Natural Gas in China - RedChip.com

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8 Νοε 2013 (πριν από 3 χρόνια και 5 μήνες)

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July, 2010

2

This

material

may

contain

forward
-
looking

statements

and

management

may

make

additional

forward
-
looking

statements

in

response

to

your

questions
.

Such

forward
-
looking

statements

are

not

guarantees

of

future

performance

and

involve

risks

and

uncertainties,

and

actual

results

may

differ

from

those

in

the

forward
-
looking

statements

as

a

result

of

various

factors

and

assumptions
.


Although

we

believe

our

expectations

expressed

in

such

forward

looking

statements

are

reasonable,

we

cannot

assure

you

that

they

will

be

realized
.

Investors

are

cautioned

that

such

forward
-
looking

statements

involve

risks

and

uncertainties

that

could

cause

actual

results

to

differ

materially

from

the

anticipated

results,

and

therefore

we

refer

you

to

a

more

detailed

discussion

of

the

risks

and

uncertainties

in

the

Company’s

filings

with

the

Securities

&

Exchange

Commission
.


The

forward
-
looking

statements

contained

in

this

presentation

are

made

only

of

this

date,

and

Sino

Gas

International

Holdings

is

under

no

obligation

to

revise

or

update

these

forward
-
looking

statements
.

Safe Harbor Statement

3

Company Overview


Focus on the natural gas distribution systems in small and
medium size cities in China.


Owns and operates natural gas distribution systems in 35 2
nd
-
tier and 3
rd
-
tier cities with over 7 million urban residents in
Jilin, Hebei, Anhui, Jiangsu and Yunnan provinces and Beijing.
Serves 152,000 out of over 1.43 million addressable
households.


The Company has exclusive concession right agreements with
local governments for up to 30 years.


Profitable for over 6 years with 525% increase in revenue since
2004.


Owns 1,040 km infrastructure pipeline.


Company has invested over $50 million into infrastructure in
Beijing and Jilin, Hebei, Anhui, Jiangsu and Yunnan
provinces.


Has capacity to distribute 1 million cubic meters of gas per
day.

Founded in Beijing in 2003, Sino Gas (OTCBB: SGAS.OB), is a natural gas operator
principally engaged in:


The distribution of natural gas to residential and industrial users.


The construction and operation of city natural gas distribution networks.

4


One of the fastest growing natural gas distributors
in China.

.

Well positioned to lead the vast market of 2nd and
3rd tier cities.

Recurring revenues and predictable margins.

Solid relationships with key gas suppliers & local
governments.

Seasoned management & business development
team.

Strong organic growth, and attractive acquisition
opportunities.

Investment Highlights

Significantly undervalued.

Strong hard assets of infrastructure and strategic
value.

5

$0.58

Share Price (7/2/2010)

OTC Bulletin Board Symbol SGAS.OB

$15.53 Million

Market Capitalization

$26.77M (Basic)

$31.44M (Diluted)

Shares Outstanding (as of 12/31/09 Fiscal Year)

$27.59 Million

Net Revenues (as of 12/31/09 Fiscal Year)

$4.05 Million

Net Income (as of 12/31/09)



$0.15 (Basic)

$0.14 (Diluted)

EPS (as of 12/31/09)

5.10x

P/E (
ttm

7/2/2010)

$63.3 Million

Stockholder s’ Equity (as of 12/31/09)

Financial Snapshot

FAST DEVELOPING GAS INDUSTRY

IN CHINA

7

Natural Gas in China:

A Major Market Potential


The Chinese government has set the target to
increase the country’s natural gas consumption
to 10% by 2020. The world average is 23%.


Municipal gas is expected to account for 35%
of the total natural gas consumption by 2020.


Demand for gas is projected to triple by 2020.

80.1
96.1
115.3
127.2
140.4
55.6
66.7
45.7
38.9
0
50
100
150
2004
2005
2006
2007*
2008*
2009*
2010*
2011*
2012*
(Billion m3


Source: NDRC, BP World Energy Estimate and Accenture


Stands for estimate

China NG Consumption Forecast

2007

2020

NG as of Total
Energy Consumed

3.5%

10.0%

Municipal Gas as of
Total Gas Used

7.8%

35.0%

Sources:

(1) 2009 Energy Outlook


(2) Energy Information Administration


(3) Merrill Lynch



(2)

(2)

(1)

(3)

(3)

8

POLICY AND INVESTMENT:


Backbone pipelines are being built
across China.


LNG and CNG terminals are being
built.


Government supports 30 year
monopoly concessions.


For cleaner energy policy, local
governments mandate or promote the
use of natural gas for residential needs.


Favorable tax rates.

Strong Government Support

for Natural Gas

LNG Under Construction

LNG Under Approval

LNG Under Approval

Natural Gas Pipeline

Proposed NG Pipeline

Coal Port

Net Coal Exporter

Net Coal Importer

China NG Pipeline Distribution

9

Increasing Popularity of

Natural Gas

Government Drivers



Energy Diversification



Environmental Protection



Urbanization

‘China is expected to consume over 300 billion cubic meters of natural gas
by 2020
-

3
rd

largest worldwide consumer.’


Supply



Government Gas Price Subsidy


Increased Domestic Development of Gas Supply and Overseas Expansion.



Country
-
wide infrastructure Development for Gas Distribution

Customer Performance



Increasing Affordability


Superior for Heating & Cooking (versus
coal, bottled LPG)



Safe and Efficient

ATTRACTIVE & SUSTAINABLE

BUSINESS MODEL

11


Company Infrastructure



Acquire or establish a natural gas
distribution system in a new city under 30
year concession rights


Build gas stations, gas distribution systems
in urban areas.


Invest, operate and manage Transportation
of NG from NG field or NG pipeline


LNG/CNG logistics or NG pipes


Revenue comes from two sources:


Connection fees: connecting customers to
the natural gas distribution network, which
we build, own and manage.


Sales of gas to customers: (industrial and
residential) through the natural gas
distribution network, which we build, own
and manage.





Residential


Customers


Commercial


Customers


Industrial


Customers


Natural Gas Field


Pressure Regulating and


Storage Station


Pressure Regulating and


Storage Station


CNG/LNG Trucks


CNG/LNG Trucks


Assets Owned by Sino Gas


or


Long Distance Pipeline


Main Pipeline


Valve


Branch Local Pipeline


Pressure Regulating Box

Company Infrastructure

12

Strategic Partnerships

Natural Gas Supplier


The founder of Sino Gas is from PetroChina, one of Sino Gas’ strategic suppliers. Long term
supply contract with PetroChina, renewable in the end, supplying 40% of gas today.


China Petroleum Chemical, a strategic supplier since 2005, supplying 20% of gas today.


Partner with Shanxi Jincheng Coal Group, one of the largest coal bed methane (CBM) producers
in China, supplying 15% of gas as of today. Established a joint venture in distribution of 500,000
cu meter natural gas through Sino Gas’ pipeline and networks in Jiangsu and Anhui.


Municipal Governments


For cleaner energy policy, local governments mandate or promote the use of natural gas for
residential needs.


In most cities where Sino Gas operates, the Company signs an exclusive agreement with the
municipal governments for building and operating natural gas distribution in the city for 30 years
.



13

Growing Geographic Presence

Exclusive concession rights in 29
cities with addressable market in
excess of 1,200,000 households

Over 100, 000 connected households
to date



Operates in 35 cities with addressable
market in excess of 1,425,000
households

Over 152,000 connected households
and 7 industrial customers to date

Presence in 5 provinces and Beijing

Low penetration rate provides organic
growth opportunities

14


*Represent price net of sales tax

**70% is saturation rate of gas access in well developed cities (estimate)

Connection Fees

Gross Margin

Residential $350/household*

70%
-

75%

Commercial / Industrial (negotiated)

75%
-

80%

Gas Sales

Gross Margin

Residential per m
3

usage (Prepaid debt cards )

10%
-

15%

Commercial / Industrial (10 to 30 day terms)

15%
-

20%

Stable Revenues and Visible Profit
Margins under Concession Agreements

Connection services in our existing projects could generate additional $448 million
revenue. The current penetration rate in our market is only about 10%**

After the majority of city residents in our existing projects are connected to the city
gas distribution systems, annual gas sales from residential users alone could reach
over $120 million a year. **

HIGH GROWTH STRATEGY


Major potential customer base in 2
nd

and 3
rd

tier cities
-

over 900 potential cities
(out of 2000 cities in China).


Currently low penetration rate
-

the current connection rate in 2
nd

and 3
rd

tier
cities is much lower than 1
st

tier cities.


Lower competition level
-

fewer market players to compete within 2
nd

and 3
rd

tier
cities.


The Company focuses on the vast market of 2
nd

and 3
rd

tier cities, and currently
covers Jilin, Hebei, Anhui, Jiangsu and Yunnan provinces, and Beijing.

16

Target Market

Penetration Rate *

900 small and medium cities

40%

Within an existing market/city

12%

The addressable markets of 300 million population

4
-
5%

Great Potential in 2
nd

and

3
rd

Tier Cities

* Total penetration rate inclusive of natural gas peers’ market

Focus on 2
nd

and 3
rd

Tier cities
with exclusive monopoly
franchises.

Secure additional long
term natural gas
contracts.

Expand gas distribution network and
make accretive acquisitions.

Expand into other natural
gas related businesses.

17

Strategy for Growth

Expand the number of
cities under
management to 60 in
the next 3
-
5 years, and
become a leading
energy company in
China.

18

FINANCIAL HIGHLIGHTS

0
5,000
10,000
15,000
20,000
25,000
30,000
2004
2005
2006
2007
2008
2009
Year
19

19

Strong Financial

Performance

RECORD SALES RECORDED FOR FISCAL YEAR 2009

$27.59M


Profitable for the last 6 years with
revenues up
525
%

2004 vs. 2009


Net Income of
$4.05M

in 2009, up
152.9%

from 1.6M in 2008


Net Asset of

$63.3M
(as of 12/31/09)


Cash:
$9.82M
(as of 12/31/09)
,

compared
to $3.03M
(as of 12/31/08)


Net Sales

(Thousands)

20

Balanced Revenue Contribution

2009 Gas Sales (millions)

2008 Net Revenue (millions)

2009 Net Revenue (millions)

2008 Gas Sales (millions)

66%

34%

$4.2

53%

47%

$7.41

$8.29

$8.0

1
st

Quarter Financial

Highlights

38.11% Increase

72.46% Increase

Operating Income

(in thousands)

Net Revenues

(in millions)

21

1
st

Quarter

Revenue Breakdown

22

23

Financial Summary

US $ MM

Dec. 2009

Dec. 2008

Dec. 2007

Total Assets

(MM)

93.1

73.7

65.4

Net Book Value

(MM)

63.3

57.9

50.8

Number of Common Stock
Outstanding

(MM)

26.77

25.27

24.88

Book Value Per Share

($/share)

2.36

2.29

2.04

24

Management Team

Shukui Bian


Prior to co
-
founding Sino Gas, worked for the First Refinery Factory of North China Oilfield for 14 years .


Won notable awardsof Practical New Technology in

2002.


Vice President, Beijing Zhong Ran Xiang Ke Petroleum and Oil Technology Co., Ltd.


Drafted the National Standard of Natural Gas Usage in Cities in China.

Yugang Zhang


Proficient with U.S accounting systems; has a strong knowledge of U.S GAAP .


Area Financial Controller, Asian operation and plant controller of Massachusetts
plant,Smurfit
-
Stone
Container Enterprises, a public, U.S. based company.


Plant Controller for Mansfield, Massachusetts plant of Smurfit
-
Stone Container Enterprises.


MBA, Clark University, MA; BS, Harbin Institute of Technology.

Zhicheng Zhou


General Manager of Finance, China
Everbright Group International Economic Corporation


Director and General Manager, Beijing Chenguang Gas Co., Ltd.


General Manager, Beijing
Zhong Ran Xiang Ke Petroleum and Oil Technology Co., Ltd.


Received the 3rd place in National Technology Development Award in 1990
.


Chairman
& CEO



CFO



COO




VP
Engineering


Yuchuan

Liu


Over 20 years experience in natural gas industry.


Chief of R&D at
PetroChina
.


General Manager, Beijing
Zhong

Ran Wei Ye Gas Co., Ltd.; Chairman, Beijing Xiang
Ke

Jia

Hua

Petroleum and Natural Gas Co., Ltd.; CEO, Lang Fang
Zhong

Gong Petroleum and Natural Gas
Technology Co., Ltd.


Senior engineer , holding patent for bottled compression natural gas delivery process
.

25

Natural Gas Peers


*Market Price As Of 7/2/10

** Market cap is presented in HKD for Hong Kong listed companies

Company Name

Exchange
& Symbol

Price*

Market
Cap**

EPS
(ttm)

Sales

(2009 in $Mil)

P/E

(ttm)

P/B

CHINA GAS
HOLDINGS LTD.

HKG: 384

4.20

14.03B

0.03

$810.76

140.00x

4.35

TOWNGAS CHINA
COMPANY LTD.

HKG: 1083

2.96

6.43B

0.14

$372.56

21.14x

0.90

XINAO GAS
HOLDINGS LTD.

HKG: 2688

17.68

18.56B

0.88

$1,078.57

20.09x

3.60

ZHENGZHOU GAS
COMPANY LTD.

HKG: 3928

14.20

1.78B

1.43

$159.54

9.96x

2.10

HONG KONG AND
CHINA GAS
COMPANY

HKG: 0003

19.64

128.25B

0.79

$1,583.59

24.86x

3.90

AVERAGE

43.21x

2.97

SINO GAS INTL.
HOLDINGS

OTCBB:
SGAS

0.58

15.53M

0.14

$27.59

5.10x

0.25

26

26

Contact

Investor Relations Contact

RedChip Companies, Inc.

Dave Gentry

500 Winderley Place, Suite 100

Maitland, FL 32751

Tel: (800) 733
-
2447

info@redchip.com


www.redchip.com




Corporate Contact

Sino Gas
International
Holdings Headquarters

Zhang Yu Gang


Chief Financial Officer

Room 2008, Tower A, Caizhi Int'l Building

No. 18 Zhongguancun Dong St.

Haidian District, Beijing 100083

People’s Republic of China

Tel: +(86) 10 8260
0040

zhangyugang@sino
-
gas.com

http://www.sino
-
gas.com


27

Thank You

Questions