1. Overview of performance in 2013

Turnover during the period was HK $6.44 billion, an increase of 34% over the same period last year (LPG business was omitted in 2012). The growth was mainly due to an increase in recurrent gas sales and revenue from gas pipeline connections. The profit attributable to the owners of the company was HK $401 million, an increase of 9.8% over the same period last year. Excluding other one-time losses / gains, profit and profit attributable to owners of the company for the year were HK $956 million and HK $420 million respectively, up 41 per cent and 35 per cent respectively over the same period last year. Earnings per share were HK8.142 cents and the Board recommended a final dividend of HK0.72 cents per share in 2013. As of the end of 2013, the company's total assets reached HK $12.157 billion, an increase of 32% over the same period last year, and its net worth reached HK $5.826 billion, an increase of 16% over the same period last year.

2. Share of revenue from connecting customers

Revenue from connecting customers accounts for 16% of total revenue, which management believes will remain stable for some time to come.

3. The proportion of each sales volume

Residential users accounted for 22% of gas sales, industry, commerce and other customers accounted for 61%, gas stations accounted for 17% of gas sales. The ratio remains stable compared with 2012, and the company does not expect it to fluctuate significantly for some time to come.

4. The proportion of gas sales by region

The company's largest business is still in Qinghai, but its proportion is decreasing year by year. At present, Qinghai gas sales account for 49.5% of the company's total gas sales, down more than 7 percentage points from 2012. Gas sales in Hunan, Jiangsu, Shandong, Guangdong, Hubei and other regions are growing rapidly, with an increase of 37% in other areas except Qinghai.

5. Connect users

In 2013, about 150000 new residential users were connected, with a total of 675000 residential users, 5500 industrial and commercial users, more than 10, 000 new users in Jiangxi, Qinghai, Shandong, Jiangsu and other provinces, and more than 30, 000 new users in Hubei.

6. Natural gas price increase

The company believes that the rise in natural gas prices or the implementation of market-oriented pricing play an important role in the healthy development of the whole natural gas industry, especially in promoting upstream natural gas supply, which will benefit downstream distributors. In the second half of 2013, the company completed all the prices in other regions except Qinghai, which had no impact on the company's gross profit level. the average price increase for non-resident users was about 0.22 yuan, an increase of about 10%. For Qinghai, it has not yet received official documents from the government, but the company is confident that the problem will be solved in the short term. The sales volume of non-resident users in Qinghai in the second half of 2013 was 400m square meters, and the average gas cost per party rose by 0.145 yuan, which had an impact on the profits of shareholders of listed companies of about HK $30m.

7. Other profits and losses in the financial statements

Other gains and losses are mainly changes in the market value of the company's blue-chip stocks invested in Hong Kong before 2011, which are non-cash gains and losses. the company is currently committed to gradually reducing these equity investments in the second half of 2013. the company's paper losses decreased by HK $19 million compared with the first half of the year, and the company reduced its holdings of more than HK $22 million in the second half of the year, with remaining equity investment assets of about HK $50 million.

8. Sales growth guidance for 2014

Sales are expected to grow by 30% in 2014 compared with the same period last year, mainly from the space for rising natural gas prices, and the fastest growing areas will be mainly distributed in Jiangsu and Jiangxi.

9. Profit margin guidelines for 2014

Profit margins are expected to remain around 8 per cent.

10. Sales volume growth forecast in 2014

Maintain between 25% and 30%.

11. Capital expenditure in 2014

Capital expenditure of about HK $1.176 billion in 2013 and HK $13-1.4 billion in 2014 will be mainly spent on existing projects.

12. LNG sales in 2013

More than 150 million LNG was sold in 2013, mainly for internal sales. 13. The reason why the price has not been raised in Qinghai and the management anticipates that the price adjustment in Xining has been done vigorously since the notice of the National Development and Reform Commission in July last year. Due to the special situation in the western region, the incremental gas has not been adjusted in 2013, mainly because the price index of Qinghai Province in 2013 exceeded expectations. Xining GDP accounts for about 80% of Qinghai Province, and the company is a big enterprise in Xining City. The rise in energy prices will have a great impact on the overall price index, and the price problem is expected to be resolved smoothly after the two sessions this year (the NDRC and the government have made it clear). For the losses caused by price adjustment in 2013, the company expects to give compensation in the process of price adjustment. Now it is only a matter of time. The company believes that the price adjustment problem does not have much practical impact. On the other hand, the company will actively take countermeasures. After the price is straightened out, I believe there will be a lot of room for development in Xining.

14. The impact of Petrochina Company Limited incident on the company

Petrochina Company Limited investigation aimed at individual cadres and individual incidents, the cooperation between the company and Petrochina Company Limited is only one of the projects, and after 10 years of development, the cooperation between the two sides has undergone the adjustment of many cadres by Petrochina Company Limited. It will not have any impact on bilateral cooperation because of the personal problems of a certain leader of the partner.

15. Management increases its holdings of shares

The management of the company paid close attention to the changes in the company's stock price and chose the opportunity to increase its holdings. The chairman of the company said that he would continue to increase his holdings of the company's shares as long as he had the opportunity.

16. Administrative expenses

Administrative expenses are expected to account for 3% of turnover or slightly narrowed in 2014.

17. Our suggestion

The company's sales volume will maintain a steady growth of about 25%, 30%, and dynamic PE13 times in 2014, with obvious valuation advantages and long-term investment value.