This year, from the end of April to mid-August, in the overall rebound of A shares , the new energy sector performed strongly, and the new energy-related theme fund also achieved a wave of performance increases. New energy has gradually become the hottest track in the market this year.
However, since mid-to-late August, the new energy sector has undergone adjustments. Old energy represented by coal and oil have achieved the "black gold market" and have returned to the new focus of the market. Companies on the relevant industrial chain have also been soaring.
Recently, China Huaxin Group Holdings Co., Ltd. (hereinafter referred to as "China Huaxin Group") was established in 2009 and submitted another listing application to the main board of the Hong Kong Stock Exchange. Oriental Securities is the exclusive sponsor.
traditional energy service provider, most of the customers are thermal power and coal chemical plants
Zhitong Finance APP learned that China Huaxin Group, which submitted the form this time, is a leading and comprehensive private service provider for the thermal power generation energy industry and the modern coal chemical industry. Based on domestic revenue in 2021, the company is one of the service providers with the first-tier technical strength and service capabilities in the industry.
Although it deals with the thermal power and coal chemical industries, the company mainly focuses on providing third-party services, including operation and maintenance, maintenance, maintenance, upgrade and transformation, early development, design and construction and other services for thermal power plants and modern coal chemical plants. All services are based on the company's technology, labor and materials, and operated in an asset-light business model.
From the perspective of financial performance, in the past three years from 2019 to 2021, China Huaxin Group achieved revenues of approximately RMB 293 million, RMB 434 million and RMB 531 million, respectively, showing a continuous growth trend with an annual compound growth rate of 34.62%; in terms of net profit, it was approximately RMB 33 million, RMB 51 million and RMB 48 million in the same period, respectively, which fluctuated slightly, but remained basically stable.
In terms of revenue structure, operation and maintenance services are the main business that supports the group, and their contribution to revenue has reached 90% in the past three years. Upgrading and renovation, early development, design and construction services have been carried out in 2021. Although the proportion is small, it is also on an upward trend.
It is worth noting that China Huaxin Group's customers mainly include subsidiaries of China's five major power generation groups, namely National Power Investment Group Co., Ltd. , China Huadian Group Co., Ltd. , China Datang Group Co., Ltd. , China Huaneng Group Co., Ltd. and National Energy Investment Group Co., Ltd. .
Therefore, a large proportion of the company's revenue comes from these major customers. In 2019-2021 and the first half of 2022, the revenue of the five major customers accounted for approximately 98.3%, 95.5%, 86.9% and 86.1% of the total revenue in the same period. For traditional energy industries such as thermal power and coal chemical plants, safety is the top priority. The company continues to maintain high safety standards and has maintained zero mortality throughout the entire enterprise history. Therefore, it is not difficult to understand why it can serve the five major power generation groups.
On the other hand, the company is a service provider that mainly operates in an asset-light model. In this regard, the company stated that this business model will help the company maintain stable cash flow , allowing the company to execute operating activities in an orderly manner and achieve long-term and stable growth. However, even if the services are provided in the light asset model, the company's gross profit margin is not high. During the period, the gross profit margin was only 23.70%, 21.95%, 19.53% and 19.94%, respectively, which is declining day by day, while the net profit margin is basically stable at around 9%.
From the perspective of the project, China Huaxin Group's operation, maintenance and maintenance projects are mainly obtained through bidding. From 2019 to 2021 and the first half of 2022, the company's winning bid rates for operation and maintenance services were about 31.3%, 35.0%, 34.4% and 33.3% respectively. In terms of maintenance services, the winning rates were about 38.6%, 34.4%, 36.9% and 43.3% respectively. At present, China Huaxin Group's winning rate is at a high level among its peers, and has also brought it many project-based contracts. As of the first half of 2022, the company's number of contracts in hand reached 69, and the initial unfinished contract value exceeded 300 million yuan, which is expected to support its subsequent performance boost.
However, China Huaxin Group also mentioned in its prospectus that if the company cannot continue to obtain new contracts, its operating performance may be significantly adversely affected and may not be able to obtain projects or maintain growth or profitability in the future at the past ratio.
"switch channel" of new and old energy, China Huaxin Group opened a new track
With the proposal of the "3060" goal of carbon peak and carbon neutrality , my country has entered the era of energy switching. Due to the gradual replacement of new energy for traditional energy, the new energy industry has become the "new darling". With the reduction of capital expenditures related to coal and oil and gas, the traditional energy stock market has been eroded. Even though thermal power still supports most of the energy demand at present, the rise of renewable energy has accelerated the switching of new and old energy.
CITIC Securities research report shows that the current conversion of new and old energy is still the core clue to exceed expectations for performance. The prices of traditional energy such as coal remained high in the first half of the year, leading to a continued high growth in industry profits; the shortage of energy in Europe has led to a surge in the scale of household photovoltaic installed capacity, driving the demand of the domestic industrial chain. The surge in silicon material prices has brought about a phased inversion of domestic photovoltaic and wind power installed capacity costs, which has promoted the bidding of for wind power in the first half of the year and may continue, and the prosperity of photovoltaic wind power continued to exceed expectations; domestic automobile consumption stimulus policies, high oil prices combined with the domestic model cycle have brought about a rapid increase in the penetration rate of for electric vehicles. Overall, the transformation of the new and old energy structure is still the most important clue to performance exceeding expectations.
At this time of the booming new energy track, China Huaxin Group saw the development opportunities of integrated energy services and was optimistic about the huge growth prospects of renewable energy business (serving photovoltaic power generation and potential other renewable energy power plants). Therefore, the company plans to diversify and expand its business.
It is understood that comprehensive energy services are to change the previous model of individual planning, designing and operating energy such as electricity, gas, cold, and heat, and use information technology, intelligent technology, management improvement and other means to coordinate and optimize the distribution, conversion, storage and consumption of various types of energy in operation. Its core value lies in improving the energy utilization efficiency of and achieving energy conservation and emission reduction.
From the current company's revenue details based on customer power category, we can see that in recent years, in addition to consolidating the main services of thermal power and modern coal chemical industry, the company has developed renewable energy business and has achieved some results, including upgrading and transformation of thermal power and coal chemical plants, and involving renewable energy fields such as photovoltaic power generation, and listed them as development goals.
still needs to be noted that as the pace of energy switching in the future accelerates, the capacity of new photovoltaic installed capacity has increased significantly at this stage, and China Huaxin Group is bound to face a "pain period" of transformation or upgrading of its thermal power customers. Since most of the company's revenue comes from thermal power and coal chemical customers, the number of projects, revenue and profit margins may fluctuate accordingly.
