Report summary
Company Overview
The company is the leading operator of natural gas filling stations for vehicles in Jilin Province. Based on sales in 2016, the company ranked second in the compressed natural gas filling station market in Jilin Province, with a market share of 6.2%. The company mainly operates natural gas filling stations under the “Zhongcheng Chain” trademark name in Jilin Province and sells natural gas in the form of compressed natural gas to vehicle end users. The sales revenue of gas stations in Jilin Province accounts for more than 90% of the company's total revenue. With the exception of a compressed natural gas station and a liquefied petroleum gas station in Heilongjiang Province, all of the company's stations are located in Jilin Province.
The company supplies compressed natural gas, liquefied petroleum gas and liquefied natural gas. Retail sales of compressed natural gas account for about 90% of the company's sales revenue. The company is committed to developing the compressed natural gas filling station business. In 2014-16, compressed natural gas sales reached 21% CAGR. However, in Q1 of 2017, the company's gas station in Liaoning Province ceased operation, and sales declined due to intense competition at the gas station in Changchun City.
The company operates 25 gas stations, of which 14 are self-operated, 6 are jointly operated, and 5 are commissioned.
The company's revenue and net profit in 2016 were 274.6 and 34.2 million RMB respectively. 2017 Q1 revenue and net profit were 55.9 and 1.0 million RMB respectively. 2017Q1 generated a listing expense of 7.6 million RMB. The 2014-2016 revenue CAGR was 4.4%, and net profit CAGR was 100.9%. Excluding the impact of listing expenses, 2017Q1's operating profit increased 26% year over year.
Status and prospects of the industry
Natural gas sales at compressed natural gas filling stations in Jilin Province increased from 237.8 million cubic meters in 2011 to 1093.7 million cubic meters in 2016, with a CAGR of 35.7%. The number of compressed natural gas filling stations increased from 60 in 2011 to 264 in 2016, with a CAGR of 34.5%.
The main participants in China's vehicle gas filling station market are the Big Three Petroleum Companies and a number of independent operating companies. The big three petroleum companies did not participate in the Jilin provincial market, and the market was scattered. The three major operators accounted for 27.3% of the market share.
Advantages and opportunities
One of the leading vehicle gas station operators with mature development and a good safety record in Jilin Province;
Benefiting from the growth of the regional car filling station market and local government policy support;
Establish stable relationships with major customers and suppliers.
Weaknesses and risks
Fluctuations in the purchase price and sale price of compressed natural gas;
Reliance on stable compressed natural gas supply and gas transportation services from suppliers;
The rapid development of new energy vehicles and competition for natural gas vehicles.
valuations
The prospectus pricing corresponds to a fully diluted price-earnings ratio of 12.7-16.2 times in 2016. The company did not provide a profit forecast for fiscal year 2017 in the prospectus. The unconfirmed portion of the listing expenses of HK$14.6M is expected to be reflected in the income statement one after another. The company's fully diluted price-earnings ratio in 2016 was highly discounted compared to Hong Kong-listed gas companies. We believe that the company focuses on the operation of compressed natural gas filling stations in Jilin Province. The scale of the business is small, and the valuation should be discounted to a certain extent. Give the IPO an exclusive rating of “5.”