Tianjin Tianlian Public Utilities hopes today's move to Hong Kong's main board from the Growth Enterprise Market will help it realise a long-delayed plan to buy the gas distribution assets of its unlisted parent Tianjin Gas Group.
The company also wants to tap the mainland equity market, with a view to becoming the first gas distributor listed in Hong Kong and the mainland.
In 2007, Tianjin Tianlian unveiled a plan to buy the assets from the municipal government-backed parent within three years. They were estimated to be worth three billion yuan (HK$3.64 billion) at the time.
But chairman Jin Jianping said the listed arm ran into difficulties with gas resources a few years ago.
After net profit more than doubled to 62.34 million yuan in 2007, earnings were relatively stagnant until last year when income grew to 76.7 million yuan. The slow growth meant the company bought only an eighth of the assets it had wanted.
'By switching to the main board, we can raise our shares' liquidity and awareness by the investment community,' Jin said. 'More importantly, it can augment our fund-raising capacity in the capital market, which implies we can speed up injection of assets from our parent into our firm.'
Tianjin Tianlian now aims to complete the asset purchases in three to five years.
Jin said the Tianjin government wants to raise natural gas consumption in the municipality, to more than 10 billion cubic metres in 2015 from 1.3 bcm last year, as part of efforts to cut pollution and energy consumption per unit of economic output.
The coastal city, home to 12 million people, is a key part of the Bohai Rim economic region and is half an hour by train from Beijing.
Tianjin Gas controls 95 per cent of the city's gas sales, while Tianjin Tianlian has a 15 per cent share.
Second-quarter gas sales profit margin halved to 6 per cent from the year-earlier period owing to sharply higher low-margin sales to businesses, and the government's reluctance to quickly pass on higher gas supply prices to residential users.