Strategic Expansion to Tap Increasing Demand and Drive Future Growth;
Provides Sustainable Energy and Clean Technology to Complement Usage of Natural Gas;
Aspires to Become an Integrated Smart Energy Provider in China
HONG KONG – (ACN Newswire) – Changfeng Energy Inc. (TSXV: CFY) (“Changfeng” or the “Company”, together with its subsidiaries, the “Group”), an energy provider in the People’s Republic of China (the “PRC”), announces today its results for the nine months ended September 30, 2018 (“the Period”).
For the Period, the Group recorded revenue of RMB290.6 million (same period 2017: RMB266.3 million), up 9% period-on-period (“PoP”). Gross profit recorded was RMB119.6 million (same period 2017: RMB126.0 million). Profit from continuing operations was RMB40.0 million (same period 2017: RMB35.7 million), increased by 12% PoP. Basic earnings per share from continuing operations was RMB0.62 (same period 2017: RMB0.54).
In Guangdong Province, Changfeng completed construction of a 2.0-kilometer pipeline connecting the provincial natural gas trunk lines to the Gaoyao Combined Heat, Power and Cold Natural Gas Power Plant (the “Datang Gaoyao Plant”) owned by Guangdong Datang International Zhaoqing Heat & Power Co., Ltd. (“Guangdong Datang”). On November 14, 2018, Guangdong Datang began a successful trial operation to transport natural gas through the Changfeng pipeline to the Datang Gaoyao Plant. Changfeng is currently in negotiations with Guangdong Datang and Guangdong Grid on a definitive agreement to provide gas transmission service to the Datang Gaoyao Plant and expects to execute the definitive agreement in the near term.
The recent trial run of a liquefied natural gas (“LNG”) shipment from Canada to the PRC using ISO-containers was successfully completed. The LNG shipment arrived in Shanghai on 8 November 2018, and was sent onward to Hebei. Unlike the market price of pipeline gas, which is regulated by the PRC government, LNG prices are relatively deregulated and market-oriented. Accordingly, as management has observed that in the winter months, due to higher demand for natural gas required for heating in the PRC, the available supply of natural gas may be lower and trucked LNG prices may increase, there is an opportunity for the Company to increase its supply of LNG to customers at higher prices in the winter months. The trial shipment signifies a move to strategically position the Company to seize such opportunities and to tap the potential synergy of Sino-Canadian energy trading and the natural gas supply business.
Mr. Huajun Lin, Chairman, President and CEO of Changfeng, who has over 20 years of experience in the natural gas industry, said: “We are very pleased to see our pipeline in trial operation, the successful LNG shipment from Canada to the PRC and the signing of the agreement to jointly of the integrated district energy distribution project in the New Economic Development Zone of Meishan City, Sichuan Province, the PRC, a hub for manufacturers of drugs, health supplements, medical equipment, and other medical related supplies. With the PRC government pressing ahead with reforming the country’s energy structure, shifting away from a coal-based economy, we expect demand for natural gas as a clean energy source to remain strong. The Group is reaching another major milestone on the path of becoming an integrated smart energy provider in China with provision of sustainable energy and clean technology to complement the usage of natural gas.”
Business Review
This is the second year of Changfeng’s three-year plan to strategically shift its corporate focus to sustainable energy in combination with natural gas to realize its aspiration of becoming an integrated energy provider in the PRC.
Projects in Operation
Currently, Changfeng has seven projects in operation: two pipeline natural gas distribution projects, three LNG supply distribution projects, and two compressed natural gas (“CNG”) vehicle refueling stations. Changfeng has a 30-year exclusive concession right to distribute natural gas in Sanya City and supply natural gas to factories in Hebei and Hainan Province.
Projects under Development
Major projects under development include an integrated smart energy project (the “Haitang Bay Integrated Smart Energy Project”) which combines usage of multiple clean energy sources, including solar, hydro, electricity, and natural gas (CCHP/Co-Gen), to supply cooling, heating, as well as hot water to hotels, shopping centers, and households in the Haitang Bay area of Sanya City, Hainan Province. The Group has a 30-year concession right to build, own and operate four energy-processing stations in the Haitang Bay area of Sanya City, Hainan Province.
Prospects and Strategic Focus
The Chinese economy is moving away from coal dependency. To capitalize on opportunities the Company sees in the Chinese energy sector, Changfeng looks to integrated smart energy and clean technology to complement the usage of natural gas. Changfeng will continue to provide natural gas to its customers, which is a cleaner alternative to coal. Building on the successful trial shipment of LNG to Hebei in November this year, Changfeng will seek to broaden its LNG supply base outside of the PRC to meet increasing demand for natural gas.
For the rest of 2018, Changfeng will continue to implement its long-term growth strategy which involves the proposed Guangdong Grid pipeline gas project in Western Guangdong Province, development of the Haitang Bay Integrated Smart Energy Project with EDF Group in Sanya City, with commercial operation expected by early 2019, and commencing development of the newly acquired Meishan Project. In addition, the Group will continue to work on preparing its Hong Kong IPO and targeting a listing on The Stock Exchange of Hong Kong Limited in the first half of 2019.
Mr. Lin concluded: “Since its inception over 20 years ago, Changfeng has strived to provide natural gas, a cleaner alternative to coal, to customers. We believe smart energy is on a strong growth trend in China and is loaded with development potential and opportunities. On top of helping address the strong demand for natural gas in the region, we see our strategic development efforts opening to us opportunities in the China market at large. Changfeng will continue to adhere to its development strategies and draw from its abundant experience in operating its advanced business model to provide cleaner energy, as well as generate the highest returns for shareholders.”
About Changfeng Energy Inc. (Toronto listed symbol: TSXV:CFY)
Changfeng Energy Inc. is a Canadian public company currently traded on the Toronto Venture Exchange (“TSX-V”) under the stock symbol “CFY”. It is an integrated energy provider and natural gas distribution company (or natural gas utility) in the PRC. Changfeng strives to combine leading clean energy technology with natural gas usage to provide sustainable energy to its customer base in the PRC. In 2009, Changfeng was recognized as being one of China’s the Top Ten Most Influential Brands in the Natural Gas Industry. For details of Changfeng, please visit: www.changfengenergy.com.