Binhai Investment (02886) Gas prices expect to fall in 2H, drive financial performance for the year September 13, 2023 218

PSR Recommendation: BUY Status: Maintained
Target Price: HKD2.20

Binhai Investment Company Limited (Binhai) is principally engaged in the sales of piped
natural gas, construction and gas pipeline installation service and gas passing through
service. The natural gas business of Binhai Investment and its subsidiaries is distributed in
seven provinces and two cities across the country, with a total of 40 gas project companies.
At present, the largest shareholder of Binhai Investment is Tianjin TEDA Investment Holding
Company, holding 40.00% of Binhai’s shares, and the second largest shareholder is Sinopec
Great Wall Gas Investment Company, holding 29.99% of Binhai’s shares.
Suffer from rising purchase cost of natural gas in 2022, 1H margins under pressure
In FY2022, total revenue of Binhai amounted to HK$6102 million (FY2021: HK$4843 million),
representing an increase of 26.0% YoY. Profit attributable to equity owners of the Company
was HK$326 million (FY2021: HK$400 million), representing a decrease of 18.5% YoY. Profit
attributable to equity owners of the company excluding the net foreign exchange loss
recognized (FY2022: net exchange loss of HK$84 million) in profit or loss amounted to
HK$410 million, representing an increase of 9% YoY. The number of regular customers from
the construction and installation of gas engineering works of the company increased by 106
thousand, down by 35% YoY, and the aggregate number of customers amounted to 2299
thousand. The recorded sales volume of piped natural gas was 2.03 billion cubic metres, up
by 3% YoY, among which the sales volume of pipeline gas amounted for 1.44 billion cubic
metres, up by 15% YoY, and achieved 0.59 billion cubic metres of natural gas pipeline
transmission for the year, down by 17% YoY. Gross profit was HK$727 million (FY2021:
HK$855 million) and the gross profit margin was 11.9% (FY2021: 17.7%). The decrease in
gross profit margin was mainly due to the increase in purchase cost of natural gas.

About the author

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Eric Li
Analyst
Research

李浩然先生(Eric Li) 高級分析師 現任現為輝立証券持牌高級分析師,曾任職股票基金、家族辦公室及證券公司等,擁有多年的證券研究部門從業及投資經驗,並先後於香港最暢銷的財經媒體撰寫投資專欄。畢業於香港理工大學電子計算系。 Eric is currently a licensed research analyst at Phillip Securities. Prior to joining Phillip Securities, he has years of equity research and investment experiences in asset management company, family office and securities company. Meanwhile, he has written investment columns in Hong Kong`s best-selling financial media for years. He holds Bachelor of Arts in Computing from The Hong Kong Polytechnic University.

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