CR Gas builds up projects war chest

China Resources Gas, one of the nation's largest city gas distributors, has set aside HK$3 billion to HK$4 billion this year to acquire city gas projects, after posting a 31 per cent jump in net profit last year.

But chairman Wang Chuandong said the pace of acquisitions was likely to slow in coming years on fewer suitable, available projects.

"This is a natural trend ... there are some 280 projects that we are following and believe have possibility for co-operation," he said, adding that the firm had acquired an average of 30 projects annually in the past five years.

It had 176 operating projects as of the end of last year, of which 48 are in early-stage development and are loss-making. It had only seven projects in 2008. Counting committed but undeveloped ones, the company has 196 projects.

CR Gas yesterday posted a net profit of HK$2.16 billion compared with HK$1.65 billion in 2012. The result was in line with market expectations.

Gas sales volume grew 30 per cent to 12.1 billion cubic metres (bcm) from 2012, of which 17 percentage points was driven by acquisition and the rest from growth of existing projects, said general manager Shi Shanbo.

CR Gas has secured 14.9 bcm of gas supply for existing projects for this year.

Shi would not give a target for this year, but said the company expects existing projects to see growth in line with national gas demand growth of 15 per cent.

It has maintained a target set earlier to sell 20 bcm of gas next year, although Wang said insufficient supply of gas in one of its largest projects, in Tianjin, meant it sold only 1.5 bcm there, trailing a target of 5.2 bcm to 6 bcm.

He said CR Gas was confident of reaching the target since state oil and gas producers were developing new gas fields and laying pipelines to Tianjin, but he did not give any time frame.

Gross profit margins rose to 25.8 per cent from 23.1 per cent in 2012, thanks to more sales to the lucrative industrial and commercial sectors and price increases in the residential segment.

A final dividend of 20 HK cents per share was proposed.