Half-year results from Green Dragon Gas point to steady operational progress within the group's upstream segment, although the temporary closure of a client's power facility put a dent in first-half sales. Admittedly, Green Dragon's share price has slumped since peaking at a high of $15.25 early last year, but we believe that it will recover from current depressed levels, as the coal bed methane specialist begins to recoup ever greater returns from the considerable capital expenditure that has gone into its GSS Production Block.
In the latest trading period, gas production rose by 31 per cent to 832m cubic feet, although sales at the Beijing Huayou joint venture slipped by 4 per cent due to the aforementioned closure. The group did manage to increase volume gas sales through its retail stations by 58 per cent, although a corresponding 12 per cent rise in retail revenues point to weakening gas prices. Although prices across markets in China vary, Beijing's energy mandarins have been cutting wholesale energy prices throughout this year.
However, based on a threefold increase in upstream gas sales in the second half, analysts at Macquarie Equities expect net earnings to turn positive in the second half and forecast full-year EPS of 9¢, subject to review post results.
| GREEN DRAGON GAS (GDG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 425¢ | MARKET VALUE: | $580m | |
| TOUCH: | 410-440¢ | 12-MONTH HIGH: | 1,050¢ | LOW: 370¢ |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 478¢ | NET DEBT: | 2% | |
| Half-year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 36.2 | -13.0 | -10.5 | nil |
| 2012 | 35.7 | -10.0 | -8.0 | nil |
| % change | -1 | - | - | - |
£1=$1.58 | ||||
