Hebei piped-gas supplier Xinao Gas Holdings, which reported a 33.7 per cent jump in net profit for last year, will seek growth by competing for projects in Vietnam and Macau. The group, which operates about 70 piped-gas projects on the mainland, submitted bids for gas supply franchises in Hanoi and Ho Chi Minh City and was awaiting the results of its bid for a HK$500 million project in Macau, executive director Wilson Cheng Chak-ngok said yesterday. The company, which is facing lower profitability as a result of a declining reliance on a lucrative one-off income from connection fees, is seeking new sources of revenue. 'Vietnam and Macau offer growth opportunities and sources of natural gas,' Mr Cheng said. 'We expect to hear bidding results from Macau in the second half of this year and from Vietnam next year.' Although Xinao's net profit of 507.52 million yuan (HK$566.73 million) last year slightly exceeded a Thomson Reuters forecast of 490.12 million yuan, gross margin slipped 4.41 percentage points to 30.4 per cent while net margin shrank 2.36 percentage points to 8.81 per cent. Mr Cheng blamed the declining margins on a substantial drop in connection fees - a one-time cash payment by customers subscribing to piped-gas services. Connection fees, with a margin of about 70 per cent, generated 33.4 per cent of the group's 5.75 billion yuan turnover last year, down from about 40 per cent. The group charged on average a connection fee of 2,570 yuan per residential account and 228 yuan per cubic metre for industrial and commercial users. Piped-gas supplies, which had a much lower margin of 18 per cent last year, were the group's bread and butter, accounting for 45.9 per cent of turnover. Xinao raised gas prices an average of 9 per cent last year, more than enough to offset a 4 per cent rise in the cost of gas. 'Because of the central government's tight control over commodity prices, our sourcing cost for gas has remained the same so far this year and so have our sale prices,' Xinao executive director and chief executive Yang Yu said. Mr Cheng expected Xinao's gas sales would jump 35 per cent to 2.85 billion cubic metres this year on the back of more widespread use of piped-gas in existing service areas. Xinao shares climbed 24 HK cents, or 1.74 per cent, to HK$14.02 yesterday. The firm raised its final dividend 73.16 per cent to 13.42 HK cents per share.