德意志银行-xx行业研究-china gas utilities takeaways from beijing and hebei gas trip-20170707-deutschebank.pdfVIP

Deutsche Bank Markets Research Asia Industry Date China China Gas Utilities 7 July 2017 Utilities Utilities Industry Update Hanyu Zhang Michael Tong, CFA Takeaways from Beijing and Hebei Research Associate Research Analyst (+852 ) 2203 6207 (+852 ) 2203 6167 gas trip hanyu.zhang@ michael.tong@ Three-day gas trip in Beijing and Hebei We attended a two-day trip in Hebei organized by ENN Energy (2688 HK, Buy), and visited Jinhong Energy (000669 CH, Not rated) and Jingneng Clean Energy (579 HK, Not rated) in Beijing. We summarize the key takeaways below. ENN: Distributed energy projects We visited two distributed energy projects in Langfang and Shijiazhuang in the Hebei province. In both the projects, ENN provides power, heating and cooling to end users, with an energy utilization rate of 80%. For the Junlebao project in Shijiazhuang (with annual gas consumption of 28.6mn cm), the total investment is c.Rmb80mn with a project IRR of 12%. Compared to the pure gas sales business, ENN can earn an additional profit via 1) selling high value- added products (power, heat and cold water); 2) enhancing energy utilization rate; and 3) providing operational and maintenance services. According to management, ENN plans to invest in 10 distributed energy projects each year, with an annual capex budget of Rmb500mn. ENN: Rural coal-to