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Articles 

China Natural Gas Inc. Reports Operating Results (10-Q/A)

December 28, 2011 | About:

China Natural Gas Inc. (CHNG) filed Amended Quarterly Report for the period ended 2010-06-30.

China Natural Gas Inc. has a market cap of $41.42 million; its shares were traded at around $1.93 with a P/E ratio of 2.57 and P/S ratio of 0.46. China Natural Gas Inc. had an annual average earning growth of 15.5% over the past 5 years.

Highlight of Business Operations:

Natural Gas from Fueling Stations. Natural gas revenue from our fueling stations increased by 2.9% or $438,981 to $15,490,300 during the three months ended June 30, 2010, from $15,051,319 during the three months ended June 30, 2009, and contributed to 73.3% of our total revenue, which was the largest among our four major business lines. During the three months ended June 30, 2010, we sold 42,955,867 cubic meters of compressed natural gas, compared to 41,152,513 cubic meters during the three months ended June 30, 2009 through our fueling stations. In terms of average station sales value and volume, in the three months ended June 30, 2010, we sold approximately $387,257 and 1,073,897 cubic meters of compressed natural gas per station, compared to approximately $430,038 and 1,175,786 cubic meters in the three months ended June 30, 2009. Unit selling price remained stable at $0.34 (RMB2.34) and $0.42 (RMB2.83) net of VAT in Shaanxi and Henan province, respectively, or $0.37 (RMB 2.49) on an average basis.

Installation Services. Revenue from installation services decreased by 13.0%, or $348,611 to $ 2,341,553 during the three months ended June 30, 2010, from $2,690,164 during the three months ended June 30, 2009, and contributed 11.1% to our total revenue. Installation services to our top four customers contributed to 19.4%, 19.4%, 16.6% and 16.6% of our installation revenue for the three months ended June 30, 2010.

Natural Gas from Fueling Stations. Cost of revenue of our natural gas for our fueling stations increased by 11.7%, or $823,927, to $7,847,102 during the three months ended June 30, 2010, as compared to $7,023,175 during the three months ended June 30, 2009. Procurement price for natural gas remained stable at $0.16 (RMB 1.12) in Shaanxi since 2008. In Henan Province, the Company started to use coal bed methane (‘CBM ) as an alternative to regular natural gas to supply its fueling station in July 2008. The price for CBM is historically at a discount compared with natural gas, as a result the average cost of fueling station revenue in Henan decreased from $0.22 (RMB 1.55) to $0.14 (RMB 1.0) in July 2008. However, due to uncertainty in the production capacity of CBM as a byproduct of coal mines as well as the increasing demand of both CBM and natural gas, average cost of fueling station revenue in Henan increased to $0.19 (RMB 1.30) in June 2009 and $0.23 (RMB 1.58) in second quarter of 2010. The cost, however, is still significantly below the retail price at $0.42 (RMB 2.83) in Henan Province.

Natural Gas from Fueling Stations. Natural gas revenue from our fueling stations increased by 2.8%, or $810,667, to $30,119,910 during the six months ended June 30, 2010, from $ 29,309,243 during the six months ended June 30, 2009, and contributed to 74.4% of our total revenue, which was the largest among our four major business lines. The increase of natural gas revenue was mainly due to the increase of sales volume generated from the newly added fueling stations since the third quarter of 2009. During the six months ended June 30, 2009, we sold compressed natural gas of 80,446,633 cubic meters, compared to 83,548,324 cubic meters during the six months ended June 30, 2010 through our fueling stations. In terms of average station sales value and volume, in the six months ended June 30, 2009, we sold approximately $837,407 and 2,298,475 cubic meters of compressed natural gas per station, compared to approximately $792,629 and 2,198,640 cubic meters in the six months ended June 30, 2010. The reason for the decline in per station sales was due to the construction of main subway lines in Xi'an, which caused certain bus routes to deviate from our stations. Unit selling price remained stable at $0.34 (RMB2.34) and $0.42 (RMB2.83) net of VAT in Shaanxi and Henan province, respectively, or $0.37 (RMB 2.49) on an average basis.

Installation Services. Revenue from installation services decreased by 5.5%, or $254,716, to $4,349,327 during the six months ended June 30, 2010, from $4,604,043 during the six months ended June 30, 2009, and contributed 10.7% to our total revenue. Installation services to our top four customers contributed to 13.0%, 12.2%, 10.4% and 10.4% of our installation revenue for the six months ended June 30, 2010.

Read the The complete Report

About the author:

10qk
Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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