Core Viewpoint - The global shipping industry is focusing on achieving net-zero carbon emissions by 2050, with green methanol emerging as a key fuel choice for decarbonization efforts [1][3]. Group 1: Green Methanol Production - Green methanol is produced from renewable resources such as biomass and urban waste, significantly reducing greenhouse gas emissions compared to traditional fossil fuels [3]. - The production facility of the company in Ordos, Inner Mongolia, has received a carbon footprint verification statement from TüV Süd, making it the first green methanol project to achieve this certification [2][3]. Group 2: Certification and Market Position - The certification helps the company better understand its greenhouse gas emission sources, amounts, and potential risks, allowing for the discovery of more cost-effective emission reduction solutions [5]. - The company has also achieved dual international certifications ISCC EU and ISCC PLUS, reinforcing its position as a leading green methanol producer in Asia [5]. Group 3: Industry Impact and Future Plans - TüV Süd highlighted that the company's green methanol production process meets international carbon reduction standards and has significant low-carbon benefits, setting a benchmark for green methanol development in China and Asia [5]. - The company aims to continue its commitment to green development and deepen cooperation with international organizations like TüV Süd to promote low-carbon transformation in the industry [5].

Core Insights - The TERA-Award has achieved record participation with 785 submissions from 76 countries, highlighting a global push for climate tech solutions [1][2][3] - The competition focuses on six categories, with Renewable Energy being the most prominent, showcasing innovations in green fuels, hydrogen technology, smart energy systems, and sustainable infrastructure [2][3] - The TERA-Award serves as a global platform for energy innovation, with significant contributions from the US (12.5%), UK (6.2%), India (8.7%), China (18.1%), and Hong Kong (5.5%) [3] Industry Impact - The TERA-Award not only offers a US$1 million grand prize but also has a history of transforming innovative ideas into commercial products, as seen with previous participants like i2Cool and Luquos Energy [4][5] - The competition is backed by industry leaders such as Towngas, providing participants with access to resources that can be more valuable than monetary awards [7] - The judging phase will be led by Professor Cui Yi, focusing on technological innovation, commercial viability, scalability, and potential global impact [6] Future Outlook - Winners will be announced in July 2025, with expectations that the competition will continue to discover promising energy startups to combat the climate crisis [11]

Financial Performance - The group's revenue for 2024 was HKD 55,473 million, a decrease of 3% compared to HKD 56,971 million in 2023[20] - Shareholders' profit attributable for 2024 was HKD 5,712 million, down 6% from HKD 6,070 million in 2023[20] - The diluted earnings per share for 2024 was HKD 0.301, a decrease of 5% from HKD 0.316 in 2023[20] - The group's total revenue for the year was HKD 55.473 billion, with core business profit increasing by 5% to HKD 5.955 billion[35] - The group's attributable profit, before property revaluation, was HKD 5.668 billion, up 2%[35] - The group achieved a basic earnings per share of HKD 0.306, with a proposed final dividend of HKD 0.23 per share, totaling HKD 0.35 per share for the year[36] Customer Growth - The number of customers in Hong Kong as of December 31, 2024, was 2,037 thousand, an increase of 1% from 2,020 thousand in 2023[20] - The number of customers in mainland cities as of December 31, 2024, was 42,491 thousand, reflecting a growth of 6% from 40,186 thousand in 2023[20] - The group reported a total of 12,825 shareholders as of December 31, 2024, down 3% from 13,177 in 2023[20] Gas Sales and Operations - The group maintained a consistent gas sales volume in Hong Kong at 27,159 TJ, slightly up from 27,125 TJ in 2023[20] - In Hong Kong, gas sales volume remained stable with a slight increase of 0.1%, driven by more local restaurants switching to gas stoves[37] - Industrial gas sales volume increased by 2% overall, with hotel-related gas sales rising by 6.6%, while residential gas sales slightly decreased by 1.4%, resulting in an overall gas sales volume increase of 0.1%[88] - The group achieved a gas supply reliability rate of 99.992%, with 100% of customers notified three days in advance of any supply interruptions[97] Renewable Energy Initiatives - The group operates over 1,000 renewable energy projects across 24 provincial cities in mainland China, with distributed photovoltaic capacity reaching 2.3 GW and generating 1.83 billion kWh[41] - The renewable energy business achieved a net profit of HKD 479 million in 2024, representing a fivefold year-on-year growth, with over 1,000 renewable energy projects across 24 provinces[137] - The group has developed 128 zero-carbon smart parks across various regions, contributing to carbon neutrality goals and generating positive economic benefits[143] - The group is committed to gradually introducing zero-carbon fuels to replace fossil fuels, aiming for carbon neutrality in the long term[98] Strategic Development and Investments - The group aims to develop into a leading green smart energy enterprise, focusing on sustainable energy solutions[7] - The group plans to invest RMB 10 billion to develop a green methanol production facility with an annual capacity of 1 million tons, with construction expected to start in mid-2025[44] - The group has signed distribution cooperation agreements for green methanol with multiple companies, enhancing its supply chain capabilities[152][153] - The group has established a long-term agreement for the import of 1.5 million tons of liquefied natural gas annually through its Hong Kong international trade platform, enhancing resource security and flexibility[133] Technological Innovation - The company aims to strengthen its digital systems, including enhancing the capabilities of its AIoT platform to fully leverage data value[51] - The company will continue to embrace technological innovation, hosting the TERA-Award Smart Energy Innovation Competition to discover more zero-carbon projects and accelerate the commercialization of research outcomes[51] - The "Kwang Wah Chip" developed in collaboration with Sai Fang Technology has achieved a cumulative shipment of over 3.85 million units by the end of 2024, expanding its application from smart gas meters to various scenarios including smart kitchens and safety homes[174] Corporate Governance and Leadership - The company is committed to corporate governance and transparency, as evidenced by its diverse and experienced board composition[62] - The company has a diverse board with members holding various prestigious honors and extensive industry experience[63] - The board includes independent directors with significant contributions to the financial and educational sectors[64] - The company appointed Professor Huang as an independent non-executive director effective June 2024, bringing extensive experience from major financial institutions[67] Community Engagement and Social Responsibility - The group has provided over 1 million service hours and benefited over 8.5 million individuals through its "Gas Warmth Volunteer Team" since its establishment in 1999[194] - The group continues to support the government's "Co-Creating Bright 'Teen' Program" and has participated in the "Corporate Internship Program" for four consecutive years[195] - The "Gas Discount Program" has benefited over 40,000 households in Hong Kong, with a total amount exceeding HKD 36 million[178] Environmental and Sustainability Efforts - The company has achieved a 9% reduction in greenhouse gas emissions compared to the 2020 baseline[179] - The group actively promotes clean energy applications, including green methanol, hydrogen energy, and sustainable aviation fuel, in response to national carbon neutrality goals[187] - The group has successfully issued a green asset-backed securities plan worth 515 million RMB, receiving 2.5 times subscription, marking a significant milestone in the market[143] Future Outlook - The company anticipates stable growth in gas sales in Hong Kong, driven by the recovery of the tourism industry and the "High Talent Pass" program, which is expected to bring in tens of thousands of people[49] - The group plans to provide 500,000 tons of green methanol annually by 2028, with production capacity expected to increase to 150,000 tons by the end of 2025[151] - The new production facility in Johor, Malaysia is expected to commence operations in the second half of 2025, adding an annual capacity of 300,000 tons[150]

Summary of the Conference Call Company Overview - The conference call is held by Hong Kong Central Media in 2024, indicating the company's ongoing operations and engagement with analysts and investors [1]. Key Points and Arguments - The conference is conducted in both Mandarin and English, reflecting the company's commitment to inclusivity and accessibility for a diverse audience [1]. - The presence of management staff, specifically Executive Director Mr. Wang Wei-yi, suggests a structured approach to communication and transparency with stakeholders [1]. Other Important Content - The reminder for attendees to silence their phones indicates a professional environment aimed at minimizing distractions during the call [1].

香港中华煤气作为具国际可持续发展与碳认证(ISCC)绿色甲醇的领先供应商，公布将向新加坡船用燃料供应商Golden Island Pte Ltd(Golden Island)供应香港中华煤气的绿色甲醇，应用于其新加坡燃料加注业务。这标志着香港中华煤气拓展亚洲地区 绿色甲醇供应网络的重要一步。 根据有关供应协议，香港中华煤气将向Golden Island最近于新加坡注册的燃料供应船"Golden Antares号"，供应获ISCC EU及 ISCC PLUS双重国际认证的绿色甲醇。该船预计于4月下旬由中国船厂交付，在装载由香港中华煤气生产的绿色甲醇后，将 于2025年7月返回新加坡并展开绿色甲醇燃料加注试运行。 "Golden Antares号"配备质量流量计，可运载多达6,500吨甲醇。该艘货船将运载一批绿色甲醇到新加坡一个码头，之后按新 加坡最新颁布的《甲醇燃料加注技术参考标准129》(TR 129)进行加注。TR 129为如何安全、高效地使用甲醇这种船用替代 燃料，建立了完备的参考框架。 对于是次采购交易协议，香港中华煤气营运总裁—绿色燃料及化工岑文辉表示："我们高兴看到公司的绿色甲醇业务在亚洲 区市场取 ...

Summary of Hong Kong and China Gas Company Conference Call Company Overview - **Company**: Hong Kong and China Gas Company (HKCG) - **Industry**: Utility and Renewable Energy Key Points 2024 Operational Performance - HKCG's operational performance in 2024 was stable, with utility and development businesses as the two main segments [3] - Gas sales in Hong Kong remained flat, with a slight increase of 0.1%, totaling approximately 780 million cubic meters [3][4] - User base in Hong Kong increased by 20,000 to reach 2.04 million [3] - Adjustments in standard charges included a 4.8% increase in standard fees and a 5.3% increase in maintenance fees [3][4] - In mainland China, gas sales grew by 5% to 36.4 billion cubic meters, with an increase in users to 42.49 million [3][4] Renewable Energy Developments - Cumulative photovoltaic grid-connected capacity reached 22.3 GW by the end of 2024, with an addition of 500 MW during the year [3][4] - Electricity generation increased nearly 100% year-on-year to 1.83 billion kWh, and electricity trading volume surged by 200% to 8.4 billion kWh [3][4] - Sales of photovoltaic components included 4,000 units in Hong Kong and 670,000 units in mainland China [3][4] Financial Performance - Total core operating profit for 2024 was HKD 5.95 billion, a year-on-year increase of 5% [3][4] - Net profit attributable to shareholders was HKD 5.7 billion, with basic earnings per share of HKD 30.6 [3][4] - Profit from the renewable energy segment surged by 544% to HKD 320 million, while gas business profit rose by 8% to HKD 470 million [3][4] 2025 Outlook - For 2025, HKCG expects gas sales in Hong Kong to remain stable, with a projected increase of 4%-5% in mainland gas sales to 38 billion cubic meters [5] - Anticipated user growth of 170,000 in mainland China and an increase in gas margin by two cents [5] - Renewable energy segment expected to add 600 MW of grid-connected capacity, with photovoltaic generation projected to grow by 40% to 2.58 billion kWh [5] - Eco Services product output is expected to maintain at 300,000 tons, with green methanol production capacity increasing from 120,000 tons to 150,000 tons [5] Market Position and Competition - HKCG operates in a market with limited competition due to its extensive pipeline network of 3,700 km, covering 15% of the population [10] - The company faces competition primarily from electricity providers, but gas remains a preferred choice for many households [10] Historical Context - HKCG was established in 1862 and has a long history of providing gas services in Hong Kong and mainland China [6][9] - The company has adapted to market changes and has been involved in the development of safety standards and regulations in the gas industry [9] Regulatory Environment - HKCG's pricing adjustments occur every two years, allowing for flexibility compared to electricity providers who require government approval [15] - The company has managed to keep gas prices stable despite rising global energy costs due to long-term supply contracts [15] Future Growth Areas - Future growth is expected to come from commercial and industrial sectors, particularly in renewable energy applications [11] - The company is also exploring opportunities in sustainable aviation fuel (SAF) production, with current annual output at 300,000 tons and plans to increase capacity to 600,000 tons [19] Strategic Initiatives - HKCG is undergoing a restructuring of its B2C business to better align with market demands and enhance operational efficiency [17][18] - The company plans to introduce private equity to strengthen its new business unit and improve sales capabilities [18] Cash Flow and Investment - HKCG aims to achieve cash flow coverage for investments and dividends within the next four to five years through strategic partnerships and asset management [22] This summary encapsulates the key insights from the conference call, highlighting the operational performance, financial outlook, market position, and strategic initiatives of Hong Kong and China Gas Company.

Financial Performance - The group's total revenue for 2024 was HKD 55.473 billion, a decrease of 2.6% from HKD 56.971 billion in 2023[7] - Core profit increased by 5% to HKD 5.955 billion, compared to HKD 5.664 billion in the previous year[7] - The group's attributable profit before property revaluation was HKD 5.668 billion, up 2% from HKD 5.570 billion[12] - Profit before tax for the year was HKD 8,490.4 million, a decline of 7.5% compared to HKD 9,174.4 million in 2023[49] - Net profit for the year was HKD 6,761.2 million, down 5.7% from HKD 7,171.3 million in the prior year[51] - Total comprehensive income for the year was HKD 4,571.7 million, a decrease of 16.6% from HKD 5,481.9 million in 2023[51] - Basic earnings per share decreased to HKD 30.6, down from HKD 32.5 in 2023, representing a decline of 5.8%[49] - Adjusted EBITDA for 2024 was HKD 11,823.8 million, compared to HKD 11,914.8 million in 2023, indicating a decrease of 0.8%[79] - The basic earnings attributable to shareholders for 2024 were HKD 5,711.5 million, down from HKD 6,070.1 million in 2023, reflecting a decrease of 5.9%[91] Revenue Breakdown - Gas sales revenue, including fuel adjustment fees, for 2024 was HKD 41,525.4 million, down from HKD 42,518.4 million in 2023, reflecting a decrease of about 2.3%[75] - The group reported a total of HKD 1,863.5 million in renewable energy business revenue for 2024, significantly up from HKD 1,056.3 million in 2023, indicating an increase of approximately 76.2%[75] - The revenue from the gas, water, and renewable energy segment in Hong Kong for 2024 was HKD 10,688.0 million, up from HKD 10,402.8 million in 2023, an increase of 2.8%[79] - The revenue from the green energy segment in 2024 was HKD 730.1 million, a decrease from HKD 2,447.3 million in 2023, indicating a significant decline of 70.1%[79] - The total revenue from other sales in 2024 was HKD 3,999.7 million, compared to HKD 4,088.9 million in 2023, reflecting a decline of approximately 2.2%[75] Operating Expenses and Liabilities - Total operating expenses decreased to HKD 47,294.9 million, down 3.2% from HKD 48,833.8 million in the previous year[49] - The total current liabilities reported for December 31, 2023, were HKD 39,424.5 million, which increased to HKD 41,376.8 million after reclassification adjustments[68] - The total non-current liabilities reported for December 31, 2023, were HKD 50,817.2 million, which decreased to HKD 48,864.9 million after reclassification adjustments[68] - The group's total liabilities decreased to HKD 89,878.1 million from HKD 90,241.7 million in the previous year[55] Assets and Equity - Total assets as of December 31, 2024, amounted to HKD 158,268.6 million, a decrease from HKD 161,977.6 million in 2023, reflecting a reduction of 2.1%[82] - Non-current assets totaled HKD 133,928.0 million, a slight decrease from HKD 135,343.8 million in the previous year[53] - The company's total equity as of December 31, 2024, was HKD 68,333.5 million, down from HKD 71,018.7 million in 2023[55] Dividends and Shareholder Information - The board proposed a final dividend of HKD 0.23 per share, totaling HKD 0.35 per share for the year including the interim dividend[12] - The company declared an interim dividend of HKD 0.12 per share and a proposed final dividend of HKD 0.23 per share, maintaining the same levels as in 2023[90] - The annual general meeting is scheduled for June 4, 2025, with further details to be published around April 24, 2025[110] Renewable Energy Initiatives - The renewable energy business profit increased fivefold, significantly contributing to the core profit growth of 34.5% to HKD 1.601 billion[3] - The group operates over 1,000 renewable energy projects across 24 provincial cities in mainland China, with distributed photovoltaic business grid-connected capacity reaching 2.3 GW and generating 1.83 billion kWh[17] - The green methanol production plant in Inner Mongolia is expected to increase annual capacity to 150,000 tons by the end of 2025, with plans to expand to 300,000 tons by 2028[20] - The green hydrogen project in Tseung Kwan O is the first of its kind in Hong Kong, utilizing landfill gas to produce green hydrogen[20] Strategic Developments - The group plans to launch a sustainable aviation fuel (SAF) plant in Malaysia by Q3 2025, with an annual capacity of 300,000 tons[5] - The group is actively participating in the development of hydrogen energy applications as outlined by the Hong Kong government[5] - A cooperation framework agreement was signed with Fuan Energy Group to jointly establish an investment platform, planning to invest CNY 10 billion to develop a green methanol production capacity of 1 million tons[20] Customer and Market Insights - The number of residential gas customers in Hong Kong reached 4.4 million, contributing to strong growth potential[3] - In Hong Kong, gas sales volume slightly decreased by 1.4% due to changes in consumer behavior, while hotel-related gas sales increased by 6.6% driven by tourism recovery[33] - The group expects stable growth in gas sales due to the recovery of the tourism industry and population influx from initiatives like "Talent Pass"[24]

Investment Rating - The report initiates coverage with a "Buy" rating for Hong Kong and China Gas (00003) [1] Core Views - The company is a leading national city gas enterprise with a stable gas sales structure and high-quality city gas projects [1] - The Hong Kong business has stable profitability with potential for further price increases [1] - The mainland business is experiencing steady growth in gas sales volume and improving gross margins [1] - The company is diversifying into renewable energy and sustainable energy sectors, which are expected to drive future growth [1] Business Overview Hong Kong Business - The Hong Kong gas market is mature with stable user growth, covering 75% of the market [1] - Residential and commercial gas sales dominate, with residential gas sales accounting for 54% and commercial for 40% in 2023 [1] - The company has strong pricing autonomy in Hong Kong, with recent price adjustments in August 2024 [1] - Gas sales volume in Hong Kong is expected to increase by 7% by the end of 2028 compared to 2023 [1] Mainland Business - The company operates 321 city gas projects across 29 provinces in mainland China, with a user base exceeding 40 million [1] - Gas sales volume in mainland China grew at a CAGR of 8.56% from 2018 to 2023 [1] - Industrial gas sales account for 45% of total gas sales, followed by residential (22%) and commercial (14%) [1] - The gross margin for gas sales in mainland China improved to 0.47 yuan/m³ in 1H24, up by 0.05 yuan/m³ year-on-year [1] Diversified Business - The company is expanding into renewable energy, including distributed photovoltaic and energy-carbon services [1] - In 1H24, the renewable energy business contributed 1.9 billion HKD in profit, with Hong Kong and mainland businesses contributing 1.4 billion HKD and 0.5 billion HKD respectively [1] - The company is also exploring sustainable aviation fuel, green methanol, and hydrogenated vegetable oil production [1] Financial Projections - The report forecasts net profit attributable to shareholders of 6.207 billion HKD, 6.713 billion HKD, and 7.094 billion HKD for 2024, 2025, and 2026 respectively [1] - EPS is projected to be 0.33 HKD, 0.36 HKD, and 0.38 HKD for the same periods [1] - The target price is set at 7.77 HKD, representing a 31.7% upside from the current price [1] Valuation - The company's valuation is supported by its stable dividend policy, with a long-standing dividend of 0.35 HKD per share annually [1] - The DCF valuation model suggests significant upside potential as the company's cash flow grows and the city gas industry stabilizes [1]

Summary of the Conference Call Company and Industry - The conference call pertains to Hong Kong and Mainland China gas utility industry, specifically focusing on Hong Kong and China Gas Company Limited (HKCG) and its subsidiaries. Key Points and Arguments 1. Performance Overview - The company reported a core profit of HKD 75 billion, a 5% increase from 2023, excluding financial expenses [6][7][8] - The renewable energy segment showed significant growth, with HKD 4.8 billion in revenue for 2024, up from HKD 780 million in 2023, indicating a fivefold increase [7][8] 2. Renewable Energy Focus - The renewable energy sector is highlighted as a transformative period for the company, with a strong emphasis on solar energy and carbon trading [2][3] - The company has over 440 million customers, which is expected to support future growth in renewable energy services [8] 3. Pricing Adjustments - In Hong Kong, gas prices were adjusted on August 1, with no significant opposition from the market, reflecting positive customer sentiment [3][4] 4. Green Fuel and Chemical Initiatives - The company is preparing for increased demand for green methanol, with expectations of significant market growth by 2025 [4][10] - The establishment of partnerships to enhance renewable energy projects has attracted investor interest, particularly in ESG (Environmental, Social, and Governance) initiatives [4][5] 5. Digital Transformation - The company is investing in digitalization and AI technologies to improve operational efficiency and reduce costs [5][6] 6. Urban Gas Management - The company is working on consolidating urban gas management in various cities, aiming to streamline operations and improve service delivery [6][7] 7. LNG Supply Chain - The company has secured contracts for 1.5 million tons of liquefied natural gas (LNG) to ensure a stable supply, especially during winter months [13][14] 8. Future Growth Projections - The company anticipates a 17% increase in total gas supply by 2024, with long-term growth projections of 5% or more annually in urban gas demand [15][16] - The renewable energy sector is expected to continue expanding, with plans for additional investments in solar and wind energy [16][17] 9. Capital Expenditure Plans - The projected capital expenditure (CAPEX) for 2024 is approximately HKD 60 billion, with expectations for continued investment in renewable energy and infrastructure [30][32] 10. Market Challenges - The company acknowledges challenges in the domestic market, including competition and regulatory changes, but remains optimistic about future growth [9][10] 11. Customer Base Expansion - The company aims to convert its extensive customer base into active clients for new services, including smart energy solutions and insurance [17][18] 12. Strategic Partnerships - Collaborations with major partners, including those in the aviation sector, are being pursued to enhance the company's green fuel offerings [22][23] 13. Environmental Policies - The company is aligning its strategies with government policies aimed at increasing the use of sustainable fuels, particularly in aviation and transportation [18][19] 14. Financial Health - The company plans to reduce its debt by HKD 10 billion by 2028, maintaining a stable loan level of approximately HKD 57 billion [37][38] 15. Conclusion - The management expressed confidence in achieving its financial targets and expanding its market presence, particularly in renewable energy and urban gas management [39] This summary encapsulates the key discussions and insights from the conference call, highlighting the company's strategic direction and performance outlook in the gas utility sector.

Investment Rating - The report maintains an "Outperform" rating for the company with a current price of HK$6.20 and a target price of HK$6.66 [3][6]. Core Insights - The company has successfully enhanced operational efficiency through business restructuring and cost-saving measures, achieving a total revenue of HKD 27.496 billion in 2024H1, a decrease of 5.76% year-on-year, while core profit increased by 2.21% to HKD 3.186 billion [8][12]. - The company's strategic focus on green energy is showing promise, with significant growth in its renewable energy initiatives, including a 51% year-on-year increase in the production of SAF and HVO [11][12]. Summary by Sections Financial Performance - The company reported a total revenue of HKD 56.971 billion for Dec-23A, with projections of HKD 59.777 billion for Dec-24E, HKD 62.446 billion for Dec-25E, and HKD 64.947 billion for Dec-26E [4][12]. - The attributable net profit for Dec-23A was HKD 6.070 billion, with estimates of HKD 6.467 billion for Dec-24E, HKD 6.690 billion for Dec-25E, and HKD 6.897 billion for Dec-26E [4][12]. Business Segments - The Hong Kong gas sales volume remained flat year-on-year at 14,932 million megajoules, while the mainland urban gas business saw a 6.76% increase in sales volume [5][10]. - The company is actively developing hydrogen energy and green methanol businesses, with a green hydrogen pilot project expected to produce 330 kilograms of hydrogen daily by 2025 [5][9]. Growth Opportunities - The mainland business has shown significant growth, with urban gas sales volume reaching 18.63 billion cubic meters, a year-on-year increase of 6.76% [10]. - The company is focusing on high-quality industrial customers and energy management for public institutions, achieving a 3.13% increase in industrial gas sales and a 9.29% increase in commercial gas sales [10]. Green Energy Initiatives - The company's EcoCeres produced 176,000 tons of SAF and HVO in the first half of the year, with future green methanol production capacity expected to reach 120,000 tons annually [11]. - The cumulative photovoltaic grid-connected scale reached 2.1GW, with power generation increasing by 1.4 times year-on-year to 6.8 billion kWh [11].