Hong Kong’s Towngas posts better than expected HK$4.33 billion interim profit

Hong Kong and China Gas (Towngas), Hong Kong’s sole piped-gas supplier and one of the largest city-gas distributors on the Chinese mainland, has warned of short-term growth risk on the mainland after unveiling a better than expected interim profit.

“Given the mainland’s economic growth momentum is notably slowing … growth in gas sales of the group’s mainland city-gas businesses is weakening,” chairman Lee Shau-kee, one of Hong Kong’s richest tycoons, said in a statement to Hong Kong’s exchange after the market closed.

“Coupled with the exchange [rate] risk arising from the [yuan’s] devaluation, overall profit growth of the group’s mainland businesses faces challenges in the near term.”

But Lee stressed that rapid urbanisation, Beijing’s policies encouraging the adoption of cleaner-burning natural gas, expanding gas supply and transmission capacity will ensure long term gas demand growth.

Net profit for the first six months amounted to HK$4.33 billion, or 34.1 HK cents per share, compared to HK$4.2 billion or 33 cents per share in the year-earlier period.

The latest figure was 1.2 per cent higher than the HK$4.28 billion average estimate by analysts at Citi and Morgan Stanley.