Offering Details

Sino Gas intends to offer a total of 54,000,000 shares through the global offering, including 48,600,000 international placing shares (subject to reallocation and the over-allotment option) and 5,400,000 Hong Kong public offer shares (subject to reallocation). The indicative range of the offer price is HK$2.8 to HK$3.4 per share. After deducting the underwriting fees paid and payable in connection with the global offering and estimated expenses and assuming an offer price of HK$3.1 per share, being the mid-point of the indicative offer price range of HK$2.8 to HK$3.4 per share, net proceeds from the global offering are estimated to be approximately HK$134.3 million.

The Hong Kong public offer is anticipated to commence at 9 am on 14 December 2018 (Friday) and end at 12:00 noon on 19 December 2018 (Wednesday). The final offer price and the results of the allocation are expected to be announced on or by 27 December 2018 (Thursday). Trading of shares will commence on the Main Board of SEHK on 28 December 2018 (Friday) under the stock code 1759. Shares will be traded in board lots of 1,000 shares each.

Innovax Capital Limited is the Sole Sponsor of the listing and Innovax Securities Limited is the Sole Global Coordinator. Innovax Securities Limited and Victory Securities Company Limited are the Joint Bookrunners. Innovax Securities Limited, Victory Securities Company Limited, Pulsar Capital Limited and China Goldjoy Securities Limited are the Joint Lead Managers of the listing.

Investment Highlights

Benefit from the opportunities arising from the sustainable development of industry and favorable policy support from the government

According to Frost & Sullivan Report, China is determined to transform its fuel consumption pattern to be more environmentally-friendly and thus has greatly elevated its consumption of LPG and natural gas. The Chinese government has launched multiple government policies to support LPG and natural gas infrastructure. Facilitated by favorable government policies such as the "Changing Fuels from Coal to Gas Policy" and the "Notice on Opinion of Accelerating and Advancing the Utilization of Natural Gas", the demand for CNG is expected to have further expansion with more infrastructure construction. Sino Gas' operations have been strategically located in Guangdong and Henan Province, with a huge consumption level of LPG and natural gas respectively in both provinces. The Group believes that the sustainable and rapid development of the LPG and natural gas industry in these areas will provide great potential for its growth.

An integrated LPG and natural gas suppliers in the PRC with a complete industry chain

The Group ranked third in the LPG vehicular refuelling market in Guangdong Province and first in the CNG vehicular refuelling market in Zhengzhou City, Henan Province, with a market share of approximately 17.6% and 25.0% respectively. Sino Gas has established a complete industry chain, from procurement, intermediary logistics operations to downstream operational services of stations. It has more than 13 years of extensive industry experience in the gas industry. Through JM Xinjiang Gas, a jointly controlled entity, the Group possesses an integrated terminal and storage facilities which are the only terminal designated for LPG products in Jiangmen City, Guangdong Province, and possesses the largest LPG storage facilities in Ganzhou City, Jiangxi Province. These two storage facilities also possess refuelling capabilities in order to bottle the LPG for downstream sales at its LPG domestic stations. Furthermore, the Group possesses a dedicated LPG railway line in Ganzhou City which is used to transport LPG from the Beijing-Kowloon railway to its storage facilities. In addition, the Group can better control over the delivery arrangement to ensure timely delivery of its products to its respective stations through its own logistics team and vehicle fleet. The Group has six LPG vehicular refuelling stations, two LPG domestic stations and one LNG vehicular refuelling station in Guangdong Province. It also has, through its subsidiaries and a jointly controlled entity, 12 CNG vehicular refuelling stations and two CNG mother stations in Henan Province, as well as one LPG domestic station in Jiangxi Province. In addition, Sino Gas has strategically placed the gas stations at transportation hubs or near highways or major roads in Guangdong and Henan Province with high traffic flow in order to maximize business opportunities. The Group's complete industrial chain not only ensures a continuous supply of LPG and natural gas to customers, but also effectively controls and manages operation costs, product and service quality, and transportation safety.

Competitive cost advantage in LPG procurement resulted from long-term business relationship with major suppliers, economies of scale and LPG storage capacity

Regarding the LPG business in Guangdong Province, Sino Gas has established long-term stable business relationships with LPG suppliers in Southern China, enabling it to import LPG from overseas. It also operates two leased LPG storage facilities in Dongguan City and Nansha District in Guangdong Province, with a total storage capacity of its owned and leased LPG storage facilities of around 10,140 tonnes in aggregate. For the six months ended 30 June 2018, the Group's monthly average leased storage volume at its suppliers amounted to approximately 8,002 tonnes. Leveraging its storage capacity, the Group can help effectively manage the inventory and flexibly arrange procurement, including procuring a large volume of LPG from suppliers for selling. Capitalizing on its scale of operation and long-term business relationship with major suppliers, the Group can secure a steady supply of LPG for daily operations and enjoys strong bargaining power and cost advantage in LPG procurement.

Entrenched business relationship with PetroChina for CNG procurement in Henan Province

The Group believes that a reliable and uninterrupted supply of natural gas from PetroChina is crucial to its CNG business in Henan Province. Therefore, with CNG mother stations in Zhumadian City and Xinzheng City, Henan Province, the Group has entered into a long-term CNG supply agreement with PetroChina. The Group expects that after the new mother station in Xinzheng City starts operation, its natural gas can also be procured through its own pipeline via the "West to East Gas Transmission" scheme, and direct procurement can reduce transmission cost and its procurement cost accordingly.

Experienced, stable and professional management team

Mr. Ji, Chairman of the Board of Directors and Executive Director of Sino Gas, has around 12 years of experience in the oil and gas sector, while other Executive Directors have an average of approximately seven years of experience in this sector. With abundant experience and expertise in the natural gas sector of the management team, the Group can consolidate its presence as an integrated up- and downstream LPG and natural gas supplier in Guangdong Province and Henan Province, formulate effective commercial strategies and explore potential business opportunities in the energy sector and other commercial opportunities.

Business Strategies

Sino Gas has strived to strengthen its presence as an integrated LPG and natural gas supplier with a complete industrial chain in Guangdong Province and Henan Province. To achieve this goal, regarding its LPG business, the Group has seized the business opportunities from the sustained growth of LPG consumption from residential and commercial users in Guangdong Province. It plans to expand the network of its LPG domestic stations, CNG and L-CNG vehicular refuelling stations, and to increase its LPG logistics and storage capacity by constructing additional storage capacities.

As for the CNG and LNG businesses, the Group plans to acquire land, equipment and machinery for the new CNG mother station, conduct related installation, explore opportunities for vertical integration, reinforce its market presence and enhance its competitiveness in Henan Province.

Sino Gas plans to build new gas stations, procure requisite equipment and machinery for its new L-CNG, CNG and LNG vehicular refuelling stations, conduct related installation, and maintain its existing gas stations, so as to further consolidate its market share and serve more customers. The Group is also expanding its fleet to further increase its logistics service capacity, so as to cope with the constantly rising demand for LPG and natural gas.

Use of Proceeds Assuming that the over-allotment option is not exercised, and the offer price is HK$3.1 per share (i.e. the mid-point of the indicative price range of HK$2.8 and HK$3.4 per share), after deducting the paid and payable underwriting commission and estimated total expenses of the global offering, the net proceeds from the global offering is expected to reach approximately HK$134.3 million and will be used as outlined below:

Purposes / Percentage

Complete construction, purchase land, equipment and machineries for the new CNG Mother Station: 23.0%Construct new stations, purchase and install the requisite equipment and machineries, and maintain existing stations: 20.0%Construct storage facilities to strengthen LPG logistics and storage capacity: 18.0%Acquire operational rights of a LPG domestic station: 17.0%Purchase vehicle fleet to expand logistics capacity: 12.0%For general working capital: 10.0%Total: 100%

About Sino Gas Holdings Group Limited Sino Gas Holdings Group Limited is an integrated LPG and natural gas supplier in the PRC with a complete industrial chain and over 13 years of rich experience in the industry. It provides different types of petroleum and natural gas products in Guangdong, Henan and Jiangxi Province through liquefied petroleum gas (LPG), compressed natural gas (CNG) and liquefied natural gas (LNG) vehicular refuelling stations, LPG domestic stations and CNG mother stations. According to Frost & Sullivan, the Group ranked third in the LPG refuelling market in Guangdong Province and ranked first in the CNG refuelling market in Zhengzhou City, Henan Province.

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References

1. ^{^} Daily Finance (www.acnnewswire.com)
2. ^{^} Energy (www.acnnewswire.com)
3. ^{^} Daily News (www.acnnewswire.com)