China Oil And Gas Group (603) H1 2024 earnings summary

Executive summary

• Revenue for the first half of 2024 was HK$9,292 million, down 2% year-over-year, mainly due to a decline in the gas pipeline construction segment amid a weak property market in China.

• Profit attributable to owners was HK$269 million, a 20% decrease year-over-year; comprehensive income attributable to owners was HK$91 million, down 48% after adjusting for currency depreciation.

• Natural gas sales and transmission volume increased, with sales up 11% to 3,881 million cubic meters and transmission volume up 22%.

• The Group connected 48,007 new residential users and 779 new industrial/commercial users during the period.

• The Group continued to expand clean energy and value-added businesses, including new energy projects and non-gas products.

Financial highlights

• Gross profit was HK$1,135 million, with a gross margin of 12% (1H2023: 13%).

• Administrative expenses decreased 10% to HK$232 million, while selling and distribution costs fell 19%.

• Finance costs rose to HK$245 million from HK$207 million year-over-year.

• Net debt-to-assets ratio increased to 23% (end-2023: 21%).

• Gearing ratio was 107% (end-2023: 102%).

Outlook and guidance

• The Group expects stable long-term economic growth in China, supported by strong macroeconomic, monetary, and fiscal policies.

• Plans include strengthening internal management, expanding gas sources, optimizing business layout, and innovating business models.

• Continued focus on risk management and internal controls, with ongoing improvements based on recommendations from a major accounting firm.

• Continued implementation of the “14th Five-Year Plan” and proactive risk management are priorities.