The Energy Bureau of the National Development and Reform Commission (NDRC) predicts that natural gas will make up 6% of energy consumption in 2010 in China and 10% by 2020, compared to 3% in 2007. This is an industry with plenty of growth potential, as the evolving world is becoming more environmentally aware and realizing the potential health benefits of using natural gas rather than other fossil fuels. With its proprietary technology and experienced management, Sino Gas International Holdings (OTC BB: SGAS) is well-positioned to capitalize on the growing popularity of natural gas in China.

Sino Gas, a natural gas company headquartered in Beijing, with subsidiaries in five other provinces within the People’s Republic of China, is one of the first and largest compressed natural gas suppliers in the country that serves both residential and industrial customers. The Company currently serves approximately 145,000 residential and 7 large industrial customers.

Sino Gas’ revenue is closely related to the development of the real estate industry in its targeted cities in China. A large portion of the Company’s revenue comes from new residential apartments. Natural gas facilities in new apartments are often required by local governments, who aim to promote the use of natural gas to improve local residents’ quality of life through cleaner air and fewer pollutants.

Currently, the key components of the Chinese government’s spending are infrastructure and clean energy. This helps maintain the upward trend in gas sales for Sino’s business. In the 3rd and 4th quarters of 2009, after the current government spending policy was issued, the Company saw a significant jump in revenues. Despite the ups and downs of the Chinese real estate market during the 2008 crisis, the real estate market will likely continue to grow because of the continuous urbanization in China. Even with the steady growth of the real estate market in China, the Company is planning to reduce its dependency on connection fees by investigating opportunities to diversify its business by expanding into related areas, such as pipeline and gas station businesses. As Sino Gas International Holdings develops into more cities in the coming year and reaches out to industrial users in particular, it expects to see strong growth and capitalize on the many opportunities afforded by the alternative energy market.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

A high-performance source of clean energy, LNG is rapidly gaining in popularity worldwide, with LNG production growing at about 12% per year. LNG is commonly used in such industries as power generation, transportation, metallurgy, ceramics, and glassworks. In April, China Natural Gas announced plans to build LNG reserve stations, harbor LNG fueling stations (an untapped market in China), and inland LNG fueling stations in Hubei Province.

China Natural Gas is the first China-based natural gas company publicly traded in the United States. The Company operates 25 CNG fueling stations in Shaanxi Province and 12 CNG stations in Henan province. China Natural Gas also operates a network of natural gas pipelines serving residential, commercial, and industrial customers through its distribution networks in Shaanxi and Henan provinces. Natural gas offers an economical, more environmentally friendly alternative to coal and oil. The Chinese government, in an effort to reduce dependence on fossil fuels, aims to increase the country’s use of natural gas from 3% of total energy to 8% in 2010, and to 10% by 2020.

The Company is leveraging its strategic partnerships with China’s two largest oil and gas producers to widen its customer base. In addition to its natural gas supply contracts with PetroChina, the Company is partnered with State-owned China Natural Petroleum Corporation Kunlun Natural Gas Co. to bring one CNG compressor station and six fueling stations to Pingdingshan City in Henan Province. The project received construction approval from the Chinese government in March.

China Natural Gas expects to add 8 to 10 company-owned stations and four joint venture stations in 2010. Guidance for the full year 2010 projects an increase of 20 to 25% in revenue, along with an increase of 17% to 22% in net income. Due to the Company’s ambitious expansion plans and strong growth potential, investors would do well to watch China Natural Gas.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

China Natural Gas owns and operates approximately 120 kilometers of compressed natural gas pipeline in Xi’an, a fast-growing area supported by a population of 8.5 million and the “gateway” to the broad western regions of China. CHNG has three profitable business segments: (1) retail natural gas at company-owned natural gas fueling stations; (2) end-user delivery of natural gas services to residential, commercial and industrial customers; and (3) conversion of gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles.

The Company continues to expand its compressed natural gas fueling station network in Shanxi province through acquisition and construction, and in other provinces through joint ventures. CHNG has expanded its retail business into Henan province, China’s most populous province with a population of more than 100 million. The Company currently operates 36 retail compressed natural gas fueling stations in Shaanxi and Henan provinces.

CHNG has moved into the liquid natural gas market with the construction of a liquid natural gas processing and distribution plant in Jingbian. With completion expected in early 2010, this plant initially will have an annual processing capacity of 150 million normal cubic meters.

Financial highlights for the three months ended September 30, 2009:

• Total revenue rose 9.4% year-over-year to $20.13 million in the third quarter of 2009, from $18.40 million in the year-ago period.
• Net income totaled $4.65 million in 3Q09, compared with $5.14 million in 3Q08. EPS was $0.29 per fully diluted share in 3Q09, compared to $0.35 in 3Q08.
• Gross profit was $9.72 million in the third quarter of 2009, up 2.4% from $9.49 million in last year’s third quarter.

Disclosure:  China Natural Gas, Inc. is a client of RedChip Companies, Inc.  RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.