Dear investors and analysts, good evening. A terrible fire happened in Hong Kong a couple of days back. Before we start today's meeting, the group management will deliver condolences. Now, let's welcome Mr. Liu Mingwei, our friend joining us physically and online. On behalf of China Gas, I feel deeply sorry for what happened to the Wang Fu Court, and I would like to send our condolences to all the victims, including the firefighter who died in the fire. Our condolences also go to the victims' families. China Gas Charity Foundation will donate HKD 1 million and the Yiping Wei Smart Living under the group will donate supplies of HKD 200,000 to those affected, and we hope to help them get through this terrible time. Thank you. Now we'll start China Gas Holdings Limited 2025-2026 interim results announcement, as well as the online live streaming.
Please allow me to introduce to you the management joining us today. They are Mr. Liu Mingwei, Chairman of the Board and President, Mr. Huang Yong, Executive President and Executive Director, Mr. Zhu Weiwei, COO and Executive Director, Ms. Liu Chang, Vice President and Executive Director, Mr. Li Wintao, Vice President, as well as Mr. Tan Yuwei, General Manager of Capital Operations. Now, our Chairman of the Board and President, Mr. Liu Mingwei, will extend the welcome speech. Welcome to China Gas Holdings Limited interim results announcement. Thank you to all the analysts, fund managers joining us physically, as well as all the investors and analysts and fund managers joining us online. Thank you all so much for giving us the support and trust to China Gas over the past 20 plus years.
In the past six months, China's economy has encountered many difficulties, but China Gas has been overcoming difficulties and making progress forward. We are very confident in our future development. Today, we're going to present to you our interim results and also showcase to you why we are confident in our future. Thank you. Now we will invite Mr. Liu Wintao, our Vice President, to share with us on our interim results as well as our future outlook. Please, Mr. Li. Dear analysts, investors, friends, good evening. Now I will walk you through our first half of the year performance. There will be five parts in my presentation: business highlights, operational performance, financial performance, outlook. If time allows, we have used AI agents in our management and operation. I will touch upon that as well.
For the first half of the year, free cash flow continued to grow, HKD 2.6 billion, and there was a growth of 17.2%. If you still remember, since the year 2023, our free cash flow turned positive, and since then, our cash flow has been growing in a stable manner, and we forecast this momentum to continue. For CNI BTM energy storage in operation, altogether 617.7 MWh, though there was a seven times increase. This scale of operation right now is top ranking in China. Regarding our ESG rating, in the past three years, our rating has been improving every year. First half of this year, MSCI rating was upgraded to A. In addition to MSCI, all the other ESG ratings have been improved, including DGSI and CBD, and our ratings have all been upgraded.
For residential price pass-through and also natural gas upstream/downstream pass-through, it's a very important task for gas companies within our China Gas projects. Right now, for 26 provinces, autonomous regions, and municipalities, they have announced the pass-through policies. For the first half, there are 11 China Gas projects that have been approved by the government, and the residential price adjustment has been completed. The weighted average price adjustment for residents was HKD 0.2 per cubic meter, and the pass-through ratio was increased from 62%- 74%. The pass-through ratio will continue to increase, and this will help to improve the dollar margin. For the first half of the year, residential dollar margin increased by HKD 0.03. Now let's look at natural gas. For the first half, the total sales volume, RMB 17.4 billion, up by 1.7%. For the city and township gas, RMB 9.19 billion, slightly down by 1.5%.
For the pipeline-based direct supply and training, altogether HKD 8.22 billion, up by 5.4%. Let's take a look at the sales volume by user. Residential, the volume increased by 0.1%. For industrial and commercial, for the first half of the year, volume was down by 1.1% and 2.2%. I will elaborate on the reasons why there was a drop for industrial and commercial. I believe those of you who have been following on the city gas, and if you look at the peer performance and the total industry, you would probably know the factors behind the drop, but I will elaborate on them in a minute. For the gas station business, we see the volume continue to decrease, and for the first half of the year, there was a drop of 24.6%. For the gas sales breakdown by user, we see residential 28.2%, industrial 53.1%, commercial 16.9%.
Gas station business is further down to 1.8%. It was 2.4% the same period last year. We know that the dollar margin for gas stations is the highest among all users. In the past, the gas station dollar margin has always been over RMB 1. As the share of gas stations goes down, this also impacts our overall dollar margin. Let's look at the commercial and industrial. There was a 1.1% and 2.2% volume decrease. Let's look at the reasons for that. For the commercial users, due to macroeconomic headwinds, the total catering business revenue suffered. If we look at the macro data, the catering consumption per capita in China was down by 7.7% this year. For some industries, there has been involution, and a lot of small restaurants have suffered in both revenue and profit. This impacted their gas demand.
It was a warm winter last year, so the heating gas demand for commercial users was impacted because in April, it was still quite chilly, and some users still used natural gas for heating. For April this year, the temperature was higher. One city, Qingdao, in April, single month commercial gas use was down by 10%. That is the main reasons affecting commercial business. For industrial users, it is impacted by the weak real estate sector over the years. For the real estate sector-related industries, including construction materials and porcelain and glass, the total energy use went down since the beginning of the year. This year, the newly started construction area for real estate was down by 19.8%. This impacted the residential connections and also impacted the total industrial gas demand.
If we look into the future, going into the second half of the year, where we're going to have winter, according to the market forecast, it's not going to be a warm winter this year. The temperature will become normal. Last year, when we announced the full year results, we announced that because it was a warm winter, for the second half last year, for the rural area in northern China called to gas, the natural gas use was down by 200 million cubic meters. That is about 0.9% of our full year total gas retail. This year, according to the market forecast, in winter, residential gas for heating will increase by 200-300 million cubic meters. That's about a 1% increase of total gas volume. As macroeconomy recovers for the second half, the total gas sales will return to positive growth.
Actually, for October, the single month has already increased by 3%, and November would be the month that we're going to have heating. We forecast that the volume will continue to increase. Now let's look at the dollar margin for natural gas. For the first half, the average procurement cost was on par with that of last year, HKD 2.63 per cubic meter. Average selling price, HKD 3.21. There was a HKD 0.01 decrease, but that's a weighted average of different users. It's a mixed reason. For city and town gas, the dollar margin was HKD 0.58, and it was HKD 0.59 last year. It was a roundup figure, so there was no decrease, same as we expected. One reason for that, I already mentioned earlier, high gross margin gas station business continues to decrease, and that impacted our overall dollar margin for the period.
For some large industrial users, especially newly connected industrial users, the industry also offers a very small dollar margin discount. Overall, the dollar margin remains very much the same as that of last year. If we look at the gas supply and resources and the price for the second half, we think we are going to have a HKD 0.01 increase of dollar margin. We are confident in that. By 31 March next year, the average dollar margin is going to be HKD 0.55. For the procurement, we have taken multiple measures. We have optimized the gas resources so that we could stabilize or bring down the procurement cost. Measures include integrating the resources from different parts of the country when we sign upstream contracts. For some places, they have very sufficient gas, and some do not.
Within our group, we could integrate and coordinate among different regions so that we could avoid outside of the contract procurement in order to reduce our cost. We also, for the upstream, some of the contract volume we are putting to the exchanges. A few days ago in the Chongqing Petroleum and Natural Gas Exchange, we participated. We tried to get more on contract volume. Therefore, for the total procurement cost for natural gas, it will remain fairly stable. For international LNG trading, we also adopted various LNG trading models, including some innovative models, such as the spot-bought procurement, cargo swaps, and long-term contract, or long-term shifting to near-term contract. These measures help us to mitigate or hedge against international trading risks. For the first half of this year, we have done this 500,000 ton LTC swap agreement.
Some LTC from Northern America has been replaced by contracting other regions. This will help us to mitigate risks on trading tensions as well as tariffs. For the connections, for H1 this year in residential, new connections, HKD 676,000 households, down by 25.2%. This drop falls within the range we gave in the full year guidance. Last year, full year new connection was HKD 1.4 million. The full year guidance was that for new year, new connections is going to be around HKD 1.2 million. We are confident in achieving full year target. For industrial new connections, HKD 1,213, down by 7.8%. For commercial, HKD 20,360, down by 18.3%. For commercial new connections, I would like to elaborate. In the past year, the city gas companies have enjoyed the policies from the government bottled to piped. There were a lot of new industrial and commercial connections, especially commercial connections.
For full year last year, for China Gas, new commercial connections increased by 46.1%. For last year, first half, commercial new connections increased by 63.4% year- over- year. Last year, for the gas industry, industrial and commercial, especially commercial new connections, were at a very high base for the first time this year, although there was a drop by 18.3%. HKD 20,000 commercial new connections, this is a very normal level. The average connection fee has remained quite stable, HKD 2,500 per household. As there are new connections, the penetration of gas in city and residential continues to increase. Now the penetration is 73.8%. The LPG business for the first half of the year sales was HKD 1.928 million, down by 4.5%. Revenue was HKD 8.38 billion, down by 12.3%.
Because for the first half of the year, the international LPG procurement price, as well as the selling price in China, both decreased, and that impacted the revenue. First half of the year, operating profit was HKD 4.5 million. As we all know, in the past two years, the LPG sector was faced with two challenges. On the supply side, as geopolitical tensions continued that impacted the price volatility of LPG internationally, volatility frequency increased. For the LPG importers, they are faced with the price volatility risk. For the demand side, in the past two years, due to macroeconomic downturn, especially the weak chemical industry, the total demand for LPG decreased. This impacted the total demand. Facing the price volatility as well as the weak demand, our group is committed to stable development. We strictly controlled the import and procurement volume for the full year.
Our total procurement, as well as the overall profit, will remain positive. You are familiar with this slide. For China Gas LPG, there is upstream trading, midstream distribution, as well as downstream retail. All these operation and management approaches are shown here, but I will not go into details here. For the LPG retail, leveraging our China Gas brand value, as well as standardized management system in the retail market, we are doing some integration of some light assets, small retailers. For value-added services, for the first half of the year, revenue HKD 2.02 billion, up by 0.3%. Operating profit HKD 1.02 billion, up by 1.3%. For the first half, on the profit and the loss, due to the RMB depreciation by 1.1%, but excluding Forex reasons for value-added services, first half, the actual operating profit was up by 2.4%.
For the first half of the year, for the value-added services, we expanded our market presence, including domestic market and foreign market. We also expanded our new products and services. We have done some piloting projects. For this first half of the year, we officially launched the kitchen renovation and water purifying services. These new services in the second half and next year will continue to contribute to the total revenue of VAS. In terms of the channels, we will continue to build our community network, and we also increase customer reach and also our service quality so that we can convert, we can have a higher conversion rate. This slide, you will see our products as well as services for the value-added services business. This service starts from the kitchen, but it goes beyond the kitchen.
In this slide, you can see that the products and services we sell actually include pretty much all the products that every household will need, including kitchen appliances, the gas safety products, water purification, and repairs, maintenance, and also household consumables. We want to build a leading one-stop platform for China's consumers. We are committed to build a perfect home for the households and users. Electricity and new energy is also the third pillar for us at China Gas for the first half of the year. We have two engines, and we integrate different models, including biomass storage, energy storage, and rooftop PV. We also focus on the Chinese market as well as exploring good quality overseas projects. For the first half, we have made some investment overseas. For the operation, we offer distributed PV, energy storage, integrated energy, and as well as charging poles.
For the energy storage business, accumulate HKD 617.7 megawatts, and for PV, rooftop PV, and we invest in a stable manner. Altogether, HKD 70.8 megawatts. The second pillar is the light asset trading, including green power and electricity sales and carbon trading. For the first half of the year, electricity sales is HKD 3,351 kilowatts. We also leverage multi-model and focus on five zero-carbon parks. For the first half, a virtual power plant project was progressing smoothly. For the overseas business, for the first half in Sweden, the four-megawatt project already started. So far, we have about HKD 270 megawatt altogether capacity built overseas, including Europe and also APAC. We talked about biomass. We talked about energy storage business. So far, we have signed a 1.2-gigawatt agreement and HKD 617.7 megawatt in operation. Our projects are scattered around the country, as shown in this slide here. Now, financial performance.
There are some key numbers here which I will elaborate. For the first half of the year, total revenue HKD 34 billion, and out of which natural gas HKD 20.4 billion. For engineering, design, construction, installation, HKD 3.16 billion, down by 5.2%. Sales of LPG HKD 8.38 billion, down by 12.3%. Value-added services HKD 2 billion, up by 0.3%. For other businesses that include electricity, new energy, revenue was HKD 535 million, down by 3.8%. Because for integrated energy, for the heating business, we have done some asset disposal that impacted revenue. For other businesses, especially the new electricity and new energy, the overall pre-tax profit was up by 5.3%. Among this revenue, I would like to further break down on engineering, design, construction, and installation. For the first half, residential new connections was down by 25%. Revenue was down only by 5.2%. Here is the breakdown.
For city gas and residential, industrial, commercial, installation, connection, revenue was HKD 1.48 billion. Among the HKD 3.1 billion, half of that is from installation business. The other HKD 1.54 billion was from the upgrading installation. The rest is the third-party installation. For the first half of the year, gross profit HKD 5.5 billion, profit for the year HKD 1.8 billion, and down by 21.9%. Profit attributable to owners of the company HKD 1.3 billion, and down by 24.4%. Basic EPS HKD 24.7, down by 24.2%. Interim dividend payout HKD 15. That is the same level as our previous interim dividend payout. Now, I would like to further break down on profit for the year. There was a drop of about HKD 500 million. What are the main reasons for that? If you read the announcement, the profit pre-tax was the same as last year. It was down by HKD 500 million.
There are four reasons for that. The first one is the pre-tax for connections. It was down by HKD 328 million. You will see that in the announcement. For other businesses, under gross profit, there is an item which is the other income, and that was down by HKD 245 million, out of which interest revenue was down by HKD 41 million. For the first half last year, we had the LPG leasing, ship leasing business, and we announced last year that we have disposed of those ships and sold those ships. This year, there was no leasing business of HKD 55 million. Last year, we received government subsidies as well as rebate, altogether about HKD 144 million. We did not have that for this year. These three reasons impacted other income, which is about HKD 254 million.
The other reason is the business of associates, down by HKD 100 million. All three combined, that's pre-tax of HKD 670 million impacted. You have noticed that we have adopted lean management operation, and our administrative and distribution cost has been decreasing. For H1 this year, it was down by HKD 171 million. All these four reasons combined impacted the profit for the year, which is about HKD 500 million. Now, let's look at the assets and liability. Total asset is HKD 152.2 billion. The total equity is HKD 63.4 billion. Cash is HKD 12.9 billion, up by 40%. In the same period, my total liability also increased. Total liability until 30th of September this year is HKD 62.8 billion. What are the reasons? Before 30th of September, we withdrew the new financing loan. My cash increased. After the October holidays, this cash was replaced with existing liability. My liability decreased.
There is that time difference. If we looked at only the net debt, net liability, 30th September and 31st of March, compared, the net liability was down by HKD 1.11 billion. For the balance sheet, the RMB against the Hong Kong dollar exchange rate up by 1.6%. That appreciation, 1.6%, is due to Forex. If that was excluded, the actual first half net liability was down by HKD 1.9 billion. That is why the net gearing ratio was down to 74.8%. We already communicated this with the market last year, that we started to enter into the de-leveraging period, and this will continue in the future. Now, let's look at the cash flow. First half, net cash flow, operating activities, HKD 3.13 billion, and net cash flow, investing activities, HKD 520 million. Free cash flow, HKD 2.6 billion.
For the investing activity, first half of the year fixed asset investment, HKD 1.94 billion. We collected joint venture dividend payout altogether about HKD 430 million. There is asset disposal and restructuring. We collected HKD 830 million. You see this HKD 520 million. For asset restructuring, that includes disposal of the equity of affiliated companies. That is HKD 165 million. That also includes the disposal of C&G gas stations and some coal-to-gas projects, as well as the heating projects. That is part of our integrated energy business altogether. That is HKD 665 million. You see the HKD 520 million net cash flow from investing activities. Full-year CAPEX remains the same. For the first half, fixed asset investment, HKD 1.94 billion all year. That is HKD 3.5 billion-HKD 4 billion. For the piped gas, that is about HKD 2.5 billion-HKD 3 billion. For others, that is about HKD 500 million-HKD 1 billion.
Not just the first half of the year. In the past one and a half years, we leveraged the low interest rate for RMB, home and abroad, and we replaced other foreign currency debt. Right now, foreign currency debt is only about 0.4%. Because of this optimization of our debt in the past one and a half years, our average financing cost continued to decrease. For the first half, our average financing cost was down to 3.39%. Now, the guidance, dollar margin, 0.55 RMB per cubic meter, and sales volume for sitting town gas, 0-2% growth, and newly residential connections, HKD 1 million-HKD 1.2 million households, and VAS, 10% growth in plus profit or operating profit. CNI BTM energy storage, it was 617.7 MWh. We are going to increase that to 800 MWh in operation. We are confident in delivering that.
Now, I would like to talk about the application of AI in our operation. This is an ongoing effort from our group. Since the beginning of the year, we have had a lot of AI applications, and it is driving different sectors to change their management. China Gas has increased AI technology. In terms of the AI agent application, we now have them in our key business operations, including engineering operations, audits, intelligence, safety supervision, and customer service. For engineering operations, we've had 53 engines deployed. For audit and for the overdue inspections, over tasks, missed checks, we have all used AI agents. We have been using AI technologies to optimize our key account management mechanism. We built the key account profiles and have real-time key account gas use in our database.
We also built this dynamic energy map to match with the user demands and to provide integrated solutions. For the first half of the year, for some of our large industrial users with hedging and trading, we lock volume and lock price. The users are concerned of price volatility. We use some technologies to help our users to address their price volatility concerns. For ESG, I will not go into detail. That is all from me for our first half of the year performance. Thank you for listening.