Towngas Smart Energy Announces 2025 Annual Results: Strategic Growth Amid Industry Challenges

Key Financial Highlights

• Revenue: HK\$20,912 million, down 2% year-on-year.
• Profit Attributable to Shareholders: HK\$1,585 million, down 1% year-on-year.
• Basic Earnings Per Share: HK44.5 cents, down from HK47.1 cents.
• Final Dividend: HK14 cents per share. Combined with interim dividend, total for the year is HK19 cents per share.
• Photovoltaic Power Generation: Up 36% to 2.48 billion kWh.
• Total Gas Sales Volume: Up 1% to 17.37 billion cubic metres.
• Customer Growth: Added 750,000 new customers, total now 18.39 million.
• Assets under Management (AuM): RMB3.5 billion raised through Quasi-REITs.
• Gearing Ratio: 34%, improved from 36% last year.

Strategic Expansion and Operational Performance

Despite macroeconomic headwinds and policy adjustments domestically and internationally, Towngas Smart Energy maintained stable business performance. The Group continued expanding its market coverage and business scale, driven by a transition to an asset-light model and enhanced operational quality and efficiency. Notably, the renewable energy business saw significant growth, with distributed photovoltaic grid-connected capacity increasing by 500 MW to a total of 2.8 GW.

Renewable Energy Business – Strong Growth and Future Potential

• The Group is positioning itself as a key player in China’s transition to a new energy system, aligned with national priorities such as zero-carbon industrial parks and factories. In 2025, photovoltaic power generation increased by 36%, reaching 2.48 billion kWh, with power trading volume at 8.4 billion kWh.
• The Group’s coverage extends across 25 provinces, autonomous regions, and municipalities, serving over 2,000 industrial customers.
• The Energy as a Service (EaaS) model and digital upgrades through AI-powered platforms (jointly developed with Tencent and Tsinghua University) are reducing operational costs and improving asset efficiency.
• Carbon management services are expanding, leveraging natural gas-electricity-carbon synergies for competitive advantage.
• Financing channels have been broadened via successful second and third Quasi-REITs, raising RMB3.5 billion. This strengthens cash flow and supports ongoing investment in high-quality assets.

City-Gas Business – Steady Performance and Margin Improvement

• Total gas sales volume reached 17.37 billion cubic metres, up 1% year-on-year, despite challenging market conditions.
• Dollar margin for city-gas improved by RMB0.02 per cubic metre, now RMB0.58 per cubic metre, driven by cost pass-throughs for 90% of residential and all industrial/commercial users.
• The “Gas+” business model delivered energy sales equivalent to 1.63 billion kWh, replacing steam, electricity, and other sources. Natural gas sales accounted for 156 million cubic metres.
• AI-driven safety and asset management are enhancing operational standards and reducing risks.

Financial Position and Liquidity

• Group borrowings stood at HK\$15,128 million, with fixed-rate borrowings at HK\$11,140 million. Most borrowings and cash are RMB-denominated, with currency risks managed through cross-currency swaps.
• Cash, time deposits, and restricted deposits totalled HK\$2,562 million. The Group maintains strong liquidity, supported by unutilised credit facilities and an unissued portion of its Medium Term Note Programme worth HK\$12,896 million.
• Finance costs decreased 11% to HK\$648 million, thanks to tight capital controls and low-interest loan arrangements.

Credit Ratings and Capital Structure

• Moody’s: Baa1 (Stable), S&P: BBB+ (Stable), China Chengxin International: AAA (Stable).
• No material contingent liabilities as of year-end.

Dividend Policy and Scrip Dividend Scheme

• The Board proposes a final dividend of HK14 cents per share, payable in cash or shares under a Scrip Dividend Scheme, subject to shareholder approval and regulatory compliance.
• Record date for dividend entitlement: 4 June 2026. AGM scheduled for 27 May 2026.
• Share certificates and dividend cheques expected to be dispatched on or about 14 July 2026.

ESG Commitment and Corporate Governance

• ESG practices are integrated across the business, with senior management compensation tied to ESG targets.
• Hang Seng Corporate Sustainability Index rating upgraded to AA+.
• Full compliance with Corporate Governance Code and robust internal audit/review processes.

Management Outlook – Price Sensitive Information

• The Group is strategically aligned with national energy priorities and its parent company HKCG, transitioning into a technology-driven, green energy leader.
• Anticipated policy dividends from the 15th Five-Year Plan, acceleration in new energy system development, and establishment of zero-carbon parks are expected to create substantial growth opportunities.
• The government’s move toward market-driven feed-in tariffs for new energy (including wind and solar) is expected to boost renewable energy sector profitability and capacity.
• Dual-wheel drive strategy will focus on steady gas business growth and vigorous development of renewable energy as a new growth engine.
• Continued investment in AI and digital upgrades will drive productivity and operational efficiency.
• The Group expects to maintain strong liquidity and access to low-cost funding, supporting ongoing expansion and shareholder returns.

Shareholder Information – Actions and Timelines

• Register closure for AGM: 20–27 May 2026. Register closure for final dividend: 2–4 June 2026.
• Share award scheme: Trustee purchased 11,607,000 shares on the Stock Exchange, totalling HK\$40.2 million during the year.

Potential Price Sensitive Events

• Strong performance in renewable energy and asset-light transition may positively impact share value.
• Dividend payout and Scrip Dividend Scheme offer flexibility and signal confidence in future cash flows.
• Upgraded ESG rating and new digital initiatives may attract institutional investors focused on sustainability.
• Expansion of AuM and successful Quasi-REITs issuance demonstrates robust capital management and growth prospects.
• Ongoing policy support and market reforms in China’s energy sector are likely to provide tailwinds for future earnings growth.

Disclaimer: This article is for informational purposes only. It does not constitute investment advice or a recommendation to buy or sell securities. Investors should exercise their own judgment and consult professional advisers before making investment decisions. The content is based on publicly available company disclosures and interpretations thereof; all figures are subject to change and should be verified with official company filings.

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