Wah Sang Gas Holdings has posted a 92.4 per cent year-on-year surge in net profit for the first half to September, driven by an increase in high-margin gas pipeline connection fees.
The Growth Enterprise Market-listed gas supplier reported net profit of HK$131.4 million for the period. Turnover was HK$358.2 million, an increase of 87.2 per cent.
The company, which constructs pipeline systems to supply natural gas to mainland households, derives most of its profits from one-off connection fees.
Fee income, which has a profit margin of 78 per cent, accounted for 65.8 per cent of Wah Sang's total turnover.
By comparison, the company continued to lose money selling piped gas, according to chief financial officer Richard Kong.
The company's heavy reliance on connection fee income has raised concerns among some commentators over its future profitability.
Beijing allows gas suppliers to charge connection fees as an incentive for them to invest in building infrastructure, but many analysts speculate the government may abolish the fees in future.
