Hong Kong and China Gas: Gas sales in China in recent months beat expectations

Financial News

Written by: Kwong Yueting

2020-10-27 20:44

Last update date: 2020-10-27 20:44

Hong Kong China Gas (1083) announced that it will increase its capital by RMB 4.7 billion (HK$5.362 billion) and purchase a 25% stake in Shanghai Gas. The transaction is expected to be completed in the first quarter of next year.

Hong Kong China Gas will issue new shares equivalent to 25% of the total share capital to Shanghai Gas within one year, achieving cross-shareholding.

Chen Yongjian, managing director of China Gas (0003) and chairman of Hong Kong China Gas, said that the company is optimistic about the development potential of its mainland business and has been looking for investment opportunities in high-quality large-scale projects. The company seized this opportunity and created a new method of mutual shareholding. At this stage, it is difficult to comment on the possibility of further increase in shareholding, but because Shanghai Gas has the opportunity to go public in the future, it is estimated that the authorities do not want to overly dilute the shareholding of state-owned enterprises. The ratio will depend on market conditions, and then more joint venture and cooperation opportunities will be considered.

Chen Yongjian pointed out that the company's main business is also in the Mainland. It is believed that this cooperation can enhance investors' confidence in the company.

He continued that Shanghai Gas is a high-value city gas company with 6.3 million natural gas customers. After the cooperation, it can help Hong Kong China Gas and China Gas to extend the pipeline gas network of Hong Kong and China Gas to Shanghai, and the number of mainland customers covered will increase to 4,000. Million households.

National pipeline network puts into production to help promote natural gas trade

Affected by the new crown pneumonia epidemic, the company's gas sales in the Mainland declined at the beginning of the year.

Fok Zhichang, senior vice president of Towngas China, said that the mainland economy has rebounded in the last two quarters. Gas sales in the mainland are currently experiencing low single-digit growth, which is better than the company's expectations. Coupled with the current dual-cycle economy policy implemented in the mainland, it is expected that overall gas consumption will continue to increase in the future; As the National Pipeline Group officially put into operation in October, it will help promote natural gas trade.

Regarding the winter natural gas price trend in the Mainland, Chen Yongjian believes that this year's natural gas upstream resources are abundant, making the import price of liquefied natural gas inexpensive. Furthermore, under the epidemic situation, I believe that upstream companies will not increase prices significantly, and it is expected that the gas supply will be sufficient in winter.

Hong Kong China Gas and China Gas