Gas sales hit a record high again, Zhongyu Gas (03633) delivered a definite answer to the full-year performance.
Zhitong Finance APP learned that as a professional gas service operator with city gas franchise projects covering 9 provinces across the country, Zhongyu Gas released an annual performance announcement on the morning of March 31, 2020, stating that the company's 201 Total natural gas sales volume in 9 years increased significantly by 20.3% year-on-year to 1.94 billion cubic meters, hitting a record high; after strategically slowing down some gas connection businesses, revenue still recorded HK$8.144 billion (the same below), a year-on-year increase of 6.8 %, and the profit attributable to shareholders was 430 million yuan.
In terms of the secondary market, the stock price of Zhongyu Gas was still able to operate stably despite the outbreak of domestic public health incidents. However, amid market concerns caused by the sudden drop in crude oil prices on March 9, the company's stock price fell back following the sector. , the company's stock price has stabilized, and it recorded a sharp increase of 5.24% on the day of the results release. The trading volume of 1.288 million shares also increased nearly 1.4 times compared with the previous trading day, showing a trend of heavy volume at the bottom.
Looking forward to the market outlook, as the scale and volume of sustainably profitable businesses such as gas sales gradually increase in urban gas companies, the long-term benefit logic of gas companies remains unchanged under the market-oriented reform of pipeline networks, and the market size of Zhongyu Gas continues From an improved perspective, the drop in stock prices caused by this unexpected incident may just create a golden pit for investors.
Quotation source: Zhitong Finance
Sustainable business is ushering in an explosion
Gas sales business has grown significantly. Coupled with the explosion of sales of self-branded gas appliances and other value-added services, Zhongyu Gas revenue scale continues to increase. Zhitong Finance APP learned that since the rural area business in the "coal-to-gas" project implements the company's internal full cost accounting requirements, taking into account the later safety maintenance costs caused by the actual situation of rural development, as well as the geological conditions in hilly areas, therefore The company only selects high-quality projects that meet the return on investment, and proactively slows down the parts that appear unstable and have high financial risks in the long term in order to maintain good profitability, cash flow and accounts receivable levels. Therefore, in 2019, the company will focus on gas pipeline construction Business revenue has declined. It can be seen from the data that among gas connection customers, except for the decrease in the 445,000 coal-to-gas residential users with a growth rate of 300% in the same period last year, non-coal-to-gas residential users and commercial users still maintain steady growth.
In terms of sustainable business, the company has 69 exclusive gas projects in 9 provinces by the end of 2019. Total natural gas sales volume in 2019 increased by 20.3% year-on-year to 1.94 billion cubic meters, with a three-year compound annual growth rate of 25.4%. Against this background, the gas sales business, which accounts for the largest proportion of revenue, achieved revenue of 5.805 billion yuan, a year-on-year increase of 19.2%. At the same time, the company's own brand "Zhongyu Phoenix " has also brought explosive growth to value-added business. The sales revenue of gas appliances and other services has increased significantly by 166.3% year-on-year to 412 million yuan. In addition, SAIC vehicles The gas station and liquefied petroleum gas businesses also recorded stable performance. The company's final revenue still achieved a year-on-year growth of 6.8% to 8.144 billion yuan. While
's revenue is growing, its sustainable business profit margins are also very optimistic. Zhitong Finance APP learned that in 2019, the company’s natural gas selling prices for residential, industrial, commercial, and wholesale customers recorded year-on-year increases of 7.3%, 4.3%, 4.6%, and 8% respectively. At the same time, the company’s average natural gas purchase cost also increased year-on-year. fell 0.4%. Against this background, while the company's gas sales revenue reached 5.805 billion yuan by 19.2% year-on-year, segment profits reached 408 million yuan, a year-on-year growth rate of 37.7%; the gas station business also experienced a slight revenue decline of 1.5%. On top of that, segment profit contribution also increased by 1.8% year-on-year to 24.596 million yuan. In the sales of gas appliances and other services, the profit level has changed due to product structure issues due to the surge in sales of wall-mounted boilers and . However, the 1.11 times year-on-year growth in profit of this business segment is still the most eye-catching in the entire business.
At present, the long-term growth foundation of Zhongyu Gas has become increasingly solid. Looking forward to the future, the company will have performance that exceeds market expectations.
The company's long-term positive performance
First of all, in terms of gas sales business, the long-term positive logic has not been destroyed. Zhitong Finance APP learned that on December 9, 2019, as a very important step in the overall gas market reform, National Oil and Gas Pipeline Network Group was officially established in Beijing. After the establishment of the National Pipeline Network Company, it will be sorted out through the price mechanism , reduce the energy cost of end users, accelerate the improvement of gas coverage, and directly connect upstream and downstream in the future to form a market-oriented or quasi-market model, while intermediate pipeline transmission will be based on the attributes of public utilities and have a stable return on assets approved by the government. With the current reform progress accelerating, the future decline in upstream costs will directly benefit end users, while urban gas companies will continue to benefit from the increase in downstream demand.
For gas companies like Zhongyu whose gas sales profits have increased, this stage is a good time to expand the market size. Zhitong Finance APP understands that the current high short-term gas prices are accelerating the exit of local small and medium-sized gas companies. Even in the early stages of the implementation of the national pipeline network company, upstream gas prices may continue to be high in the short term. Local small and medium-sized cities that lack operational efficiency The losses of gas companies will intensify and they are expected to be driven out of the market at an accelerated pace. This provides opportunities for urban gas companies with larger scales and more efficient operating mechanisms to integrate resources.
Zhongyu Gas completed the acquisition of 100% equity of Gaoyuan Natural Gas ( Mengzhou ) and Gaoyuan Natural Gas ( Wenxian ) at a price of 462 million yuan in 2019. In 2019, it acquired a total of Henan and Hebei and exclusive concession rights for eight new gas projects in Heilongjiang. The management also made it clear in the outlook that it will continue to expand the scale of the piped gas business, deepen penetration in the coverage area, and focus on exploring merger and acquisition targets with nearby gas sources, stable financial status, and potential to create good synergies with existing businesses. , thus bringing more value. Data shows that the company's cash balance on hand at the end of 2019 was as high as 1.903 billion yuan, an increase of 19.3% from 1.595 billion yuan last year, which is enough to ensure the expansion of future mergers and acquisitions projects.
Moreover, the company's value-added business, mainly based on the "Zhongyu Phoenix" brand, can also maintain rapid growth. Zhitong Finance APP learned that among the company’s cumulative number of piped gas customers in 2019, residential users increased by 21.1% year-on-year to 3.485 million, industrial users increased by 37.3% year-on-year to 2,932, and commercial users increased by 31. 9% to 13,700 households. The company mainly sells gas appliances, wall-mounted boilers, water purifiers and other home appliances and insurance services under the "Zhongyu Phoenix" brand. It has considerable market potential to be tapped, and the value-added services will also be improved. Customer stickiness will feed back the growth of natural gas sales business. The company also made it clear in its financial report that it has invested a lot of additional resources in 2019 to consolidate its retail brand by expanding its product portfolio and increasing brand awareness. It is still worth looking forward to in 2020.
In addition, in the industrial and commercial market, the company has also accelerated the development of smart energy and distributed energy business based on the diversified energy needs of customers (especially high-energy-consuming industrial users). The company has also already It has signed many new projects and has completed the construction of several distributed energy projects including electric vehicle charging piles. smart energy and distributed energy business will not only bring new performance increments to the company, but will also further enrich the company's comprehensive Business model for energy services.
In summary, Zhongyu Gas , which has experienced explosive growth in its ongoing business, is currently in a stage of double boosting in terms of business scale and profit level. Its long-term operations will continue to improve. At this time, Zhongyu Gas It is not unexpected to see a surge in volume at the bottom.
