Although the economy of China returns to a somewhat stable situation with a GDP growth of 6.9% in 2017, the problem of redundant production capacities has not been completely solved, and the annual results of 2017 of gas equipment manufacturers show varied performances.

Below is the summary of the annual reports of some of the listed equipment companies in the gas industry.


Hangzhou Hangyang Co Ltd, the largest air separation and cryogenic equipment manufacturer in China, has reported that their annual turnover has increased 30.5% from RMB 4944.5m ($786.2m) in 2016 to RMB 6451.8m ($1025.8m) in 2017. They have recovered from a deficit of RMB 282.6m ($ 44.9m) in 2016 to a profit of RMB 360.7m ($57.4m) in 2017, giving a 227.6m% increase.


The equipment manufacturing business of Hangyang earned RMB 2,101.01m ($334.2m) in 2017 (an increase of 57.4% from 2016), of which RMB 1,861.7m ($296m) came from the manufacturing of air separation plants, reporting an increase of 64.5% from 2016. Sales of industrial gases contributed RMB 3,912.03m ($622.01m) to the annual turnover in 2017, marking an increase of 18.9% from 2016. The industrial gas business has once again become the major part (60.6%) of the annual turnover.

Revenue from domestic business accounts for RMB 6,418.3m ($1020.5m) in 2017, an increase of 30.6% from 2016 and a share of 99.5% of the total annual turnover, whereas revenue from overseas business has increased by 17.1% to RMB 33.47m ($5.3m), giving a minimal share of only 0.52% of the annual turnover.

The company also gave an analysis of their gross profit margin of their various businesses. The gross profit margin of equipment manufacturing is 25.6% and that of air separation plants manufacturing is 26%. The industrial gas business has a profit margin of 20.7%.

Management comments

The management states in the report that the increase in annual turnover is due to the increase in gas supply by pipelines, increase in the sales of liquid products in addition to the increase in retail prices of products, especially in the latter half of year 2017. Effective measure of collecting debts and receivable funds also helps the financial performance.

On the equipment side, the company commented that the successful commissioning of the 6 sets of 100,000 Nm3/h class ASU has assisted the sales of their products, resulting in a total value of RMB 3817 million worth of orders, including 4 sets of 50000 Nm3/h ASU for Hebei Zongheng Steel, 4 sets of 83000 Nm3/h ASU for Zhejiang Petrochem Co Ltd, 2 sets of 90000 Nm3/h ASU for Xinjiang Tianye (Group) Co Ltd, and 3 sets of 100000 Nm3/h ASU for Shenhua Yulin Energy Chemicals Co Ltd.

Besides, they have also signed a contract with Jiujiang Xinlianxin for the supply of air gases with 2 sets of 80000 Nm3/h ASU, scheduled to start the gas supply by 2020.

The way ahead

Hangyang explained in the report that coal chemistry is developing in China, with Erdos of Inner Mongolia, Yulin of Shaanxi, Ningdong of Ningxia and Waidong of Xinjiang established as the four demonstration zone of modern coal chemistry. The emergence of the modern coal chemistry has led to the increase in demand of ASUs as well as pushed the sizes of ASUs to larger and larger units.

As for the plans and objectives for 2018, the company expressed that they would improve the execution of contracts to enhance cost control to lift the gross profit margin of the equipment manufacturing. They would also follow up closely on major projects so as to win more contracts.

On the industrial gas business side, more efforts will be put into the research of gas products and to realize the extraction and sales of neon and helium as soon as possible. They would also select quality gas supply projects, including merger and acquisition and new projects, to expedite the expansion and roll-out of the industrial gas business.


Another cryogenic air separation plant and cryogenic equipment manufacturer, Suzhou Oxygen Plant Co Ltd (Suyang), announced that their annual turnover in 2017 has increased by 2.7% from that of 2016 to RMB 353m ($56.1m) . However, net profit has dropped 60.1% from RMB 10.01m ($1.6m) in 2016 to only RMB 4m ($0.6m). The company explains that they have made a provision of RMB 5.2m ($0.8m) for bad debt because of the economic risks in the Russian region. When non-recurring profits and losses are deducted, the net profit attributable to shareholders plunges 71.1% to RMB 2.3m ($0.4m).

Moreover, Suzhou Huafu Cryogenic vessel Co., Ltd, one of their subsidiaries manufacturing cryogenic tanks and tankers, recorded a loss of RMB 3.4m ($0.5m) in 2017.

Breaking down into products, gas separation equipment and liquefaction equipment contributes RMB 203.3m ($32.3m) and is 57.5% of the total operating revenue; revenue from sales of natural gas is RMB 117.6m ($18.7m), accounting for 33.3% of the gross operating revenue; and cryogenic storage equipment contributes RMB 18.3m ($2.9m), accounting for 5.2% of the gross operating revenue.

The management comments that the demand in China is still sluggish because the economy in China has slowed down due to the domestic demand side structural reformation, and redundant production capacities of the steel, chemicals, coal chemistry are still being slashed. Moreover, competition is serious, deals are always low-priced, and payment terms are also stringent.


To the west region of China, Chengdu Shenleng Liquefaction Plant Co Ltd delivers a less than satisfactory annual results of 2017.

As explained in their report, since they did not get a good number and value of orders in 2016, the annual turnover in 2017 has dropped 22.2% from RMB 308.07m ($49m) in 2016 to RMB 239.6m ($38.1m). Operating profit has plummeted by 73.1% year-on-year to RMB 12.7m ($2.02m). Gross profit has declined by 49.8% year-on-year to RMB 24.4m ($4.2m). Net profit attributable to shareholders has dropped 50.03% to RMB 19.3m ($3.3m). If non-recurring profits and losses are deducted, the net profit drops further to RMB 5.5m ($0.9m), which is 82.5% less than that in 2016.

Revenue from manufacturing of LNG equipment in 2017 is RMB 192.2m ($30.6m), accounting for 80.2% of the gross revenue and has dropped 6.8% from 2016.

Manufacturing of air separation equipment contributes RMB 17m ($2.7m), representing 7.08% of the gross revenue and is 53% less than that in 2016.


A company focused in the manufacturing of non-cryogenic gas separation technology and based in Dalian city in northern China, Dalian Leader Gas Technology made RMB 35.9m ($5.7m) in 2017 (a minor drop of 0.7% year-on-year), a gross profit of RMB 8.4m ($1.3m) and a net profit attributable to shareholders of RMB 7.4m ($1.2m) which is an increase of 8.6% year-on-year.

The management states that as the supply side structural reformation continues, the market situation and the trade environment of air separation equipment remains grim; in addition, the scale of investment and the growth rate of the upstream and downstream industries has slowed down, so that the number and value of the orders have demonstrated a downward trend.

Favourable natural gas policies in China help boost the demand for natural gas equipment, CIMC Enric annual report says

Listed in Hong Kong, CIMC Enric with its headquarters in Shenzhen delivers a financial report showing satisfactory growth in their business.

Their revenue in 2017 has achieved RMB 10.7m ($1696.69 million), a 33.9% increase from that of 2016. Gross profit has grown 28% from RMB 1403.6m ($223.2m) in 2016 to RMB 1796.3m ($285.6m). Profit from operations in 2017 is 11.3% higher than in 2016, reaching RMB 740m ($117.7m). Profit attributable to shareholders has returned to RMB 417.4m ($66.4m) from a loss of RMB 928.8m ($147.7m) in 2016, representing a jump of 144.9%. The loss in 2016 was mainly due to an impairment provision of RMB 1362.9m ($216.7m).

The reportable segment revenue from energy equipment and engineering segment contributes RMB 4,973.03m ($790.7m), a year-on-year increase of 53.31%; that from chemical equipment RMB 3145.8m ($500.2m), a year-on-year increase of 23.8%.

Geographically, revenue from China accounts for RMB 5250.8m ($834.9m) and RMB 5420.5m ($861.9m) from overseas, representing 49.2% and 50.8% of the share of the revenue respectively.

Regarding the business growth, the company commented, “Gradual recovery of the international oil price and favourable policies announced by the PRC Government boosted the consumption of natural gas in China during 2017. This in turn caused the demand for natural gas equipment, especially LNG equipment, to increase during the year; thus, resulting in the surge of energy equipment and engineering segment’s revenue during the year. The rise in demand for tank containers caused the chemical equipment segment to post an increase in revenue during the year.”

The company further explained specifically the growth in their LNG equipment business, “While the widening of the price differential between natural gas and oil, caused natural gas vehicle related products like on-vehicle LNG fuel tanks to record a robust rebound in demand during 2017. At the same time the expansion into marine LNG module business and LNG tank containers, as a new LNG storage and transportation medium, also contributed to the growth in natural gas equipment’s revenue during the year. The segment remains the top grossing segment and accounted for 46.4% of the Group’s total revenue (2016: 40.7%).”

Looking forward, ENRIC stated that their energy equipment and engineering segment will follow a strategy of expansion from domestic to international market and extend coverage through the entire industry value chain. Thus, the segment would continue with its endeavours to connect the upstream, mid-stream and downstream natural gas industry value chain, develop comprehensive LNG and LPG business chains, adjust and optimise its pressure vessels business chain with an equal emphasis on hydrogen, electronic gas and CNG. The segment also captures opportunities from the development of unconventional natural gas sources and LNG marine applications, aiming to maintain competitiveness.

And for the chemical equipment segment, it will continue to devote effort into R&D and market exploration, so as to expand the scope of application of special tank containers and to maintain a leading market position in standard tank containers. And while consolidating its equipment manufacturing business, the segment will actively explore the potential in providing more intelligent products by utilising internet-of-things (IOT) technology, helping clients to build a digitalised operation system and improve their operating efficiency.