New | Towngas pins growth hopes on China’s push for increased gas use

Hong Kong and China Gas (Towngas), the city’s sole piped-gas supplier and a major city-gas distributor in mainland China, says government policies for natural gas to play a key role in reducing air pollution will continue to propel the firm’s growth as it posted a 2.7 per cent rise in annual profit.

Net profit for last year came to HK$7.3 billion, compared with HK$7.11 billion in 2014 and lower than the HK$7.43 billion average estimate of 12 analysts polled by Thomson Reuters.

Revenue fell 6.4 per cent to HK$29.6 billion due mainly to a 1.5 per cent fall in gas sales volume in Hong Kong and lower gas price on the mainland.

“Despite the various challenges resulting from the slowdown in economic growth on the mainland, the group has formulated, and is gradually implementing, development plans for different businesses in accordance with the energy and environmental policy of mainland China,” said chairman Lee Shau-kee in a filing to the Hong Kong stock exchange.

He said Beijing’s goal for the contribution from gas to the country’s energy consumption mix to rise to 10 per cent in 2020 from 6 per cent last year would create “huge market potential” for the firm.

A HK$358 million fall in adjusted earnings before interest, taxes, depreciation and amortisation from Towngas’ other energy businesses – including a Hong Kong aviation fuel supply operation and natural gas liquefaction business on the mainland – was mostly offset by a HK$217 million rise in ebitda from its mainland gas, water and related businesses. Ebitda in Hong Kong were steady.