Green Dragon Gas (GDG) saw gross profits halve in the six months to the end of June, as realised prices for coal-bed methane fell by 20 per cent during the period. An unfavourable renminbi/dollar exchange rate didn't help, while half-year earnings moved into negative territory on the back of a $6.4m (£4.9m) net financing charge.
The financial performance of Green Dragon, which has interests in two producing gas blocks in China and five ongoing developments, will always be bound up with domestic energy prices, but profitability remains as elusive as ever. A Chinese proverb enjoins us to "make gradual progress a step at a time", but frustration must be building among minority holders, particularly as the company was within a whisker of break-even in the 2014 full year. Still, with a retained deficit of $142m in the profit and loss reserve, Green Dragon won't be paying taxes for a while if it does eventually move into the black.
The good news is that the company's Baotian-Qingshan coal-bed methane block recently progressed from an exploration block to development stage. Green Dragon also continues to upgrade its pipeline infrastructure, with a view to increasing the volume of gas for sale, although gross sales were flat on the 2015 half-year.
Peel Hunt gives a core net asset value of 363p a share.
| GREEN DRAGON GAS (GDG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 224p | MARKET VALUE: | £350m | |
| TOUCH: | 220p-240p | 12-MONTH HIGH: | 300p | LOW: 200p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 434¢ | NET DEBT: | 18% | |
| Half-year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2015 | 16.8 | -1.6 | -0.9 | nil |
| 2016 | 12.1 | -4.7 | -2.9 | nil |
| % change | -28 | - | - | - |
Ex-div: - Payment: - £1= $1.30 *Includes intangible assets of $1.03bn, or 662¢ a share | ||||
