China Natural Gas Q1 Profit Grows

China Natural Gas, Inc., a leading provider of compressed natural gas (CNG) and LNG for vehicular fuel and pipeline natural gas for industrial, commercial and residential use in Xi’an, China, said its revenue in the first quarter of 2013 increased by 10.0% to $35.5 million from $32.3 million in the first quarter of 2012, driven by increased capacity of LNG plant.

Sales revenue of natural gas grew by 9.5% year-over-year to $32.2 million, from $29.4 million in the first quarter of 2012. Gasoline revenue in the first quarter of 2013 decreased by 42.5% to $0.5 million, from $0.8 million in the same period of the prior year, mainly because the closure of one gasoline fueling stations during the fourth quarter of 2012. Installation and automobile conversion services revenue increased by 38.6% year-over-year to $2.8 million, from $2.1 million a year ago. In the first quarter of 2013, sales of natural gas, gasoline, and installation and automobile conversion services contributed 90.7%, 1.3%, and 8.0% of total revenue, respectively.

Gross profit in the first quarter of 2013 increased 13.8% to $12.9 million from $11.4 million in the same period of the prior year. Gross margin in the first quarter of 2013 was 36.4%, compared to 35.2% a year ago. Gross margin increased primarily due to the increase in gross margin for LNG business.

Operating income in the first quarter of 2013 was $5.8 million, an increase of 57.9% year-over-year from $3.7 million, primarily attributable to the increase in gross profit of LNG and decrease in general and administrative expenses.

Income tax expense was $0.9 million at an effective tax rate of 15.9%, as compared to $0.8 million at an effective tax rate of 28.9% in the first quarter of 2012. The decrease of effective income tax rate was primarily attributable to the reduced income tax rate of 15% enjoyed by JBLNG beginning on January 1, 2013.

Net income in the first quarter of 2013 increased by 139.6% to $4.7million or $0.22 per diluted share from $1.9 million or $0.10 per diluted share in the first quarter of 2012.

As of March 31, 2013, the Company had $10.7 million of cash and cash equivalents on hand, compared to $10.9 million of cash and cash equivalents as of December 31, 2012. The decrease was primarily attributable to the construction of the LNG plant and other projects, and the repayment of the loans from Shanghai Pudong Development Bank.

Net cash provided by operating activities was $5.0 million for the first quarter of 2013, as compared to net cash provided by operations of $7.4 million for the first quarter of 2012. The decrease was primarily due to the increase in advances to suppliers, accounts receivable and other receivable, and adjustments for non-cash expense items.

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LNG World News Staff, May 16, 2013; Image: China Natural Gas