China Oil And Gas Group Limited

In first-half 2026, revenue totaled HKD 7,854 million, down 1% year on year. Gross profit was HKD 1,093 million, up 11%, and gross margin rose to 14% from 12%. EBITDA increased 3% to HKD 1,160 million. Profit before taxation was HKD 705 million, profit for the period was HKD 501 million, and profit attributable to owners of the company was HKD 196 million, down 22% year on year. Excluding one-off items, underlying operating profit was HKD 228.5 million, down 10%. Operating cash flow was HKD 470 million, down 6%, and capex was HKD 222 million, down 20%. At June 30, 2026, total debt was HKD 9,791 million, cash and cash equivalents were HKD 5,046 million, and net debt was HKD 4,745 million. Management said the weighted average cost of indebtedness was 4.5% versus 4.7% in first-half 2025. For guidance, management expects the blended dollar margin in gas distribution to remain stable, with only a plus or minus 0.01 to 0.02 change depending on weather. Full-year gas sales volume is expected to be down in single digits, around 6% to 7%, rather than a double-digit decline. Management also said it is working to reduce financing costs through refinancing, including a new syndicated loan at SOFR plus 1.3% versus SOFR plus 1.75% on the prior facility.

The lead executive emphasized disciplined execution in a tougher macro environment, focusing on price pass-through, procurement optimization, and cost control to protect profitability even as gas volumes softened. The tone was cautious but constructive: management repeatedly framed the business as resilient, with a “low volumes but higher profit” profile and a focus on sustaining cash flow and operating profit. Strategic priorities included deepening C&I customer development, expanding value-added services, and building a second growth curve through integrated energy and digital initiatives.

The CFO highlighted that gross profit improved faster than revenue, helped by better purchase-sales margins, with gross profit up 11% to HKD 1,093 million and gross margin up to 14%. She also pointed to pressure from higher selling, general and administrative costs, which rose 31% to HKD 304 million, mainly due to R&D in the coal-derived clean energy segment. On the balance sheet, she said cash and cash equivalents were HKD 5,046 million, total debt HKD 9,791 million, and net debt HKD 4,745 million; the weighted average cost of indebtedness improved to 4.5%, and the company refinanced at lower cost with a new USD 150 million syndicated loan at SOFR plus 1.3%.

Analysts focused on why blended gas purchasing cost fell to RMB 2.11 per cubic meter despite higher domestic gas prices, and management explained it was mainly a mix effect because low-margin Qinghai volumes dropped in a warm winter while other provinces grew. Questions also centered on full-year gas volume and margin guidance, with management saying volumes should be down in single digits, around 6% to 7%, while blended margin should stay stable. On debt, management said more onshore borrowing was used to replace higher-cost offshore debt, that the new syndicate loan is at the holdco level, and that a future RMB facility is still under discussion. A separate cluster of questions on Shengli addressed future asset injections and financing flexibility; management said it sees strategic value in using Shengli’s A-share platform for cheaper funding and possible debt or equity issuance, but the current transaction must close first.