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

August 10, 2009 | About:

China Natural Gas Inc. (CHNG) filed Quarterly Report for the period ended 2009-06-30.

CHINA NATURAL GAS INC. is the first China-based natural gas retailing company publicly traded in the U.S. It currently owns and operates a network of CNG retail filling stations as well as a 120 kilometer long compressed natural gas pipeline in Xi\'an China. Xi\'an is a fast growing Chinese city supported by a population of approximately eight million and is the `gateway` to the broad Western regions of China. CHNG has three business segments: retail natural gas at company-owned filling stations end user delivery of natural gas services to residential commercial and industrial customers and conversion of gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles. China Natural Gas Inc. has a market cap of $152.86 million; its shares were traded at around $10.4699 with a P/E ratio of 7.17 and P/S ratio of 2.26.

Highlight of Business Operations:

We had total revenues of $20,742,520 and $16,890,486 for the three months ended June 30, 2009 and 2008 respectively and revenues of $39,270,186 and $30,916,160 for the six months ended June 30, 2009 and 2008, respectively. We had net income of $3,862,756 and $3,512,892 for the three months ended June 30, 2009 and 2008 respectively and net income of $8,064,379 and $6,321,463 for the six months ended June 30, 2009 and 2008 respectively.

Natural Gas from Fueling Stations. Natural gas revenue from our fueling stations increased by 14.2%, or $1,869,984, to $15,051,319 during the three months ended June 30, 2009, from $13,181,335 during the three months ended June 30, 2008, and contributed to 72.6% 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 newly added fueling stations during the 2nd and 3rd quarters of 2008. During the three months ended June 30, 2009, we sold compressed natural gas of 41,152,513 cubic meters, compared to 37, 304,556 cubic meters during the three months ended June 30, 2008 through our fueling stations. In terms of average station sales value and volume, in the three months ended June 30, 2009, we sold approximately $430,038 and 1,175,786 cubic meters of compressed natural gas per station, compared to approximately $434,597 and 1,229,956 cubic meters in the three months ended June 30, 2008. 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 was relatively stable at $0.37 (RMB 2.5).

Gasoline. Revenue from gasoline sales increased by 42.2%, or $484,919, to $1,633,016 during the three months ended June 30, 2009, from $1,148,097 during the three months ended June 30, 2008, and contributed 7.9% to our total revenue. The gasoline revenue increase was due to the sales volume increased 58% from 1,707,160 liters to 2,707,531 liters, offset by 11% decrease of unit sales price from $0.7 (RMB 4.63) per liter in the three months ended June 30, 2008 to $0.6 (RMB 4.11) per liter in the three months ended June 30, 2009, affected by the decrease of international oil price. The increased sales volumes was due to our two stations, Shihua and Lantian, were in operation during the three months ended June 30, 2009, but were inactive in 2008.

Auto Conversion Services. Revenue from our auto conversion division increased by 5.0%, or $33,538, to $698,661 during the three months ended June 30, 2009, from $665,123 during the three months ended June 30, 2008, and contributed 3.4% to our total revenue.

Gasolin.: Cost of our gasoline revenue increased by 45.0%, to $1,529,752 during the three months ended June 30, 2009, from $1,054,978 for the three months ended June 30, 2008. The increase of cost of gasoline revenue was due to the increase in sales volume, offset by the effect of the decrease of average unit cost from $0.63 (RMB 4.29) per liter during the three months ended June 30, 2008 to $0.56 (RMB 3.85) per liter during the three months ended June 30, 2009 due to the decreasing price of the international fuel market.

Auto Conversion Services. Cost of our auto conversion revenue decreased by 2.7%, or $11,362, to $404,944 during the three months ended June 30, 2009, as compared to $416,306 during the three months ended June 30, 2008.

Read the The complete Report

Rating: 3.0/5 (8 votes)

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