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China Natural Gas Inc. (CHNG) Could Leverage Business on Positive Prospects for China's Natural Gas
10/13/08
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Monday October 13 2008
According to a recent report, China is seeing oil prices reaching a record high, and local Chinese media said China now claimsnhigher gasoline prices than the United States.
While crude oil prices fell to a new low for the year Thursday on the New York Mercantile Exchange, gasoline prices in Beijing went up by $29.18 per ton, more than 2%, with the exact proportion of the increase depending on the fuel quality from October 7.
On top of soaring oil prices, the Chinese government is also promoting cleaner energy and natural gas companies will likely benefit from this environment policy.
China Natural Gas is one of the leading providers of pipeline natural gas for industrial, commercial and residential use and compressed natural gas (CNG) for vehicular fuel in Xi'an, China and the first China-based natural gas company publicly traded in the United States.
It currently owns and operates a 120 kilometer long compressed natural gas pipeline in Xi'an, China, a fast growing Chinese city supported by a population of approximately eight million and is the gateway to the broad western regions of China.
China Natural Gas has three profitable business segments: retail natural gas at company-owned natural gas filling stations; end user delivery of natural gas services to residential, commercial and industrial customers; and conversion of gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles. The city of Xi'an has approximately 20,000 Taxis, 3,000 buses and 2,000 special purpose vehicles that are powered by compressed natural gas.
Taking advantage of the potential growth prospects, the company's CFO recently confirmed that China Natural Gas is applying for a Nasdaq listing, but the purpose of the listing is for issuing more stocks. China Natural Gas needs a total of $130 million capital for expansion. The company is applying for a $60 million loan from the Bank of China, and planning to issue $70 million in new equity once the stock is listed on Nasdaq.
As the equity cost of capital would be lower when the stock is listed on Nasdaq comparing to issuing stocks now on OTC bulletin board, market observers believe this would be a great move by the company and are confident with the management to meet its earnings target growth.
There is no doubt that natural gas is a growing industry in China. According to a report, the demand for natural gas in China, bolstered by the energy demand in Shanghai and other areas, will maintain 11% to 13% growth. The demand for natural gas will hit 100 billion cubic meters in 2010, while the supply can reach 80 billion cubic meters.
To better articulate China Natural Gas' growth story, the company recently launched a new Web site, accessible at www.naturalgaschina.com, as a response to its many shareholders and constituents who have suggested that it provide a more complete corporate Web site. The company hopes its new site will be a go-to resource for company information, updates and events.
About China Natural Gas Inc.
China Natural Gas Inc., ("CHNG"), is the first China-based natural gas retailing company publicly traded in the United States. It currently owns and operates a network of CNG retail filling stations as well as a 120 kilometer long compressed natural gas pipeline in Xi'an, China. Xi'an is a fast growing Chinese city supported by a population of 8.5 million and is the "gateway" to the broad western regions of China. China Natural Gas has three business segments: retail natural gas at company-owned filling stations, end user delivery of natural gas services to residential, commercial and industrial customers, and conversion of gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles. Currently it is estimated that there are 5,000 buses and 20,000 taxis using CNG in Xi'an.
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