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Tuesday, April 17, 2007

China Natural Gas Announces Fourth Quarter and Full Year 2006 Financial Results

NEW YORK, April 17 /PRNewswire-FirstCall/ -- China Natural Gas, Inc. (OTC Bulletin Board: CHNG - News), one of the leading providers of pipeline natural gas for industrial, commercial and residential use and compressed natural gas (CNG) for vehicular fuel in Xi'an, China, today announced its fourth quarter and full year financial results for the fiscal year ended December 31, 2006.
    Financial Highlights for the Fourth Quarter 2006:
-- Revenue increased 218% to $6.8 million, driven by the
construction of an additional 14 CNG filling stations
in the Xian area in 2006 and
continued growth of pipeline customers;
-- Gross profit up 189% to $3.3 million;
-- Income from operations increased 286% to $2.3 million;
-- Net income increased 271% to $2.1 million; and
-- Net income per diluted share increased 304% to $0.08
per share.

"We are very pleased with our performance through the fourth quarter of 2006, which exceeded our expectations by all measures," stated Mr. Qinan Ji, Chairman and CEO of China Natural Gas.

    Financial Highlights for Fiscal Year 2006:
-- Revenues increased 288% to $18.8 million;
-- Gross profit grew 272% to $9.1 million;
-- Income from operations increased 343% to $6.5
million; and
-- Net income increased 310% to $6.1 million or
$0.23 per share.

"We made great progress expanding our business in 2006, ending the year with seventeen CNG filling stations and 75,000 residential, commercial and industrial pipeline customers. I'd like to thank all of our employees for their outstanding effort," said Mr. Qinan Ji, Chairman and CEO of China Natural Gas. "As the sole authorized provider of pipeline natural gas to customers in our service area, and with 15 new company-owned filling stations slated to begin construction by the end of 2007, we are truly in a unique and enviable competitive position."

Revenue for fiscal year 2006 increased 288% to $18.8 million from $4.9 million for fiscal year 2005. The sharp increase in revenue was due primarily to the contribution of 14 newly constructed CNG filling stations during 2006 and a material increase in the number of residential, industrial and commercial pipeline customers compared to 2005. Revenue from sales of natural gas increased 713% to $13.7 million from $1.7 million in the prior year. Construction and installation revenue increased 62% to $5.1 million from $3.2 million in the fiscal year 2005.

Gross profit for fiscal year 2006 increased 272% to $9.1 million from $2.5 million in 2005. Gross margin decreased 200 basis points to 48.4% from 50.4% in the year 2005, reflecting the significant increase in revenues generated from company-owned CNG filling stations, which generate a lower gross margin than installation and construction revenue. While the Company's overall gross margin declined year over year, gross margin for sales of natural gas, excluding construction and installation revenue, increased to 44.1% from 23.3% in the prior year. Management believes that sales of CNG through its filling stations provide the best opportunity for future revenue and profit growth.

Operating expenses in fiscal year 2006 increased 166% to $2.6 million from $1.0 million, reflecting the construction and operation of 14 new natural gas filling stations during the year, as well as continued expenses related to the identification of future natural gas filling station locations and costs associated with the government licensing and approval process. As a percent of revenue, operating expenses decreased to 13.8% in 2006 from 20.1% in 2005. Operating income increased 343% to $6.5 million from $1.5 million. Operating margin increased substantially by 430 basis points to 34.6% compared to 30.3% in the prior year.

Net income for fiscal year 2006 increased 310% to $6.1 million, or $0.23 per share, compare to $1.5 million, or $0.08 per share, in the fiscal year 2005.

Balance Sheet

As of December 31, 2006, the Company had $5.3 million cash and cash equivalents on hand compared to $675,000 at December 31, 2005.

Fiscal Year 2007 Update

The Company expects to add up to 30,000 new pipeline customers by the end of 2007. Additionally, the Company expects to start construction of an additional 15 CNG filling stations through the remainder of the year.

Monday, April 16, 2007

BungeeLabs, Sneaking Out of Stealth

BungeeLabs, Sneaking Out of Stealth

April 16, 2007 — 05:56 AM PDT — by Pete Cashmore

Also at the Web 2.0 Expo: Bungee Labs, which is starting to drop hints about its Bungee Connect product.

Connect is a “100% on-demand web development and deployment environment” that launches in May. So what is it? Without going too deep into dev speak, it’s an IDE (integrated development environment) for building rich Ajax web apps. Among its strengths: automated support for the integration of SOAP and REST-based web services and the ability to deploy apps without using FTP (apps are deployed through the browser). They’re working with Amazon, Ebay, Google, Windows Live, PayPal, RealNetworks, Salesforce.com, Yahoo and more to make sure Bungee Connect works with all their web services (read: lots of mashable APIs).

For those who haven’t touched a line of code, that might not mean much, but those who have should look out for further details and the launch in May.

Thursday, April 12, 2007

The Fifth Level of Ajax

We are watching the evolution of web2.0 unfold in front of us and I believe it will eventually evolve into a web cloud of information and data for Users to search, gather, and remix to meet their needs. Whether it be personal or in the enterprise construct. This second location though requires an environment that delivers these user driven capabilities but still adheres to enterprise IT regulations.

Our CTO John Crupi recently described and blog on JackBe's corp blog about what he is seeing as a 5th level to Gartner's Levels of Ajax which is part of this story.

I think that all Ajax vendors have been touting the benefits of 'improved user experience' as their value proposition for a while. The problem with this proposition is that it is very hard to quantify.

But, they are missing something. It isn't just about the "experience" but about empowering the user with a better view and access to any data source. Consider the "Four Levels of Ajax Adoption" from Ray Valdez at Gartner. Ray has said that the levels are:
  1. Snippets
  2. Widgets
  3. Client Framework
  4. Client-Server Framework
I think Ray is missing the next level. The 5th level should be 'User-driven Framework', a framework that has all of the benefits of level 4 but allows the user to be the one pulling and mashing any information that exists in the enterprise, the trusted partner's enterprise and the Web. This may seem to be a small difference, but in reality it is the difference between 'improved user experience' and 'improved access to information which gives the true competitive advantage'. And to most business users, that's an important distinction.

So, we suggest the 'Five Levels of Ajax Adoption' :
  1. Snippets
  2. Widgets
  3. Client Framework
  4. Client-Server Framework
  5. User-Driven Framework
JackBe has embraced this idea through its new products, Dash, our dynamic interface for user-driven mashups, and Edge, our virtualization and mashup server. This is an emerging area and one we'll be talking about a lot in 2007.

New SalesForce.com Service is Yet Another Web 2.0 Proof Point

From my JackBe corp. blog....

Read/Write Web reported yesterday that 'Salesforce.com Brings Web 2.0 To The Enterprise With ContentExchange':
Today Salesforce.com announced a new product called Salesforce ContentExchange, a content management product for unstructured data such as email and html. They also publicly announced the acquisition of Koral, a web 2.0 content collaboration platform that was at DEMO07 earlier this year... Koral is a key enabling technology for Salesforce ContentExchange. The new product means that Salesforce.com now manages all types of content in a company - both structured information (e.g. CRM data like contacts and sales information) and unstructured information (office documents, HTML, video/audio files and email, etc). Marc Benioff, chairman and CEO of salesforce.com, calls this “another step towards our vision of managing all information on demand”.

So far, Web 2.0 migration into the enterprise world has seemed largely been limited to the notion of enhanced content creation and sharing – for example, using a blog to add a human touch to a vendor/customer or management/employee relationship. Another example is using a wiki to create central repositories of information to which any employee can contribute, thereby exposing previously hidden but useful information. Both blogs and wikis are certainly '2.0' types of tools, and as such they are useful for sharing unstructured information associated with projects and processes. But they do nothing for structured information retrieval.

I think the SalesForce.com ContentExchange nicely reinforces what we at JackBe have been talking about for many months: a new level of ‘2.0 collaboration’ that empowers employees to share, access and interact with disparate information and data, both structured and unstructured. Check out the graph, stolen from one of our sales pitches, for an example. I think it's about delivering on the original promises of what Portals were aimed to do (but largely didn't do), and all in a 100% user-driven way.

Most business and knowledge worker tasks rely on access to the appropriate structured data in real, or near-real time. These information pieces are spread out across many enterprise applications, and databases. We as information workers are trapped in a world of monolithic siloed applications, each with its own login and password, access control policies, and confusing and user interfaces. Furthermore, because information is stored in different locations, the relation between the data is not obvious, and is usually only well understood by the information worker himself. It appears that SalesForce.com aims to change all that.

And, of course, JackBe's own Presto offers considerable efficiency potentials to the enterprise by presenting a user-driven consolidated view to both this disparate unstructured and structured information so to better respond to tacit activities. We think Presto will essentially redefine how information is located, consumed, and remixed as seen fit in the enterprise. Presto provides user insight and control of all accessible/governed information the knowledge worker needs to better respond to events. But enuf about my stuff for now.

Thursday, April 05, 2007

Clean Energy China Stock Pick - CHNG

Based in the city of Xian in China’s north-central province of Shaanxi, China Natural Gas distributes natural gas (to approximately 50,000 households, as well as commercial buildings) and compressed natural gas (CNG) (to CNG wholesales and retail automobile filling stations). Recently CHNG has introduced its own network of retail filling stations to sell CNG directly to consumers—by the end of 2006, CHNG operated 17 filling stations in or near Xian. The company also owns a 70-mile high pressure gas pipeline, which connects CHNG’s distribution

network to the government-owned high-pressure pipeline serving the province. In 2007, CHNG plans to construct its own liquid natural gas plant, which will allow the company to expand the geographic market it serves. CHNG came public in the US via a reverse merger in December 2005. Although CNG currently represents only about three percent of China’s energy consumption, it is becoming an increasingly important source of fuel in the PRC. CNG is the cleanest burning fossil fuel (reducing the environmental impact of the increasing use of internal combustion vehicles in China), China has significant domestic natural gas resources (reducing the need for imported fuels) and CNG costs less per unit of energy content than gasoline or diesel fuel. The Chinese government is actively encouraging increased use of CNG via various incentives for CNG-related exploration and infrastructure development, which, combined with CNG’s other attributes, will likely lead to increased demand for CNG for the foreseeable future. (Because CNG is less expensive than either gasoline or diesel, drivers of dual-fuel vehicles will likely use CNG unless only gasoline or diesel are available in the area they are traveling in.) CHNG plans to fill the current gap between demand for CNG and retail supply in Xian by continuing to build its own CNG filling stations (at a cost of approximately US$600,000

each), while at the same time providing gas to filling stations owned by its competitors.

CHNG is focusing on expanding its retail CNG filling stations network because this business offers higher gross profit margins (approximately 39 percent) compared to the gross profit margin of the residential natural gas business (approximately 18 percent). As of the end of 2006, CHNG owned 23 filling stations (including six still under construction, all of which dispense CNG), with plans to have a total of 30 stations in operation by the end of 2007. Due to the fact that wholesale and retail CNG prices (and, therefore, gross profit margins) are set by the Chinese government, the key to increasing revenues and profits in the CNG business will be continuing expansion

of gas volume sold via increasing the size of the company's retail and/or wholesale distribution networks. CHNG is also working on expanding its facilities to include processing liquefied natural gas (LNG), which can be transported via trucks (rather than pipelines), allowing the company to increase the geographic size of its market. Management expects construction of the LNG plant will require $19 million in additional capital once the plant is approved by provincial and city government regulators.

As of August 2006, CHNG has 23.9 million shares outstanding. The company’s chairman owns approximately 25 percent of CHNG’s common shares; CHNG’s CEO owns nine percent. Approximately six percent of CHNG’s shares are held by institutions. For the quarter ending, September 30, 2006, CHNG received 80 percent of its revenues from the sale of natural

gas, of which 93 percent was sales to competitors’ CNG filling stations and seven percent was to household and wholesale consumers. The remaining 20 percent of revenues were related to CHNG’s construction of natural gas pipelines. (In China, customers have to pay approximately 60 percent of the construction cost of new pipelines upfront; the remainder is included in future monthly natural gas charges.) For the quarter ending September 30, 2006, CHNG reported net income of $2.5 million on revenues of $6.5 million, which represented year-on-year growth of 520 percent and 368 percent, respectively. Fully-diluted earnings per share increase 350 percent (to $0.09 per share). CHNG has a very strong balance sheet with $5.0 million in cash and total assets of $25.6 million. The company has a current ratio of 4.9 X, no long term debt and stockholders

equity of $23.4 million.

Industry: Energy


Sector: Natural Gas Distributor


What will the new spring crop yield?

Posted by Susan Scrupski on April 4th, 2007

I’ve been taking a lot of satisfaction these past few weeks in how our little enterprise 2.0 garden is growing. In the past few weeks I’ve been asked to podcast, to appear on a video segment, and to participate in an enterprise 2.0 “rave.” All good stuff. The analyst and media coverage of enterprise 2.0 has really started to pick up too. I’m particularly encouraged by the management findings and recommendations we’ve seen coming out of MIT’s Sloan Management Report and McKinsey. I guess they legitimize our inner-circle zealot ramblings.

A few items of interest: I attended Ajax World a couple weeks ago. I listened to a few of the speakers, but spent more time trolling the vendors in the exhibit hall for real examples of how Ajax solutions were generating real business advantages for their customers. Nexaweb had some interesting case studies. They quickly rattled off projects at Bank of Toyko, Mitsubishi, Seimans, AFLAC and EMC where companies had built rich Internet applications that were making a difference in their markets. Another interesting observation was a casual chat I had with Chris Warner at JackBe. He basically told me the audience makeup is different this year. That it was not so much developers in jeans and ponytails asking technical questions, but guys in Polo shirts and khakis asking how to solve a business problem. He said, “When suits start walking around, we’ll know the market has matured.”

I ran into Dion Hinchcliffe in the lounge. Dion and Jeremy Geelan had kindly asked me to participate in their ground-breaking Enterprise 2.0 premier web TV segment. Unfortunately, I had to decline, but look forward to future episodes. Don’t miss the first episode, airing Monday, April 9.

Here is Dion’s description of the show:

The Enterprise 2.0 TV Show Airs Web-Wide This April from the Reuters TV Studio in Times Square

We’ve teamed up with former BBC producer Jeremy Geelan — and IT industry maven extraordinaire — to create a new world-class Web-based TV show with broadcast quality production values that obsessively covers the rapidly emerging topic of current industry fascination: Enterprise 2.0. Taped in leading venues throughout the country, the Enterprise 2.0 TV Show is designed as an open, freely-distributable communication stream created to tap the exploding popularity and delivery models of the online video medium. The show is carefully crafted to help non-technical business leaders explore the power and potential of the very latest industry developments on the Internet. Each show delves into the most important new trends that are helping reshape the face of the enterprise today and have the potential to unleash significant productivity gains and competitive advantage. Episode #1, a deep dive into the moving parts of Enterprise 2.0, has already been taped with industry leaders such as SocialText, Kapow, Jubii, and Near-Time and will be ‘airing’ in April on the show site as well as everywhere else on the Web. Also, if you are interested in appearing on the show or want to advertise or sponsor, please contact Jeremy directly.

I first started writing about what we now call “Enterprise 2.0″ the end of June, last year. I believe it was about this time last year that McAfee published his seminal, “Enterprise 2.0: the Dawn of Emergent Collaboration.” Now, barely a year later, we’ve got our own T.V. show and we’re hosting Rave parties (more to come on that). I’m looking forward to harvesting the rewards of this year’s crop. It’s fun blogging history in the making.

Posted in Next Net, Enterprise 2.0, Enterprise Mashups, Irregulars, Office 2.0, SaaS, blogs, Wikis, SOA, AJAX | No Comments »