Firm optimistic of projects despite first-half net falling 19.7pc Hong Kong and China Gas (Towngas), the city's dominant piped-gas supplier, yesterday said first-half profit fell 19.7 per cent on lower property income and higher interest expenses. Net profit dropped to HK$2.5 billion from HK$3.12 billion. Turnover grew 12.03 per cent to HK$5.41 billion, helped by the recovery of an extra HK$320.5 million fuel cost from customers. Towngas is looking to property development on former gas storage sites and mainland sales to make up for sluggish gas sales in Hong Kong. Profit contribution from the utility's supply of piped naphtha gas in Hong Kong gained 2.19 per cent to HK$1.8 billion, accounting for 71.87 per cent of earnings. Overall gas sales declined 1.5 per cent. 'Property sales will fuel profit growth in the near term but in the long run sustainable growth will come from our mainland investments,' managing director Alfred Chan Wing-kin said. Profit from sales at Grand Promenade in Sai Wan Ho and King's Park Hill in Ho Man Tin plunged 88.62 per cent to HK$117.7 million despite an 80.7 per cent rise to HK$588.2 million in a revaluation surplus from the group's 15.8 per cent owned investment property - International Finance Centre shopping and office complex in Central. Mr Chan said income will pour in from the presale of Grand Waterfront flats in Ma Tau Kok in the second half if an occupation permit is secured by the end of the year. Profit contributions from Towngas' portfolio of 43 gas and water projects in China rose 42 per cent to 200 million yuan in the first half. Mr Chan predicted a full-year contribution of about 300 million yuan from the sector. 'We're looking to diversify into upstream gas exploitation and coal-bed gas production given the shortage of clean energy sources in China,' he said. Financing for company projects mainly through debt drove up interest expenses to HK$146.2 million from HK$24.6 million. Towngas forecast smaller gas bills next year when it begins a partial switch to cheaper natural gas. The 12 HK cents a share interim dividend was the same as last year's.