NewOcean Energy Holdings Ltd. (00342.HK)

新海能源有限公司 (00342.HK)
上半年业绩印证毛利率改善
Please see important notice on the last page.
公司报告
由于新海能源于 2012 年上半年开始把联新的营运入帐,使集团期内
毛利率按年大幅增长。毛利率由去年 3.9%升逾一倍至 9.3%,使毛
利大幅增长 157%至 5.4 亿港元,每股盈利按年增长 38%至每股
0.1754 港元。
联新业务并入集团业绩後销售结构有所改变 如我们预期,在联新
业务并入集团业绩后,新海能源对终端客户的销售额有所增加,改变
了集团的销售结构。新海能源销售予终端客户与批发之间的比例由
15:85 变为 31:69。较多的终端销售推动毛利率上升 5.2 个百分点至
9.3%。
在油库投入营运後毛利率将进一步改善 在集团的 7 万吨油库于
2013 年投入营运後,集团将更能体现规模效益。集团表示 7 月单月
的油产品销量已过 5 月和 6 月的 2 万吨销量,管理层预期全年销量将
达到 15 万吨。中长期而言,我们预期新海能源的油产品分销业务能
实现约 7%的毛利率。
估值 我们保持对新海能源为一间高增长和低风险企业的看法。集
团管理层展示了其在有限的执行风险下扩展业务的能力,同时集团一
些主要的财务数据于过去6个月亦有所改善。
基于每股0.30港元的2012年盈利以及9.9倍的市盈率,维持2.95港元的
目标价。买入。
盈利预测及估值
港元百万元 2010 2011 2012E 2013E 2014E
营业额 8,478 10,117 12,544 14,298 16,313
同比增长(%) 31% 19% 24% 14% 14%
净利润 137 303 390 457 571
同比增长(%) 22% 121% 29% 17% 25%
每股盈利(元) 0.12 0.23 0.30 0.35 0.44
每股股息(元) 0.01 0.00 0.00 0.00 0.00
市盈率(X) 15.1 7.5 5.9 5.0 4.0
市净率(X) 1.6 1.9 1.1 1.0 0.8
ROE(%) -4% 1% 19% 20% 20%
资料来源:招商证券(香港)预测
买入
(上次:买入)
目标价:HK$ 2.95
现价:HK$1.75
招商证券(香港)研究部
郁明德
(852) 31896123
yukmt@cmschina.com.cn
2012 年 8 月 22 日
基础数据
恒生指数 20,100.09
H 股指数 9,825.95
总股数(万股) 1,305.85
港股股数(万股) 1,305.85
港股市值(港元百万)
2,285.24
每股净资产(港元) $1.40
主要股东
持股(%)
中海油集团
37.58%
自由流通量 685.1m
行业
石油/天然气
股价表现
% 1m 6m 12m
绝对表现 6.7 15.1 11.5
相对恒指表现 4.4 21.6 7.9
%
20%
10%
0%
Jan 12 Apr 12 Jul 12
-10%
资料来源:彭博
-20%
相关报告
00342.HK HSI Index
Sino Land (23.HK) Price
1 of 9

NewOcean Energy Holdings Ltd.
(00342.HK)
1H12 results prove gross margin expansion
Please see important notice on the last page.
Company Report
NewOcean reported a surge in gross profit during 1H12 as the company
consolidates Lianxin’s operations onto its books. Gross profit spiked
157%yoy to over HK$544.8mn as gross margins more than doubled to
9.1%. EPS up 38%yoy to HK$0.1754/share.
Change in production mix after consolidating Lianxin As expected,
NewOcean’s product mix has changed after consolidating Lianxin with the
company now selling more LPG directly to end-users. During the 1H12,
NewOcean’s sales split between end-user and wholesale sales changed from
15:85 to 31:69. Greater end-user sales translate to a surge in gross profit and
an expansion in gross profit margins with gross margins up 520bps to 9.1%.
Gross margins to improve further as oil terminal begins operations
NewOcean will start to benefit from economies of scale when its new
70,000tonne oil production terminal start operations in 2013. The company
has reported July oil product sales have already exceeded the 20,000tonnes
sold during the previous two months and management expects
150,000tonnes of oil products to be sold during the whole year. In the
medium-to-long term we can expect that gross margins for NewOcean’s oil
distribution business will average approximately 7%.
Valuation We continue to view NewOcean as a high growth + low risk gas
play. The company’s management has shown they are capable of expanding
with minimal execution risk and key financial metrics show improvement
over the past 6months.
Target price of HK$2.95, 9.9X our FY12E EPS of HK$0.30/share. Buy.
Financials
HK$m FY10 FY11 FY12E FY13E FY14E
Revenue 8,478 10,117 12,544 14,298 16,313
Growth(%) 31% 19% 24% 14% 14%
Net profit 137 303 390 457 571
Growth(%) 22% 121% 29% 17% 25%
EPS(HK$) 0.12 0.23 0.30 0.35 0.44
DPS(HK$) 0.01 0.00 0.00 0.00 0.00
P/E(X) 15.1 7.5 5.9 5.0 4.0
P/B(X) 1.6 1.9 1.1 1.0 0.8
ROE(%) -4% 1% 19% 20% 20%
Source: Company data, CMS(HK) estimates
TP:HK$ 2.95
Buy
(Prior: Buy)
Current Price HK$1.75
China Merchants Securities (HK)
Michael Yuk
(852) 31896123
yukmt@cmschina.com.cn
22 Aug 2012
Key data
HSI Index 20,100.09
HSCEI Index 9,825.95
S/O (mn) 1,305.85
Mkt cap (HK$) (mn)
2,285.24
BVPS (HK$) $1.40
Major share holder Holding (%)
Uniocean Investment
37.58%
Free float 685.1m
Industry
Oil & Gas
Share performance
% 1m 6m 12m
Absolute return 6.7 15.1 11.5
Relative return 4.4 21.6 7.9
%
20%
10%
0%
Jan 12 Apr 12 Jul 12
-10%
Source:Bloomberg
-20%
Related research
00342.HK HSI Index
Sino Land (23.HK) Price
2 of 9

Earnings Review & Second-half Outlook
1H12 earnings review
NewOcean reported a surge in gross profit during 1H12 as the company
consolidates Lianxin’s operations onto its books. Revenue grew a moderate
9.3%yoy to HK$5.9bn. However, gross profit spiked 157%yoy to over
HK$544.8mn as gross margins more than doubled to 9.1%. EPS up 38%yoy to
HK$0.1754/share.
Figure 1: NewOcean Energy – 1H12 results
HK$ ‘000 1H12 1H11 %yoy Comments
Turnover 5,978,044 5,467,227 9.3% NewOcean sold 819,100 tons of LPG during
1H12, a 15.5%yoy improvement over last
year. Revenue from the LPG business was
HK$5,441mn during the period up8.3%yoy,
despite ASP at HK$6,643/tonne down from
HK$7,085/tonne in 1H11, due to lower LPG
market prices during 2Q12. LPG sales
contribute over 91.0% of total revenue.
Cost of sales (5,433,150) (5,255,509) 3.4% Cost of sales only grew 3.4%yoy as the
company began capturing the synergies after
consolidating the Lianxin’s operations onto
its books.
Gross profit 544,894 211,718 157.4%
Gross margin (%)
9.1 3.9 520bps
Please see important notice on the last page.
GPM surged 520bps as the company began
disintermediating the supply chain for
providing autogas to Guangzhou. The
wholesaling and end-user proportion
improved to 69:31 versus 85:15 for the same
period last year as the company captured
more of the higher-margin market.
Net finance costs (142,128) (86,567) 64.2% Net finance cost increased due to higher
RMB interest rate prevailing over the period,
with effective interest paid for US$ loan
increased as a result of uplifted interest
margin. The company also increased working
capital financing to support increased credit
sales to bus companies and industrial
customers.
Profit before taxation 238,595 193,201 23.5%
Income-tax expenses (10,587) (27,154) -61.0% Tax rate dropped dramatically to 4.4% from
14.1%.
Profit after taxation
Profit attributable to
minority interests
Profit attributable to
equity shareholders
EPS (HK$)
228,008 166,047 37.3% 1H12 net profit margin expanded by 80bps to
3.8% 3.0% as revenue from higher margin
businesses increased.
(1,046) 927 N/A
229,054 165,120 38.7% Overall, net income improved by 38.7% as
higher gross margins from consolidating
Lianxin boosted the bottom line.
0.1754 0.1264 38.8% Weighted average number of ordinary shares
maintained at 1,305,853,374shares.
Diluted EPS (HK$) 0.1728 0.1246 38.7% Effect of dilutive share options:
19,734,380shares.
DPS (HK$) - - No dividends declared. Company has
accumulated loss, which prevents company
from paying out dividends.
Source: The Company and CMS(HK)
Company Report
3 of 9

Change in production mix after consolidating Lianxin
As expected, NewOcean’s product mix has changed after consolidating Lianxin
with the company now selling more LPG directly to end-users. During the
1H12, NewOcean’s sales split between end-user and wholesale sales changed
from 15:85 to 31:69. In total, over 251,000tonnes of LPG were sold to higher
margin end-users, representing a 128.5%yoy surge over last year. The shift in
autogas sales from wholesale to retail was the biggest change. Wholesale
autogas, which accounted for 14% of volume sold in 1H11, dropped to just 1%.
Whereas, retail autogas sales now account for 14% of total volume sold.
Figure 2: NewOcean’s LPG sales mix
Other bottling
plants
10%
Oversea
customers
35%
1H11
Retail -
Bottled
LPG
15%
Source: The Company, CMS(HK)
Wholesale -
Industrial
26%
Retail -
Autogas
0%
Wholesale -
Autogas
14%
Figure 3: LPG sales volume and breakdown
LPG businesses 1H11 1H12
Please see important notice on the last page.
Wholesale -
Autogas
1%
Other bottling
plants
8%
Oversea
customers
27%
1H12/1H11
(%yoy)
Retail - Bottled LPG 111,000 134,800 22.5%
Retail – Autogas 0 116,500
Wholesale – Autogas 97,000 8,300
1H12
Retail -
Bottled LPG
16%
Retail -
Autogas
14%
Wholesale -
Industrial
34%
28.7%
Wholesale – Industrial 184,000 278,000 51.0%
Wholesale - Oversea customers 249,000 219,000 -12.0%
Wholesale - Other bottling plants 68,000 62,500 -8.0%
Total 709,000 819,100 16.0%
Source: The Company, CMS(HK)
Greater end-user sales translate to a surge in gross profit and an expansion in
gross profit margins. Gross profit surged to HK$544.8mn up 157.4%yoy as
gross margins more than doubled to 9.1%, up 520bps from last year. For 2H12,
we can expect retail autogas sales to continue to stabilize NewOcean’s gross
margins, which have historically ranged from 3.7% to 5.3%. The variance in
gross profit depends on imported propane and butane cost pass-through, which
is normally more difficult for LPG used for retail households. However,
Guangzhou’s pricing mechanism, which links autogas selling prices with
import cost ensures a 6% gross profit for fueling station operators. For
NewOcean, they not only are able to capture this 6% but also capture the profits
from the storage and transportation of autogas from its gas terminal to the pump.
Company Report
4 of 9

Hence, NewOcean margins now react faster to changes in market conditions.
For 2H12, we can expect a continuation from first-half operating results but
with greater volumes sold through its Retail-Autogas due to hotter weather,
which results in greater energy use for air-conditioning. Hence, we use a 45:55
split for 1H12 and 2H12 autogas sales, implying that 2H12 retail autogas
volumes will reach approximately 142,000tonnes, a 21.9% half-on-half
increase.
Gross margins to improve further as oil terminal begins operations
1H12 marked the commencement of the company’s oil distribution business,
which began in May 2012. Revenue for this segment was only HK$99.4mn,
after selling 20,000tonnes of fuel with gross profit of HK$1.3mn. If we ignored
the margin dilutive effects of the oil distribution business, we calculate that
gross margins would have improved by 10bps. NewOcean will start to benefit
from economies of scale when its new 70,000tonne oil production terminal start
operations in 2013. The company has reported July oil product sales have
already exceeded the 20,000tonnes sold during the previous two months and
management expects 150,000tonnes of oil products to be sold during the whole
year. Hence, margins overall will gradually improve. In the medium-to-long
term we can expect that gross margins for NewOcean’s oil distribution business
will average approximately 7%.
Finance cost to come down as well as gearing levels
NewOcean reported a spike in finance cost with over HK$145.1mn expensed
during 1H12. The increase in financing cost is due to 1) interest payment on the
RMB580mn entrusted loan for acquiring Lianxin, and 2) increase in short-term
financing used for providing credit lines to Guangzhou bus companies. We can
expect future finance costs to down in the short-and-medium terms as:
1) The company begins to paydown debt. NewOcean’s net debt stood at
HK$1.3bn as of 30 June 2012, down from HK$2.1bn at the end of the
2011 (net debt derived from: Total Borrowings – (Cash + Pledge Bank
deposits)). The company has begun using its operating cash flow to pay
down its debt and will continue to do so. Hence, operating and net profit
margins should gradually improve.
2) NewOcean will substitute more of its mainland credit line with Hong
Kong borrowings, which incur lower borrowing cost. Furthermore,
mainland interest rates cuts during the 1H12 are conducive for lower
interest payments going forward.
With the company paying down its debt, gearing levels have also come down.
The company’s gearing (LT debt/total equity) has improved from 24% to 17%.
Please see important notice on the last page.
Company Report
5 of 9

Valuation
We continue to view NewOcean as a high growth + low risk gas play. The
company’s management has shown they are capable of expanding the business
organically as well as developing new avenues of growth, with minimal
execution risk. Key financial metric show improvement over the past 6months,
which should alleviate worries that the company’s balance sheet is
overstretched.
Figure 4: Key metrics
Please see important notice on the last page.
FY11 1H12
Inventory Turnaround Time 16 days 21 days
A/C Receivables Turnaround Time 77 days 51 days
Long Term Liabilities / Fixed Assets 21.3% 14.9%
Current Ratio 1.01 1.02
NAV/Share HK$1.42 HK$1.56
Annualized Earnings/Share HK$0.24 HK$0.35
ROE 16.4% 22.5%
Source: The Company, CMS(HK)
The stock trading at 5.9X and 5.0X our FY12E and FY13E forecast EPS and at
1.3X P/B is still at a deep discount to peers who have lesser earnings growth
and visibility. We continue to value NewOcean using the mean of its 12-month
forward PE, with a target price of HK$2.95, 9.9X our FY12E EPS of
HK$0.30/share. Buy.
Figure 5: NewOcean 12-month forward P/E band
(X)
40
35
30
25
20
15
10
5
0
Jan 03
Jul 03
12M Rolling Forward PE Mean +1 Standard Deviation -1 Standard Deviation
Sources: CMS(HK)
Jan 04
Jul 04
Jan 05
Jul 05
Jan 06
Jul 06
Jan 07
Jul 07
Jan 08
Jul 08
Jan 09
Jul 09
Jan 10
Jul 10
Jan 11
Jul 11
Jan 12
Jul 12
Company Report
6 of 9

Figure 6: Peer Analysis
Company Stock Code
Share price
(HK$)
Please see important notice on the last page.
Market cap
(HK$m)
Gross
margin
(%)
Operating
margin
(%)
Net margin
(%)
Company Report
ROAA
(%)
ENN Energy Holdings 02688 HK 29.35 31,305 25.9 15.8 8.3 5.4 19.2
China Gas Holdings 00384 HK 4.19 18,392 19.0 11.8 5.0 3.0 10.3
China Resource Gas Group 01193 HK 14.68 30,300 29.4 14.8 8.9 5.2 17.2
China Oil and Gas Group 00603 HK 0.79 3,923 20.5 15.7 4.8 3.6 8.1
China Towngas China Co 01083 HK 5.60 13,778 29.8 14.1 16.4 4.3 7.8
Kunlun Energy Co 00135 HK 13.06 104,851 65.2 31.4 22.1 7.6 19.5
Average 31.6 17.2 10.9 4.9 13.7
NewOcean Energy Holdings 00342 HK 1.75 2,285 4.2 1.5 3.0 3.2 18.6
Company
Free cash
flow yield
(%)
Div.-
payout ratio
(%)
Div.
yield
(%)
FY1
P/E
(X)
FY2
P/E
(X)
P/B
(X)
FY2 EPS
growth
(%)
ROAE
(%)
2-yr forward
EPS CAGR
(%)
ENN Energy Holdings (1.6) 25.0 1.2 16.4 14.1 3.6 21.1 (23.4)
China Gas Holdings N/A 18.0 0.9 16.2 14.1 1.9 15.6 15.2
China Resource Gas Group 2.0 19.4 0.8 19.0 15.5 3.6 23.1 20.6
China Oil and Gas Group N/A 0.0 N/A 13.6 10.7 1.4 36.7 39.4
China Towngas China Co (1.5) 17.4 0.9 16.3 13.4 1.4 22.4 17.6
Kunlun Energy Co (4.1) 28.3 1.7 14.1 11.9 3.1 18.9 15.3
Average 1.9 18.0 1.1 15.9 13.3 2.5 23.0 14.1
NewOcean Energy Holdings (9.0) 9.8 1.3 5.8 4.7 1.3 22.5 20.9
Source: Bloomberg and CMS(HK)
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Appendix: Financial summary
Please see important notice on the last page.
Company Report
Statement of financial position
Statement of comprehensive income
HK$m 2010 2011 2012E 2013E 2014E HK$m 2010 2011 2012E 2013E 2014E
Current Assets 4774 8433 10109 11166 12436 Revenues 8478 10117 12544 14298 16313
Cash & equivalents 380 878 1101 1218 1340 Cost of sales (8031) (9690) (11917) (13583) (15497)
Trading investments 44 29 29 29 29 Sales taxes 447 427 627 715 816
Trade notes 0 0 0 0 0 Op expenses (79) (99) (132) (143) (165)
Trade receivables 756 2128 2578 2742 3128 Admin exp (136) (181) (226) (259) (297)
Other receivables 446 565 687 783 894 Financial costs (109) (205) (313) (349) (371)
Inventories 470 434 522 670 764 Impairments 0 (40) (50) (57) (65)
Other current assets 2678 4399 5192 5725 6281 FV changes (82) 8 0 0 0
Non-current assets 1025 2189 2290 2370 2420 Others 115 422 527 601 718
Investment property 0 0 0 0 0 Op Profit 265 537 746 856 1006
PPE 744 1203 1948 2028 2078 Non-op inc 0 0 0 0 0
Intangible assets 130 96 96 96 96 Non-op exp 0 0 0 0 0
Other non-current assets 151 890 246 246 246 PBT 155 333 433 508 635
Total assets 5800 10622 12399 13537 14856 Taxes (18) (30) (43) (51) (63)
Liquid Liabilities 4046 8308 9590 10250 10851 Net Profit 137 303 390 457 571
Bank loans 3341 6783 7736 8084 8402 NCI 0 0 0 0 0
Trade payables 461 1074 1371 1637 1868 Parents 137 303 390 457 571
Prepaid Accounts 0 0 0 0 0 EPS - (HK$) 0.12 0.23 0.30 0.35 0.44
Other liquid liabilities 244 451 484 529 582
Long term Liabilities 275 466 706 946 1186 Ratios
Loans 254 445 685 925 1165 2010 2011 2012E 2013E 2014E
Others 20 21 21 21 21 YoY growth rate
Total Liabilities 4321 8775 10297 11196 12038 Revenue 30.8% 19.3% 24.0% 14% 14%
Issued capital 131 131 131 131 131 Op profit 13.2% 103.2% 38.9% 15% 18%
Retained Earnings 352 645 830 188 645 Net profit 22.2% 120.6% 28.7% 17% 25%
Reserves 986 1048 1118 1204 1416 Profitability
NCI 10 24 24 23.781 23.781 Gross margin 5.3% 4.2% 5.0% 5.0% 5.0%
Parents 1479 1848 2102 1546 2215 NP margin 1.6% 3.0% 3.1% 3.2% 3.5%
Total equity and liabilities 5800 10622 12399 12743 14253 ROE -4.1% 1.3% 18.8% 19.7% 20.4%
ROIC 0.7% 2.5% 6.3% 6.7% 7.2%
Statement of cash flows Liquidity
HK$m 2008 2009 2010E 2011E 2012E D/A 65.5% 68.2% 67.9% 66.5% 64.4%
CF from OA (18) 53 678 (67) 313 ND/A 48.1% 53.2% 59.0% 57.6% 55.4%
Net profit 155 333 433 508 635 Liquid ratio 0.9 0.9 1.1 1.1 1.1
D&A 52 46 117 122 125 Quick ratio 0.9 0.9 1.0 1.0 1.1
Finance costs 57 103 69 105 360 Operating efficiency
Investment income 0 0 0 0 0 Asset turnover 0.2 0.2 1.0 1.1 1.1
Changes of WC (354) (3) 393 (427) (404) Inventory turnover 20.0 87.7 14.6 16.0 16.9
Others 71 (425) (335) (374) (403) AR turnover 194.2 135.8 50.0 50.0 50.0
CF from IA (1422) (326) (614) (334) (560) AP turnover 40.0 40.0 30.0 30.0 30.0
Capital expenditure (131) (50) (100) 244 11 Per share ratios(HK$)
Other investments (1292) (276) (514) (578) (571) EPS 0.12 0.23 0.30 0.35 0.44
CF from FA 1,623 233 1,428 823 793 CFS 0.50 0.00 0.44 (0.11) 0.20
Borrowings 1480 358 1193 588 558 BVPS 1.08 0.93 1.61 1.79 2.16
Share capital 267 0 0 0 0 DPS 0.01 0.00 0.00 0.00 0.00
Changes of reserves 122 293 185 -642 457 Valuation ratios
Dividends (12) (5) (5) (5) (5) PE 15.1 7.5 5.9 5.0 4.0
Others (235) (413) 55 882 (217) PB 1.6 1.9 1.1 1.0 0.8
Net cash flow 180 (40) 1492 422 545 EV/EBITDA 17.1 14.6 11.0 10.2 9.2
Source: Company data, CMS(HK) estimates
8 of 9

RATING DEFINITION & DISCLAIMER
RATING DEFINITION
BUY Expected to outperform the market index by >20% over the next twelve months
OUTPERFORM Expected to outperform the market index by 10-20% over the next twelve months
DISCLAIMER:
Please see important notice on the last page.
Company Report
NEUTRAL Expected to outperform or underperform the market index by 20% over the next twelve months
This document is prepared by China Merchant Securities (HK) Co., Limited (“CMS”). CMS is a licensed corporation to carry on Type 1
(dealing in securities), Type 2 (dealing in futures), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (Asset
Management) regulated activities under Securities and Futures Ordinance (Chapter 571). This document is for information purpose only.
Neither the information nor opinion expressed shall be construed, expressly or impliedly, as an advice, offer, invitation, advertisement,
inducement, recommendation or representation of any kind or form whatsoever or any financial instrument in any jurisdiction where such
advice, offer, invitation, advertisement or solicitation would be illegal.
The information and opinions, and associated estimates and forecasts, contained herein have been obtained from or are based on sources
believed to be reliable. CMS, its holding or affiliated companies, or any of its or their directors, officers or employees (“CMS Group”) do not
represent and warrant that it is accurate or correctness or complete and it should be relied upon. CMS Group will not accept any
responsibility or liability whatsoever for any use of or reliance upon this document or any of the content thereof. The contents and
information in this document will be subject to change without prior notice. Use of any information herein shall be at the sole discretion and
risk of the user. Investors are advised to make their own investment decisions without relying on this publication.
CMS Group may have a position, make markets or act as principal, or engage in transactions in securities of companies referred to in this
document and may also perform or seek to perform investment banking services for those companies.
This document is for the use of intended recipients only and this document may not be reproduced, distributed or published in whole or in
part for any purpose without prior consent of CMS.
I, Michael Yuk do not have the mentioned stock and related derivatives.
China Merchants Securities (HK) Co., Ltd
48/F, One Exchange Square, Central, Hong Kong
Website:http://www.newone.com.hk
Tel: (852) 3189-6888 Fax: (852) 3101-0828
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