NewOcean Energy (0342 HK) - Refueling station to contribute (NR)

to summarize…

-  First issue with reference target price at HK$2.02

-  FY12/10A results lower than our preliminary forecast

-  Expect acquisition of Guangzhou LPG refueling stations to contribute

-  Base on our estimates, currently trading at 7.0x P/E for FY12/11F

-  Potential upside on additional cities to adopt LPG vehicles

NewOcean Energy - Refueling station to contribute

NewOcean Energy (0342 HK) - LPG into Guangzhou (Not Rated)

to summarize…

-  Acquired 17 of 35 auto gas refuelling stations in Guangzhou at attractive price

-  Synergy of retail gas business and existing operations

-  Guangzhou experience could be promoted to neighbour cities

-  New opportunities with regional development

-  Business model – essentially independent of LPG price volatility

-  Preliminary profit forecast of LPG business at HK$173.9m for FY12/10F

LPG into Guangzhou

NewOcean Energy (342 HK): growing from market consolidation- Not Rated

to summarize…

- NOE is the biggest LPG importer and exporter in China.

- NOE is growing from market consolidation benefiting from its efficient operation Chain and management

- Gross profit increased 105.3% YoY due to the lower international LPG price for 1H FY12/09A.

- Leveraging the facility in Zhuhai to develop the higher margin LPG business in HK and Macau. And it is expected to bring significant profit contribution. 

- Expanding Zhuhai Terminal to have throughput capability of 1.6m tons a year, which is expected to complete at the end of 2010.

- The capex for 2010 would be around HK$157.0m, which could be funded by NOE’s own funds.

- NoE would still keep its electronic business as a profit contributor, however, it is possible to be disposed in the future.

- The counter is currently trading at 60.8% discount with 9.1x FY12/10F P/E based on our back of pad estimate.

NOE: growing from market consolidation