Utilities | $19.50 |
Revenue in the first quarter of 2010 increased 4.5% to $19.4 million from $18.5 million in the first quarter of 2009 driven by sales from two new fueling stations added in third quarter 2009 and first quarter 2010, respectively, as well as an increase in the number of residential and commercial pipeline customers. According to management, the Company’s Jingbian County liquefied natural gas (LNG) plant in Shaanxi Province, China is set to complete construction by June 30, 2010. Test runs are scheduled to start at the beginning of 3Q10. Additionally, we now have capacity utilization targets from the Company. CHNG management expects the LNG facility to be operating at 30% of capacity in 3Q10 and 50% of capacity in 4Q10. Plant production capacity is expected to be 500 thousand cubic meters per day or 150 million cubic meters in total. Nothing has changed our long-term outlook on CHNG. They are strong financially, have major expansion plans, a partnership with a State-owned oil and gas company (China National Petroleum), aggressive but viable business development plans and are making monthly progress updates.
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First Quarter 2010 Earnings Conference Call - Monday, May 10, 2010
When: Monday, May 10, 2010 at 8:00 a.m. ET (5:00 a.m. Pacific)
To participate in the call please dial (877) 941-4775, or (480) 629-9761 for international calls, approximately 10 minutes prior to the scheduled start time. Interested parties can also listen via a live Internet webcast, which can be found at the Company's website athttp://www.naturalgaschina.com.
A replay of the call will be available for two weeks from 11:00 a.m. May 10, 2010, EDT until 11:59 p.m. EDT on May 24, 2010. The number for the replay is (800) 406-7325, or (303) 590-3030 for international calls; the passcode for the replay is 4293821. In addition, a recording of the call will be available via the company's website at http://www.naturalgaschina.com for one year. Listen to webcast
When: Monday, May 10, 2010 at 8:00 a.m. ET (5:00 a.m. Pacific)
To participate in the call please dial (877) 941-4775, or (480) 629-9761 for international calls, approximately 10 minutes prior to the scheduled start time. Interested parties can also listen via a live Internet webcast, which can be found at the Company's website athttp://www.naturalgaschina.com.
A replay of the call will be available for two weeks from 11:00 a.m. May 10, 2010, EDT until 11:59 p.m. EDT on May 24, 2010. The number for the replay is (800) 406-7325, or (303) 590-3030 for international calls; the passcode for the replay is 4293821. In addition, a recording of the call will be available via the company's website at http://www.naturalgaschina.com for one year. Listen to webcast
Value Proposition
The Company has exhibited consistently solid financial performance. Revenues have grown at a compound annual growth rate (CAGR) of 141% from 2005 to 2008 while net income increased at a CAGR of approximately 130% for the same period. CHNG expects a 15% - 20% increase year-over-year in revenues and earnings for 2009 with greater growth expected in the second half of 2010 when the Company’s LNG plant is completed. CHNG is currently trading at a P/E (ttm) of 11x which is well below the 21x average of industry peers
Overview
China Natural Gas, Inc. (“CHNG” or the “Company”) is a market leading natural gas operator in China specializing in the operation of compressed natural gas (CNG) fueling stations as well as pipeline natural gas (PNG) services. Currently, the Company operates 24 CNG fueling stations in Shaanxi Province and 12 CNG fueling stations in Henan Province. The Company also transports, distributes and sells natural gas to commercial, industrial and residential customers through its natural gas pipeline networks in Lantian County, the districts of Lintong and Baqiao in Shaanxi Province, and the city of Lingbao in Henan Province.
Investment Highlights- Government Mandate Supports Expansion of Natural Gas
The Chinese government, in an effort to reduce dependence on coal and oil, has set a goal to increase the country's use of natural gas from 3% of total energy currently to 8% in 2010 and to 10% in 2020. - Partnerships with PetroChina and China National Petroleum
CHNG is aligned with the two largest in oil & gas producers in China: PetroChina (NYSE: PTR) and China National Petroleum Corporation Kunlun Natural Gas Co. The Company has natural gas supply contracts with PetroChina and is in a joint-venture with the largest supplier of CNG in China, China National Petroleum, to build and operate CNG compressor stations and fueling stations along CNPC’s natural gas pipelines in China as well as sell CNG and provide vehicle conversion services. - Completion of LNG Plant Provides Near-Term Catalyst
Construction of a liquid natural gas (LNG) plant with 150MM nm3 capacity is to be completed in 2Q10 with an expected payback period of less than 3 years.
Financial Highlights
- Revenues for the first nine months of 2009 grew at over 20% year-over-year to $59.4 million. Earnings grew 11% to $12.7 million over the same period.
- In the first nine months of 2009, the Company has sold 130 MM nm3 of natural gas compared to 147 MM nm3 sold for all of 2008.
- CHNG has achieved consistent gross margins of 48% - 50% and net margins of 21% - 26% over the past three years.
- Net cash from operations was $10.5 million, $20.9 million and $18.3 million for fiscal years 2007, 2008 and first nine months of 2009, respectively.
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