's long-term gas demand."
He said he expected the firm to see average annual gas sales growth of 15 per cent in the next three to five years, with that growth coming from existing projects and acquisitions.
"With heightened awareness of the nation's air pollution problem, there is ample room for growth in the city-gas, power generation and automobile fuelling markets," Chan said.
Industrial sales took up 58.4 per cent of the total last year, against 16.8 per cent of commercial sales and 24.8 per cent of residential sales.
The company has more than 40 compressed natural gas stations, which sold 100 million cubic metres last year to taxis and buses.
Net profit grew 18.6 per cent to HK$841 million last year, and is forecast to rise 27.5 per cent to HK$1.07 billion this year, based on the estimates of 15 analysts polled by Thomson Reuters.