These were an encouraging set of half-year numbers from Green Dragon Gas (GDG), with revenues bolstered by increased gas sales and stable prices. Gross profits more than doubled to $11.9m (£7.6m), while an adjusted net loss of $1.56m compared favourably with a loss of $3.84m in the 2014 half year.
Because Green Dragon supplies its coal-bed methane through predictable long-term regional contracts, its pricing arrangements remain unaffected by recent Chinese market volatility, although the impact of Chinese yuan devaluation is difficult to quantify at this stage.
The cost base for China-focused Green Dragon is largely fixed, so the steady scale-up in production is feeding through into a substantial fall-away in unit costs. Green Dragon is also roughly half way along its development programme for the full year; another 14 wells planned for the second half are expected to drive production to an annualised exit rate of 12bn cubic feet (bcf) of gas - up from 10.15 bcf at the end of June. The key strategic goal for Green Dragon is the infrastructure developments being put in place by its partner CUCBM, which should substantially boost production capacity.
Prior to these results, Cantor Fitzgerald had predicted adjusted earnings of $3.1m (2¢ a share), against a loss of $37.5m in 2014, although these estimates are now under review.
| GREEN DRAGON GAS (GDG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 295p | MARKET VALUE: | £460m | |
| TOUCH: | 290-299p | 12-MONTH HIGH: | 549p | LOW: 286p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 472¢ | NET DEBT: | 11% | |
| Half-year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2014 | 15.5 | -69.2 | -50.4 | nil |
| 2015 | 16.8 | -1.6 | -1.0 | nil |
| % change | +8 | - | - | - |
Ex-div:- Payment:- £1 = $1.56 | ||||
