Core Insights - The TERA-Award has achieved record participation with 785 submissions from 76 countries, highlighting a global push for climate tech solutions [1][2][3] - The competition focuses on six categories, with Renewable Energy being the most prominent, showcasing innovations in green fuels, hydrogen technology, smart energy systems, and sustainable infrastructure [2][3] - The TERA-Award serves as a global platform for energy innovation, with significant contributions from the US (12.5%), UK (6.2%), India (8.7%), China (18.1%), and Hong Kong (5.5%) [3] Industry Impact - The TERA-Award not only offers a US$1 million grand prize but also has a history of transforming innovative ideas into commercial products, as seen with previous participants like i2Cool and Luquos Energy [4][5] - The competition is backed by industry leaders such as Towngas, providing participants with access to resources that can be more valuable than monetary awards [7] - The judging phase will be led by Professor Cui Yi, focusing on technological innovation, commercial viability, scalability, and potential global impact [6] Future Outlook - Winners will be announced in July 2025, with expectations that the competition will continue to discover promising energy startups to combat the climate crisis [11]

香港中華煤氣有限公司 （股份代號：3） 邁向 更綠色的未來 二零二四年年報 The Hong Kong and China Gas Company Limited 香港中華煤氣有限公司 www.towngas.com 二 零 二 四 年 年 報 本報告以環保紙印製 香港北角渣華道 363 號 23 樓 香港中華煤氣有限公 司 集團前主席 李兆基博士 大紫荊勳賢 (1928-2025) 李兆基博士痛於2025年3月17日與世長辭。在他的卓越領導下，香港中華煤氣創下輝煌成就，包括獲 評選為「全球最佳燃氣公司」。李博士之崇高品格及營商之道贏得不少稱頌，更為本港的經濟繁榮作出 重大貢獻。李博士亦是一位備受尊崇的慈善家，為本港、內地及海外很多主要的教育及社會項目作出 捐獻。董事會對李博士的辭世深表哀悼，並將秉承其所定下的方針，繼續發展集團業務。 永遠懷念您 使命 為客戶供應安全、可靠、潔淨的智慧能 源，提供優質服務，履行社會責任，確 保業務持續增長，提高股東投資回報， 為地球、社會和持份者帶來長遠利益。 願景 致力發展成為綠色智慧能源之領先企 業，創造可持續的 綠色能源世界。 目錄 | 2024年獎項及榮譽 | 2 | ...

Core Viewpoint - The domestic green methanol refueling business has made significant progress, with Hong Kong and China Gas Company successfully completing a large-scale refueling operation for the Korean vessel "HMM Green" using green methanol produced in Inner Mongolia, marking a milestone in the green energy sector in Asia [1][2]. Group 1: Production and Certification - The green methanol was produced by the company in its facility located in Ordos, Inner Mongolia, utilizing biomass resources and urban waste, and has achieved ISCC-EU certification, demonstrating a 70% reduction in greenhouse gas emissions over its lifecycle [1][3]. - The company has been awarded the EU ISCC EU and ISCC PLUS international certifications for three consecutive years since 2022, making it the first enterprise in mainland China to achieve these certifications for large-scale green methanol production [3]. Group 2: Industry Context and Future Outlook - In line with global carbon neutrality goals, the latest strategy for reducing greenhouse gas emissions from shipping aims for a 20% reduction by 2030 and a 70% reduction by 2040 compared to 2008 levels, positioning green methanol as a preferred option for the shipping industry to lower emissions [3]. - The company plans to continue collaborating with various partners to advance the research and production of green methanol, contributing to the popularization of green energy and the sustainable development of the global shipping industry, with a projected production capacity of 150,000 tons by 2025 [3].

Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of HKD 7.04 [7][24]. Core Insights - The company reported a core profit growth of 5% for 2024, driven by structural upgrades in green energy, despite a revenue decline of 3% to HKD 55.5 billion [1][5]. - The gas sales volume in Hong Kong remained stable, with a slight increase of 0.1% year-on-year, while the company expects to benefit from a favorable pricing mechanism [2][3]. - The renewable energy and green energy sectors show significant growth potential, with net profit from renewable energy reaching HKD 322 million, a 544% increase year-on-year [4][5]. Summary by Sections Financial Performance - For 2024, the company reported revenues of HKD 55.5 billion, a decrease of 3% year-on-year, and a core profit of HKD 5.95 billion, an increase of 5% year-on-year [1][6]. - The net profit attributable to shareholders was HKD 5.71 billion, down 6% year-on-year [1][6]. Gas Sales - The gas sales volume in Hong Kong was 27,159 TJ, with residential gas volume decreasing by 1.4% and commercial/industrial gas volume increasing by 1.4% and 5.2% respectively [2][3]. - The company anticipates stable gas sales in Hong Kong for 2025, maintaining an EBITDA margin of approximately 52% [2][3]. Renewable Energy Growth - The renewable energy segment is expected to grow rapidly, with the company shifting towards a light-asset strategy, projecting significant revenue growth from carbon services and asset management [4][5]. - The green energy business, including green methanol and sustainable aviation fuel (SAF), is strengthening its capacity to capture future demand [4][5]. Profit Forecast Adjustments - The profit forecasts for 2025 and 2026 have been adjusted downwards by 6% and 9% respectively, with expected net profits of HKD 6.24 billion and HKD 6.56 billion [5][24]. - The target price has been revised down to HKD 7.04 from HKD 7.63, reflecting a price-to-book ratio of 2.3x for 2025 [5][24].

Investment Rating - The report maintains a "Buy" rating for Hong Kong and China Gas Company Limited [1] Core Views - The company's core profit is steadily recovering, and growth in green energy is expected [1] - The company reported a total revenue of HKD 55.473 billion for 2024, a decrease of 2.6% year-on-year, while the attributable net profit was HKD 5.712 billion, down 5.9% [5] - The core profit for the year was HKD 59.55 billion, reflecting a year-on-year increase of 5.1%, aligning with expectations [5] - The company plans to distribute a final dividend of HKD 0.23 per share, resulting in a total dividend of HKD 0.35 per share for the year, yielding a dividend rate of 5.31% based on the closing price on March 19 [5] Financial Data and Profit Forecast - Revenue (in million HKD) is projected as follows: 2023: 56,971, 2024: 55,473, 2025E: 55,525, 2026E: 57,637, 2027E: 59,285 [2] - Attributable net profit (in million HKD) is forecasted as: 2023: 6,070, 2024: 5,712, 2025E: 6,131, 2026E: 6,543, 2027E: 6,911 [2] - The net asset return rate is expected to improve from 8.55% in 2023 to 9.61% in 2027 [2] - The price-to-earnings ratio is projected to decrease from 20.3 in 2023 to 17.8 in 2027 [2] Business Performance - The Hong Kong gas sales volume for 2024 is expected to be 27,159 TJ, with a slight increase of 0.1% year-on-year [5] - The company has increased its maintenance fees and basic pricing, indicating a strong pricing power in the Hong Kong market [5] - The mainland gas sales volume is projected to reach 36.36 billion m³ in 2025, with a year-on-year growth of 4.8% [5] - The gross margin for city gas sales is expected to improve, with a target of 0.54 HKD/m³ for 2025 [5] Renewable Energy Growth - The company's photovoltaic power generation is expected to increase by 95% to 1.83 billion kWh in 2024, with net profits from renewable energy activities reaching HKD 4.79 billion [5] - The company is expanding its green methanol production capacity by 50% to 150,000 tons in Inner Mongolia [5] Conclusion - The report concludes that the company's core profit is steadily increasing, and the overall business performance is stable, maintaining a "Buy" rating [5]

Investment Rating - The report maintains a "Buy" rating for Hong Kong and China Gas Company Limited [1] Core Views - The company's core profit is steadily recovering, and growth in green energy is expected [1] - The company reported a total revenue of HKD 55.473 billion for 2024, a decrease of 2.6% year-on-year, while the attributable net profit was HKD 5.712 billion, down 5.9% [5] - The core profit for the year was HKD 59.55 billion, reflecting a year-on-year increase of 5.1%, aligning with expectations [5] - The company plans to distribute a final dividend of HKD 0.23 per share, resulting in a total dividend of HKD 0.35 per share for the year, yielding a dividend rate of 5.31% based on the closing price on March 19 [5] Financial Data and Profit Forecast - Revenue (in million HKD) is projected as follows: - 2023: 56,971 - 2024: 55,473 - 2025E: 55,525 - 2026E: 57,637 - 2027E: 59,285 - Year-on-year growth rates for revenue are expected to be: - 2023: -6.5% - 2024: -2.6% - 2025E: 0.1% - 2026E: 3.8% - 2027E: 1.5% [2] - Attributable net profit (in million HKD) is forecasted as: - 2023: 6,070 - 2024: 5,712 - 2025E: 6,131 - 2026E: 6,543 - 2027E: 6,911 - Year-on-year growth rates for net profit are: - 2023: 15.7% - 2024: -5.9% - 2025E: 7.3% - 2026E: 6.7% - 2027E: 5.6% [2][6] Business Performance Insights - The company has increased gas prices in Hong Kong, leading to stable sales volume and improved profitability, with a slight increase in gas sales volume of 0.1% in 2024 [5] - The mainland business is expected to see both volume and profit growth, with total gas sales projected at 36.36 billion cubic meters in 2025, a year-on-year increase of 4.8% [5] - The company’s renewable energy business is experiencing significant profit growth, with solar power generation expected to increase by 95% to 1.83 billion kWh in 2024 [5] - The company’s net profit from extended businesses reached HKD 470 million, with contributions from both Hong Kong and mainland markets [5] Valuation Metrics - The current stock price corresponds to a price-to-earnings (PE) ratio of 20.1 for 2025, 18.8 for 2026, and 17.8 for 2027 [5] - The company maintains a stable dividend policy, with a focus on steady growth across its various business segments [5]

Financial Performance - The group's total revenue for 2024 was HKD 55.473 billion, a decrease of 2.6% from HKD 56.971 billion in 2023[7] - Core profit increased by 5% to HKD 5.955 billion, compared to HKD 5.664 billion in the previous year[7] - The group's attributable profit before property revaluation was HKD 5.668 billion, up 2% from HKD 5.570 billion[12] - Profit before tax for the year was HKD 8,490.4 million, a decline of 7.5% compared to HKD 9,174.4 million in 2023[49] - Net profit for the year was HKD 6,761.2 million, down 5.7% from HKD 7,171.3 million in the prior year[51] - Total comprehensive income for the year was HKD 4,571.7 million, a decrease of 16.6% from HKD 5,481.9 million in 2023[51] - Basic earnings per share decreased to HKD 30.6, down from HKD 32.5 in 2023, representing a decline of 5.8%[49] - Adjusted EBITDA for 2024 was HKD 11,823.8 million, compared to HKD 11,914.8 million in 2023, indicating a decrease of 0.8%[79] - The basic earnings attributable to shareholders for 2024 were HKD 5,711.5 million, down from HKD 6,070.1 million in 2023, reflecting a decrease of 5.9%[91] Revenue Breakdown - Gas sales revenue, including fuel adjustment fees, for 2024 was HKD 41,525.4 million, down from HKD 42,518.4 million in 2023, reflecting a decrease of about 2.3%[75] - The group reported a total of HKD 1,863.5 million in renewable energy business revenue for 2024, significantly up from HKD 1,056.3 million in 2023, indicating an increase of approximately 76.2%[75] - The revenue from the gas, water, and renewable energy segment in Hong Kong for 2024 was HKD 10,688.0 million, up from HKD 10,402.8 million in 2023, an increase of 2.8%[79] - The revenue from the green energy segment in 2024 was HKD 730.1 million, a decrease from HKD 2,447.3 million in 2023, indicating a significant decline of 70.1%[79] - The total revenue from other sales in 2024 was HKD 3,999.7 million, compared to HKD 4,088.9 million in 2023, reflecting a decline of approximately 2.2%[75] Operating Expenses and Liabilities - Total operating expenses decreased to HKD 47,294.9 million, down 3.2% from HKD 48,833.8 million in the previous year[49] - The total current liabilities reported for December 31, 2023, were HKD 39,424.5 million, which increased to HKD 41,376.8 million after reclassification adjustments[68] - The total non-current liabilities reported for December 31, 2023, were HKD 50,817.2 million, which decreased to HKD 48,864.9 million after reclassification adjustments[68] - The group's total liabilities decreased to HKD 89,878.1 million from HKD 90,241.7 million in the previous year[55] Assets and Equity - Total assets as of December 31, 2024, amounted to HKD 158,268.6 million, a decrease from HKD 161,977.6 million in 2023, reflecting a reduction of 2.1%[82] - Non-current assets totaled HKD 133,928.0 million, a slight decrease from HKD 135,343.8 million in the previous year[53] - The company's total equity as of December 31, 2024, was HKD 68,333.5 million, down from HKD 71,018.7 million in 2023[55] Dividends and Shareholder Information - The board proposed a final dividend of HKD 0.23 per share, totaling HKD 0.35 per share for the year including the interim dividend[12] - The company declared an interim dividend of HKD 0.12 per share and a proposed final dividend of HKD 0.23 per share, maintaining the same levels as in 2023[90] - The annual general meeting is scheduled for June 4, 2025, with further details to be published around April 24, 2025[110] Renewable Energy Initiatives - The renewable energy business profit increased fivefold, significantly contributing to the core profit growth of 34.5% to HKD 1.601 billion[3] - The group operates over 1,000 renewable energy projects across 24 provincial cities in mainland China, with distributed photovoltaic business grid-connected capacity reaching 2.3 GW and generating 1.83 billion kWh[17] - The green methanol production plant in Inner Mongolia is expected to increase annual capacity to 150,000 tons by the end of 2025, with plans to expand to 300,000 tons by 2028[20] - The green hydrogen project in Tseung Kwan O is the first of its kind in Hong Kong, utilizing landfill gas to produce green hydrogen[20] Strategic Developments - The group plans to launch a sustainable aviation fuel (SAF) plant in Malaysia by Q3 2025, with an annual capacity of 300,000 tons[5] - The group is actively participating in the development of hydrogen energy applications as outlined by the Hong Kong government[5] - A cooperation framework agreement was signed with Fuan Energy Group to jointly establish an investment platform, planning to invest CNY 10 billion to develop a green methanol production capacity of 1 million tons[20] Customer and Market Insights - The number of residential gas customers in Hong Kong reached 4.4 million, contributing to strong growth potential[3] - In Hong Kong, gas sales volume slightly decreased by 1.4% due to changes in consumer behavior, while hotel-related gas sales increased by 6.6% driven by tourism recovery[33] - The group expects stable growth in gas sales due to the recovery of the tourism industry and population influx from initiatives like "Talent Pass"[24]

Investment Rating - The report initiates coverage with a "Buy" rating for Hong Kong and China Gas (00003) [1] Core Views - The company is a leading national city gas enterprise with a stable gas sales structure and high-quality city gas projects [1] - The Hong Kong business has stable profitability with potential for further price increases [1] - The mainland business is experiencing steady growth in gas sales volume and improving gross margins [1] - The company is diversifying into renewable energy and sustainable energy sectors, which are expected to drive future growth [1] Business Overview Hong Kong Business - The Hong Kong gas market is mature with stable user growth, covering 75% of the market [1] - Residential and commercial gas sales dominate, with residential gas sales accounting for 54% and commercial for 40% in 2023 [1] - The company has strong pricing autonomy in Hong Kong, with recent price adjustments in August 2024 [1] - Gas sales volume in Hong Kong is expected to increase by 7% by the end of 2028 compared to 2023 [1] Mainland Business - The company operates 321 city gas projects across 29 provinces in mainland China, with a user base exceeding 40 million [1] - Gas sales volume in mainland China grew at a CAGR of 8.56% from 2018 to 2023 [1] - Industrial gas sales account for 45% of total gas sales, followed by residential (22%) and commercial (14%) [1] - The gross margin for gas sales in mainland China improved to 0.47 yuan/m³ in 1H24, up by 0.05 yuan/m³ year-on-year [1] Diversified Business - The company is expanding into renewable energy, including distributed photovoltaic and energy-carbon services [1] - In 1H24, the renewable energy business contributed 1.9 billion HKD in profit, with Hong Kong and mainland businesses contributing 1.4 billion HKD and 0.5 billion HKD respectively [1] - The company is also exploring sustainable aviation fuel, green methanol, and hydrogenated vegetable oil production [1] Financial Projections - The report forecasts net profit attributable to shareholders of 6.207 billion HKD, 6.713 billion HKD, and 7.094 billion HKD for 2024, 2025, and 2026 respectively [1] - EPS is projected to be 0.33 HKD, 0.36 HKD, and 0.38 HKD for the same periods [1] - The target price is set at 7.77 HKD, representing a 31.7% upside from the current price [1] Valuation - The company's valuation is supported by its stable dividend policy, with a long-standing dividend of 0.35 HKD per share annually [1] - The DCF valuation model suggests significant upside potential as the company's cash flow grows and the city gas industry stabilizes [1]

Investment Rating - The report maintains an "Outperform" rating for the company with a current price of HK$6.20 and a target price of HK$6.66 [3][6]. Core Insights - The company has successfully enhanced operational efficiency through business restructuring and cost-saving measures, achieving a total revenue of HKD 27.496 billion in 2024H1, a decrease of 5.76% year-on-year, while core profit increased by 2.21% to HKD 3.186 billion [8][12]. - The company's strategic focus on green energy is showing promise, with significant growth in its renewable energy initiatives, including a 51% year-on-year increase in the production of SAF and HVO [11][12]. Summary by Sections Financial Performance - The company reported a total revenue of HKD 56.971 billion for Dec-23A, with projections of HKD 59.777 billion for Dec-24E, HKD 62.446 billion for Dec-25E, and HKD 64.947 billion for Dec-26E [4][12]. - The attributable net profit for Dec-23A was HKD 6.070 billion, with estimates of HKD 6.467 billion for Dec-24E, HKD 6.690 billion for Dec-25E, and HKD 6.897 billion for Dec-26E [4][12]. Business Segments - The Hong Kong gas sales volume remained flat year-on-year at 14,932 million megajoules, while the mainland urban gas business saw a 6.76% increase in sales volume [5][10]. - The company is actively developing hydrogen energy and green methanol businesses, with a green hydrogen pilot project expected to produce 330 kilograms of hydrogen daily by 2025 [5][9]. Growth Opportunities - The mainland business has shown significant growth, with urban gas sales volume reaching 18.63 billion cubic meters, a year-on-year increase of 6.76% [10]. - The company is focusing on high-quality industrial customers and energy management for public institutions, achieving a 3.13% increase in industrial gas sales and a 9.29% increase in commercial gas sales [10]. Green Energy Initiatives - The company's EcoCeres produced 176,000 tons of SAF and HVO in the first half of the year, with future green methanol production capacity expected to reach 120,000 tons annually [11]. - The cumulative photovoltaic grid-connected scale reached 2.1GW, with power generation increasing by 1.4 times year-on-year to 6.8 billion kWh [11].

Financial Performance - For the six months ended June 30, 2024, the core profit was HKD 3.186 billion, an increase of HKD 69 million or 2% compared to the same period last year[9]. - The net profit attributable to shareholders for the same period was HKD 3.040 billion, a decrease of HKD 574 million or 16% year-on-year[9]. - The total revenue for the first half of 2024 was HKD 27.496 billion, down from HKD 29.178 billion in the previous year[10]. - The basic earnings per share for the first half of 2024 were HKD 16.3 cents, down from HKD 19.4 cents in the same period last year[10]. - The company declared an interim dividend of HKD 0.12 per share, payable to shareholders on September 11, 2024[11]. - The company achieved a pre-tax profit of HKD 4,574.2 million, down 19.6% from HKD 5,687.4 million in the previous year[22]. - The total comprehensive income for the period was HKD 1,775.0 million, an increase from HKD 1,595.6 million in the previous year[23]. - The company reported a net profit of HKD 3,561.4 million for the six months ended June 30, 2024, compared to HKD 4,319.5 million in 2023, indicating a decline of approximately 17.5%[44]. - The total tax expense for the six months ended June 30, 2024, was HKD 903.0 million, compared to HKD 1,197.9 million in 2023[54]. Customer and Market Growth - The number of Hong Kong customers as of June 30, 2024, was approximately 2.027 million, an increase of 7,678 customers compared to the end of 2023[10]. - The number of gas customers in mainland cities reached 41.394 million, an increase from 38.564 million in the previous year[10]. - The number of gas customers increased to over 41.39 million, representing a growth of 7.3% year-on-year[13]. - The company expects stable gas sales in Hong Kong for 2024, supported by recent tariff adjustments[21]. - The company anticipates continued growth in gas and natural gas operations in mainland cities in the second half of the year, contributing to profit improvement[21]. Revenue and Sales - The total gas sales volume of the urban gas business reached approximately 18.6 billion cubic meters, an increase of 7% compared to the same period last year[13]. - Gas sales, including fuel adjustment fees, amounted to HKD 21,296.3 million for the first half of 2024, down from HKD 21,689.3 million in the previous year, a decrease of approximately 1.8%[42]. - Revenue from external customers in Hong Kong for the six months ended June 30, 2024, was HKD 6,170.8 million, compared to HKD 6,391.5 million in 2023, a decrease of about 3.4%[48]. - Revenue from external customers in Mainland China for the same period was HKD 21,325.4 million, down from HKD 22,786.1 million in 2023, representing a decline of approximately 6.4%[48]. Operational Efficiency - The company has integrated its mainland and Hong Kong retail businesses to enhance synergies and drive growth in smart kitchen, insurance, and home safety services[17]. - The group employed 2,117 staff in the Hong Kong gas business as of June 30, 2024, serving 2,027,334 customers, resulting in an efficiency of 958 customers per employee, a slight increase from the previous year[86]. - The group’s human resources cost for the first half of the year was HKD 658 million, an increase of HKD 39 million compared to the same period last year[86]. Investments and Projects - The company is developing Hong Kong's first "green hydrogen" pilot project, expected to produce about 330 kg of hydrogen daily by 2025[12]. - The company plans to invest in green hydrogen production from landfill gas, aiming to enhance sustainable fuel supply and support low-carbon transformation[21]. - The company has accumulated contracts for 3.3 GW of renewable energy projects, with 2.1 GW connected to the grid as of June 30, 2024[15]. - The green methanol production plant in Inner Mongolia is expected to increase its capacity to 120,000 tons per year in the coming years[18]. Financial Position and Liabilities - As of June 30, 2024, total assets minus current liabilities amounted to HKD 115,937.4 million, a decrease from HKD 119,883.6 million as of December 31, 2023, representing a decline of approximately 3.1%[25]. - Total equity as of June 30, 2024, was HKD 67,999.3 million, down from HKD 71,018.7 million at the beginning of the year, marking a decrease of about 4.5%[27]. - The total liabilities as of June 30, 2024, were HKD 47,938.1 million, slightly down from HKD 48,864.9 million as of December 31, 2023[25]. - The group’s net current borrowings as of June 30, 2024, were HKD 134.73 billion, an increase from HKD 98.73 billion as of December 31, 2023[81]. - The group has sufficient and stable funding sources, including bank financing agreements and bond issuances, to meet future capital investment and working capital needs[81]. Corporate Governance and Management - The company has been recognized as one of the top 1% of Chinese enterprises in global ESG ratings, reflecting its commitment to social responsibility and governance[19]. - The group has complied with all corporate governance codes as per the Hong Kong Stock Exchange Listing Rules as of June 30, 2024[87]. - Mr. Chen Yinglong was appointed as the Executive Director and Chief Investment Officer of the company on June 25, 2024[92]. Shareholder Information - As of June 30, 2024, Dr. Li Ka-shing holds 7,748,692,715 shares, representing 41.53% of the company's total issued shares[99]. - Timpani Investments Limited holds 5,989,193,083 shares, accounting for 32.10% of the company's total issued shares[99]. - Macrostar Investment Limited holds 1,759,499,632 shares, representing 9.43% of the company's total issued shares[99]. - The company has granted stock options for EcoCeres, Inc. shares to certain directors, with 31,818 shares available at an exercise price of $57.00[96]. - The company has also granted stock options for Honghua Smart Energy shares, with 1,800,000 shares available at an exercise price of HKD 3.40[94].