Beijing Gas Blue Sky Announces 2019 Interim Results

Net profit and revenue increased by 70.8% and 123.4% respectively year-on-year

Highlights

• Total gas sales volume increased significantly by 121.3% to 548.5 million cubic meters as compared with the same period of the previous year.
• Revenue increased significantly by 123.4% to HK$1,882.6 million as compared with the same period of the previous year.
• Gross profit increased significantly by 156.8% to HK$207.9 million as compared with the same period of the previous year. Gross profit margin increased to 11.0%.
• Profit for the period attributable to owners of the Company significantly by 70.8% to HK$134.3 million as compared with the same period of the previous year.
• Closing cash balances increased significantly by 74.1% to HK$490.3 million as compared with the same period of the previous year.
• Operational cash flow turned to positive, net operational cash flow increased by HK$355.5 million to HK$99.2 million.
• Earnings per share increased by 33.8% to HK1.03 cents.

Financial Highlights

HONG KONG, CHINA - Media OutReach - 29 August 2019 - Beijing Gas Blue Sky Holdings Limited ("the Company" or "Beijing Gas Blue Sky", together with its subsidiaries, the "Group", HKSE stock code: 6828) announced its interim results for the six month ended 30 June 2019 ("HY2019"). In HY2019, the Group recorded total revenue of HK$1,882.6 million (HY2018: HK$842.6 million), representing a growth of 123.4% year-on-year, and recorded a profit attributable to owners of the Company amounted to HK$134.3 million (HY2018: HK$78.7 million), representing an increase of 70.8%.

During the Reporting Period, earnings per share were HK1.03 cents (HY2018: HK0.77 cents).

BUSINESS REVIEW

For the six months ended 30 June 2019 ("HY2019"), the Group's total gas sales volume increased by 121.3% as compared to the corresponding period of last year to 548.5 million cubic meters (HY2018: 247.9 million cubic meters) on the back of the gradual betterment of the Group's whole LNG value chain. In HY2019, the gas sales volume from the subsidiaries amounted to 521.5 million cubic meters, representing a significant increase of 166.1% as compared to the corresponding period of last year (HY2018: 196.0 million cubic meters). In addition, the gas sales and throughput volume from the associates of the Group amounted to 3,267.3 million cubic meters. It was mainly attributable to natural gas throughput volume from Jingtang Liquefied natural gas (LNG) receiving terminal.

As at 30 June 2019, the Group's natural gas projects covered a total of 16 provinces, city and autonomous region in the PRC, namely Liaoning, Jilin, Hubei, Hebei, Shandong, Anhui, Zhejiang, Shaanxi, Guizhou, Hainan, Guangxi, Guangdong, Ningxia Autonomous Region, Shanxi, Beijing City and Shanghai City.

CITY GAS BUSINESS

As at 30 June 2019, the Group connected gas pipelines for 33,113 new users of 5 city gas projects during the period and the cumulative number of users reached 465,514, of which 32,987 were new residential users and the cumulative number of residential users reached 463,152. The Group secured 126 new industrial and commercial users and the cumulative number of industrial and commercial users reached 2,362. The gas sales volume of city gas projects of the Group was 91.1 million cubic meters, representing an increase of 28.3% as compared to the corresponding period of last year. The Group recorded a revenue of HK$465.4 million, representing an increase of 43.7% as compared to the corresponding period of last year, primarily due to the increase in gas consumption of newlydeveloped industrial and commercial users of Shanxi and Liaoning projects and the increase in value-added service income.

DIRECT LNG SUPPLY BUSINESS

During HY2019, the Group provided industrial and commercial users with direct supply service covering Guangdong Province, Shanghai City, Shandong Province, Anhui Province, Hainan Province, Guizhou Province and Zhejiang Province, and 22.5 million cubic meters of natural gas (HY2018: 38.3 million cubic meters) were sold, recording sales income of HK$79.2 million (HY2018: HK$138.2 million). In HY2019, the decrease in gas sales volume of the business segment was due to the Group's business intergration. In order to improve the operation quality of individual project and coordinate the strategic development of newly acquired projects, the Group proactively reduced several direct LNG supply projects which have poor operation quality and little synergy. The Group provided stable gas sources for existing industrial and commercial users of direct supply service by establishing the productive partnership with LNG suppliers from the Bohai Economic Rim and the Yangtze River Delta Economic Zone which will also be two focused market regions for the Group to conduct business in the future. At the end of May 2019, the Group completed the acquisition of Zhejiang Bo Xin project serving nearly 100 industrial customers of direct supply service. As there is high demand for LNG at the location of Zhejiang Bo Xin project, the Yangtze River Delta region, which is characterised by steady upstream gas sources and regular downstream industrial and commercial customers, the project has become a significant contributor to LNG consumption growth of the Group since the completion of the acquisition.

GAS REFUELING STATION BUSINESS

The Group sold natural gas to LNG vehicles (trucks and buses) and compressed natural gas ("CNG") vehicles (taxis, buses and private cars). In HY2019, the Group owned 30 gas refueling stations including 17 CNG refueling stations and 13 LNG refueling stations (30 June 2018: 34 gas refueling stations including 20 CNG refueling stations and 14 LNG refueling stations), mainly covering Hainan Province, Anhui Province, Shandong Province, Guizhou Province, Jilin Province, Shanxi Province and Liaoning Province. The Group recorded a gas sales volume of 39.8 million cubic meters (HY2018: 40.7 million cubic meters) and sales income of HK$79.1 million (HY2018: HK$65.0 million), representing an increase of 21.7% as compared to the corresponding period of last year. The number of the Group's gas refueling stations reduced by 4 as compared to the corresponding period of last year due to active adjustment. However, leveraging on good operation management, the business volume of gas refueling stations maintained growth and its operation quality was further improved.

LNG TRADING AND DISTRIBUTION BUSINESS

As at 30 June 2019, the Group distributed natural gas to downstream customers with gas sources from LNG receiving terminals in China's coastal regions and gas sources from LNG plants and recorded a total trading volume of 395.0 million cubic meters (HY2018: 97.9 million cubic meters), representing a significant increase of 303.5% as compared to the corresponding period of last year through distributing LNG by 67 self-owned natural gas transportation vehicles (HY2018: 67 natural gas transportation vehicles). The revenue was HK$1,259.0 million (HY2018: HK$315.5 million), representing a significant increase of 299.0% as compared to the corresponding period of last year. The increase during the period was mainly because the Group imported a shipload of LNG in the second half of 2018 and approximately 88 million cubic meters of which were sold during the period. Meanwhile, with the good partnership with upstream gas source suppliers, the Group had  gas sources with lower prices than average market cost. Therefore, the Group's market development capability increased rapidly and its business scale expanded quickly. In addition, due to the completion of the acquisition of Zhejiang Bo Xin project in HY2019 by the Group, a significant LNG business project in the Zhejiang region which had better upstream gas sources and a huge trading network, contributing to stronger growth of the Group during the period.

LNG RECEIVING TERMINAL PROJECTS

PetroChina Jingtang (Jingtang LNG Receiving Terminal)

In HY2019, the total throughput volume of LNG of Jingtang Receiving Terminal amounted to 3,243.7 million cubic meters, of which the gas volume transported to pipelines through gasification was 2,837.7 million cubic meters while the gas transportation volume of a tank truck was 406.0 million cubic meters. 4 new storage tanks of the receiving terminal are currently under interior construction and the emergency peak adjustment project is expected to be completed and put into operation in the second half of 2020, which will turn the receiving terminal into China's largest LNG receiving terminal with higher peak adjustment and supply assurance capacity for the time being.

New Project Development

The Group completed the acquisition of Zhejiang Bo Xin and Xin Te project in June 2019, the consideration of which was RMB205,000,000 (equivalent to approximately HK$239,174,000).

The principal business of Zhejiang Bo Xin included (i) direct supply of LNG to industrial users; and (ii) trading of LNG. It receives stable gas supply from CNOOC's Zhejiang Ningbo LNG terminal and mainly distributes and supplies to large scale industrial users. Zhejiang Bo Xin's major sales network covers Yangtze River Delta region, which is the key LNG consumption area in the PRC with developed regional economy and numerous industrial and commercial enterprises. This area has a strong market demand and the LNG consumption is expected to have considerable growth potential in the future. Xin Te is principally engaged in direct supply of LNG to industrial users. For the year ended 31 December 2018, Zhejiang Bo Xin had 68 direct supply and trading customers with sales volume of approximately 104,132 tons, whereas Xin Te had 23 direct supply and trading customers with sales volume of approximately 14,653 tons. The acquisition was completed in late May 2019, Zhejiang Bo Xin is undergoing the change of name to 北藍博臣能源有限公司 (Beijing Gas Blue Sky Bo Chen Energy Limited) and will be engaged in the development of LNG trading and distribution, direct supply and relevant businesses in eastern China.

The acquisition of Zhejiang Bo Xin demonstrated the Group's strategic layout of whole LNG industry chain and replenished the market share and influence of the Group in the midstream and downstream market of the LNG business in the Yangtze River Delta region, enhancing the overall LNG distribution capacity and sales capacity of the Group. It will be easier to achieve economies of scale through increasing the total trade volume, thereby improving the bargaining power of the Group in the upstream market. The Acquisition will help the Group to achieve cooperation in the Yangtze River Delta region with upstream gas suppliers and terminals, coupled with the Group's established distribution advantages in the Beijing-Tianjin-Hebei region and other markets, the Group will achieve its strategic planning of importing gas from overseas sources independently in the future and capture more revenue under the great opportunity of the fast-growing market of imported LNG.

FUTURE PROSPECTS

Looking forward to the second half of 2019, the domestic natural gas consumption will continue to maintain a steady growth. With the accelerated reform of oil and gas system, and the increasing supply capacity of natural gas, the natural gas industry will usher the important development opportunities. Benefiting from the established system of the whole LNG value chain business, the Group recorded the considerable growth of gas sales from LNG segment, compared to the same period last year. The Zhejiang Bo Xin project acquired in the first half of the year is an important step for the Group's layout of the whole LNG value chain, which will help the Group to cooperate closely with the upstream gas sources in the Yangtze River Delta region, further enhance existing customers' dependence on us, and promote the expansion of markets of new customers.

In the Bohai Rim, the Group is also focusing on the development opportunities of the whole LNG value chain, and has achieved the overall market layout of the Group's strategy of "North-South Connection". The Group will give full play to the business advantages of the whole LNG value chain and promote the synergistic effects among upstream, midstream and downstream sectors. By expanding business development in the midstream and downstream, the Group will gain more imported offshore gas sources and improve bargaining power. Under the market environment where the LNG is developing rapidly, the Group will seize the opportunity of the industry and strive to increase its ranking within the industry.

In addition, in terms of management, the Group will strengthen its operation and management, and reduce the costs and improve efficiency through "multi-tasking strategy". The Group will also effectively reduce the management expenses through the management measures such as optimizing organizational structure, optimizing personnel and strictly controlling expenditures. By continuing to strengthen cooperation with commercial banks, the Group will lower the financial cost of loans. Through the targeted acquisition of quality projects and enhanced scale advantage, the Group will thereby improve the overall profitability.

About Beijing Gas Blue Sky Holdings Limited

Beijing Gas Blue Sky Holdings Limited ("Beijing Gas Blue Sky", HKSE stock code: 6828) is an integrated natural gas provider, distributor and operator, with an emphasis on the midstream and downstream natural gas development. Our natural gas business includes: (i) construction and operation of compressed natural gas ("CNG") and liquefied natural gas ("LNG") refueling stations for vehicles; (ii) construction of natural gas pipelines and operation of city gas projects by providing piped gas; (iii) direct supply of LNG to end-users; and (iv) trading and distribution of CNG and LNG.

The Group has adapted to the "One Belt One Road" policy, and focus on operating and investing natural gas business. The Group is actively expanding its business development and distribution, as well as continues to gradually expanding the scale of operations. Currently, the Group's natural gas projects covered 16 provinces, city and autonomous region in the PRC, namely Liaoning, Jilin, Hubei, Hebei, Shandong, Anhui, Zhejiang, Shaanxi, Guizhou, Hainan, Guangxi, Guangdong, Ningxia Autonomous Region, Shanxi, Beijing City and Shanghai City. The Group is committed to its vision: "develop clean energy, enhance customer value, create a beautiful blue sky". In the future, it will continue to actively investing and developing natural gas business, as well as participating in the development of natural gas industry value chain.