Main points of investment
The growth of income was slow compared with the same period last year, and the net profit of homecoming decreased significantly. The company's total 2019H1 revenue was 20.35 billion Hong Kong dollars, up 5.8 percent from the same period last year. Affected by the decline in gas sales, the profit from its Hong Kong business was 1.67 billion Hong Kong dollars, down 5 percent from the same period last year, while that from its mainland business was 2.12 billion Hong Kong dollars, up 2 percent from the same period last year. Affected by market prices, the profit from the new energy business was 90 million Hong Kong dollars, down 67 percent from the same period last year, and the net profit from its home company was 3.89 billion Hong Kong dollars, down 18.8 percent from the same period last year.
Gas sales: 2019H1's gas sales in Hong Kong in the first half of the year were 15776 megajoules, down 2.4% from the same period last year. Gas sales in the mainland were 12945 million cubic meters, an increase of 12.9 percent over the same period last year. The main reasons for the decline in Hong Kong sales are: 1) Hong Kong's economic growth slowed down in the first half of the year, and gas sales in the catering industry decreased compared with the same period last year; 2) the temperature in Hong Kong this year is much higher than that in the same period last year, affecting gas sales.
Growth in the number of customers: 2019H1 had 1.92 million customers in Hong Kong in the first half of the year, up 1.6% from the same period last year, while the number of mainland customers was 28.52 million, an increase of 7.74% over the same period last year. Affected by the slowdown in the mainland's economic growth, the growth of gas sales and the number of customers in the mainland have declined compared with the same period last year.
The company's Hong Kong-China Gas Company has stable business in the first half of the year. 2019H1's total revenue was HK $6.51 billion, up 16.6% from a year earlier, and its net profit was HK $756 million, up 14% from a year earlier, mainly due to a 14% year-on-year increase in natural gas sales to 5.619 billion cubic meters and an exchange gain of 60 million. The number of customers of the company in the first half of the year was 13.03 million, an increase of 400000 over the end of last year. In the first half of the year, the company's sales of industrial gas increased by 16% compared with the same period last year, accounting for 57% of the total sales, 11% of the sales of commercial gas, 17% of the total sales, and 11% of the total sales. Accounted for 26% of the total sales.
Our view: 2019 is a challenging year for the company, and the local environment in Hong Kong is uncertain. It is expected that the cash flow of the company's operations in Hong Kong will reach 14 billion yuan in the next three years, and the dividend of HK $8 billion paid by the mainland business will be able to meet shareholders' dividend and capital expenditure requirements for the next three years.
Risk hint: the macro-environmental uncertainty in Hong Kong is further increased; the company's new energy business development is not as expected.