Binhai Investment Announces Interim Results for 2020 Total Revenue Holds Steady Growth with a 124% Soar in Net Profit

Stable growthin revenue in times of pandemic

As of 30 June 2020, the Group achieved HK$1,834million of revenue, representing a year-on-year leap of approximately 3%; totalassets amounted to approximately HK$6,148 million, representing a growth ofapproximately 1%; profit for the year reached approximately HK$151 million,representing a year-on-year surge of approximately 124%. During the period, profitattributable to owners of the Company was approximately HK$144 million, representinga climb of 117% as compared to HK$66 million for the correspondent period oflast year. Such significant growth was mainly due to: firstly, the government’sdownward adjustment of gas prices, as well as the drop in the unit price of pipednatural gas purchased as a result of the increase in the proportion of gassupply obtained by the Group from its gas sources, thus increasing the grossprofit of the Group from the sales of piped natural gas; and secondly, the recoveryof certain trade receivables by the Group which accordingly reverted the correspondingbad debt provision. During the period, basic earnings per ordinary share were HK$12.25cents, representing an increase of HK$6.60 cents as compared to HK$5.65 centsfor the corresponding period of last year.

Business review

Hit hard by the outbreak ofCOVID-19 pandemic at the beginning of 2020, both the economic and socialdevelopment in China had faced unprecedented challenges. Under the guidance ofthe PRC central government with its precise promulgation of polices, along withthe coordinated strengths in pandemic prevention and control, as well as the crediblepolicies for economic and social developments, China had achieved phenomenalstrategic results in its pandemic prevention and control, with its economy evenshowing signs of recovery and growth under the concerted efforts of the entirenation. As reflected in the Group’s assessment, the outbreak of COVID-19pandemic had not brought any material adverse impact on its financial position andoperating results during the period; nevertheless, the Group will carry on itswork in closely monitoring the development of the COVID-19 pandemic outbreak, andin the meantime, performing relevant assessments and taking appropriate measuresin a proactive manner. As of 30 June 2020, the aggregate length of the gaspipeline networks owned by the Group was approximately3,137 kilometres,representing an increase of 89 kilometres as compared to 2019; the constructionand gas pipeline installation service fees received by the Group amounted toapproximately HK$327 million, representing an increment of 44% as compared to HK$227million of the corresponding period of last year; the income of the Group fromsales of piped natural gas amounted to HK$1,469 million, representing a declineof 2% as compared to the corresponding period of last year. The decrease inpiped natural gas sales income was mainly due to the diminishing natural gassales prices.

In the first half of theyear, the Group introduced Sinopec Great Wall Gas Investment Co., Ltd. (“GreatWall Gas”), a wholly-owned subsidiary of China Petroleum & ChemicalCorporation, as a strategic investor. Upon the completion of the Subscription andthe Disposal, Great Wall Gas would hold approximately 29.99% of the totalnumber of shares then in issue of the Company, and then become the secondlargest shareholder of this listed company. Such introduction of a resource-basedstrategic investor alsomarks a fundamentally important milestone ofthe Group, which does not only secure the Group with stable gas resources andhigher bargaining power, but also achieves synergies between upstream anddownstream resources, thereby strengthening the Group’s competitive edge withinthe industry, and creating more potential opportunities for the developments andcooperation ahead, altogether favouring the sustainable growth of the Group.

Prospects

With the release of its “Gas 2020 Report” （《2020年天然氣報告》） in mid-year, the International Energy Agency remarkedthat China is returning to the track of embarking an exponential growth, with theannual increment of its natural gas demand being expected to go beyond 130billion cubic metres between 2019 and 2025. It is also expected to become the largest contributor tothe growth of global natural gas consumption. Looking ahead, withthe strong backing of the two cornerstone shareholders, namely Tianjin TEDAInvestment Holding Co., Ltd. (“TEDA Holding”) andGreat Wall Gas, Binhai Investment will integrate its resources and edges while placingemphasis not only on seizing every potential opportunity emerged on the market,but also on its layout of regional development throughout the country, in orderto strategically propel the leapfrog development of the Group. In the meantime,Binhai Investment will work towards the vision of lifting its operationmanagement to a more scaled and advanced level so as to generate exceptionalreturns for its shareholders, investors, government and users as anappreciation for their continuous support over the years.