Towngas to spin-off business 'when time is ripe': CEO Peter Wong

Hong Kong and China Gas, known as Towngas, will spin off its Hong Kong gas-distribution business into a separately listed company when the time is ripe, according to chief executive officer Peter Wong Wai-yee.

Wong's comments follow an announcement last month by Li Ka-shing-controlled utility Power Asset Holdings that will spin-off its local electricity distributor, Hong Kong Electric. Li is reportedly seeking to raise as much as US$5 billion. Wong said Towngas was in no hurry to spin off its division.

Wong, who took over as CEO in February, said the company's corporate structure was not suited to its long-term development.

"Our new city-gas projects on the mainland now are all located in suburban cities, with low capital needs. If we have to start a major project in Shanghai someday we might consider [a spin-off]."

Hong Kong and China Gas, through Hong Kong-listed Towngas, has 166 projects on the mainland. The Hong Kong gas business generates the bulk of its income. Earnings before interest, taxes, depreciation, and amortisation (ebitda), fell 1.3 per cent to HK$4.1 billion last year. That compares with a 9.8 per cent jump in ebitda of its mainland business.

Tycoon Lee Shau-kee's decision to sell his 1.6 per cent stake in Towngas to his flagship company, Henderson Properties - revealed in an exchange filing earlier this month - sparked concern that shares of public utilities were losing their attractiveness. Henderson already owns 42 per cent of Towngas.

Wong denied that the local business was losing steam.