China Economic Net: CBM industry embracing fresh investment opportunities

On September 22nd, the General Office of the State Council released Opinions on Further Accelerating Coalbed Methane (Coal-Mine Gas) Extraction and Utilization, which mentioned explicitly that the development and exploitation of coalbed methane (CBM) shall be promoted by reinforcing financial fund and tax support, improving the CBM pricing policy and generating on-grid power. The State level policy support has given substantial support to the share prices of listed CBM firms.

According to the sector classification of Wind, there are 47 listed CBM (shale gas) companies in A share market, and the CBM (shale gas) sector rose by 2.33 percent up to the stock market close on September 23rd and performed better than the overall stock market. Individual shares in the sector all went up, among which Sino Geophysical and Huanghai Machinery almost hit the daily limited at the opening.

The upwardness of CBM sector is not accidental. The State has previously issued a series of preferential policies and measures supporting the development of CBM industry, for example, CBM extracting enterprises can enjoy value added tax refund-after-collection policy and import tariff and VAT exemption. Data shows that the national CBM extracting volume and utilization volume reached 14.1 billion cubic meters and 5.8 billion cubic meters respectively in 2012, growing by 22.6 percent and 9.4 percent. The compound growth rate of CBM extraction and utilization from 2010 to 2012 was 29.5 percent and 28.7 percent respectively. MORE