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2009-4-3 12:05:00 p.m. HKT, XFNA
DJ Towngas China To Exit LPG Business, Sell 70% Stake In Unit
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| HONG KONG (Dow Jones)--Towngas China Co. (1083.HK) plans to ultimately dispose of its entire liquefied petroleum gas sales business and focus only on urban piped gas distribution.
Towngas China, a 45%-owned affiliate of blue-chip gas supplier Hong Kong & China Gas Co. (0003.HK), said in a statement late Thursday it plans to exit the LPG business due to relatively low profit margins and unstable LPG prices.
'The amount invested into the LPG business is not proportionate with the return of the business,' John Ho, an executive director of Towngas China, said in the statement.
As the first step, the company plans to sell its entire 70% stake in Pan River Enterprises (Changde) Co., one of its 17 LPG units in China, for HK$414.2 million, Ho added.
Analysts said profit margins at local LPG filling stations are low, which are squeezed by lower domestic prices due to weaker demand and higher import costs. -By Aries Poon, Dow Jones Newswires; 852-2832-2332; aries.poon@dowjones.com
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