Catalist-listed Union Gas Holdings says it has diversified into the supply of piped natural gas (PNG) and liquefied natural gas (LNG) to its customers in the services and manufacturing sector.
The group announced that it has successfully secured contracts in November to supply PNG to four customers from the packaging, food production, hospitality and waste management industries.
The group has also signed a letter of intent with a potential fifth customer to conduct technical and feasibility studies to supply LNG to its food production plant.
If confirmed, the group believes the development will pave the way for it to offer this environmentally-friendly alternative fuel to more customers in Singapore.
The total annual worth of these contracts is said to be around $2 million.
The contracts will form the group’s fourth fuel product after liquefied petroleum gas (LPG), diesel and compressed natural gas.
Union Gas says it had already obtained its gas license from the Energy Market Authority since 2017 but was “waiting for the opportune time” to enter the market.
On the decision, Union Gas’ executive director and CEO Teo Hark Piang explains: “Although we had our licence and were ready to supply and retail PNG and LNG since 2017, it was also in that year that we were publicly listed. At that time, we made a decision to focus on growing and expanding our existing business to gain momentum to be on the right trajectory of growth.”
“As our existing business has since gained sufficient traction, we felt that now is the right time to revisit our plans to offer PNG and LNG and promulgate this gas as a viable, sustainable, and environmentally friendly alternative fuel,” he says.
“We are encouraged that this new business is off to a good start with four customers and potentially a fifth coming onboard soon. Union Gas is a well-recognised and trusted homegrown brand known for quality products and reliable services and we intend to leverage this track record and our industry know-how to grow this new segment of our business,” he adds.
For the 1HFY2020 ended June, the group reported a 76.7% surge y-o-y in net profit to $7.0 million despite the Covid-19 pandemic situation during the year.
The higher net profit was thanks to higher revenue of $43.2 million, up 27.2% y-o-y.
See: Union Gas reports 76.7% increase in 1H20 net profit to $7 mil due to higher LPG sales
The group attributes its healthy showing to strong sales of LPG to domestic customers and its entry into the supply of LPG to commercial customers.
The new business is not expected to have a material impact on the group’s net tangible assets and earnings per share for the current financial year.
Shares in Union Gas closed 0.5 cent lower or 1.1% down at 45.5 cents on Nov 26.
