Source of this article: Times Business School Author: Lu Shuoyi
Source: Times Business School
Author|Lu Shuoyi
Edited by Sun Yiming
On April 7, Zhejiang Zheneng Gas Co., Ltd. (hereinafter referred to as "Zheneng Gas") officially submitted an application for registration. However, Huadian New Energy Group Co., Ltd. (hereinafter referred to as "Huadian New Energy"), which passed the meeting more than half a year earlier than Zhejiang Energy Gas, has not yet entered the registration process.
On March 3, 2023, Huadian New Energy's IPO application was accepted by the Shanghai Stock Exchange, and it plans to land on the main board of the Shanghai Stock Exchange, and three months later, on June 15, 2023, Huadian New Energy successfully passed the meeting.
Times Business School found that at the end of each period from 2021 to the first half of 2023, Huadian New Energy's monetary funds could not cover short-term borrowings, and its asset-liability ratio was higher than 70% at the end of the same period.
According to the prospectus, Huadian New Energy plans to raise 30 billion yuan, of which 9 billion yuan is planned to be used to supplement liquidity, accounting for 30% of the proposed fundraising.
Therefore, whether it can successfully knock on the door of the Shanghai Stock Exchange is very important for Huadian New Energy, which is in urgent need of replenishment. However, after nearly one year of success, Huadian New Energy has not been registered, how should Huadian New Energy deal with the crisis caused by insufficient monetary funds?
On April 11th and 12th, on the slowdown in performance and the high asset-liability ratio, Times Business School sent a letter to Huadian Xinneng to inquire, and the other party said that in view of the current IPO review period, it is necessary to strictly abide by the relevant requirements of the regulatory authorities for information disclosure, and it is not convenient to accept research for the time being.
Nearly half of the revenue comes from renewable energy subsidiesAccording to the prospectus, Huadian New Energy is the only platform for the final integration of the new energy business of China Huadian Group Co., Ltd. based on wind power generation and solar power generation, focusing on the development, investment and operation of new energy projects such as wind power generation and solar power generation, and is one of the largest new energy companies in China.
From 2020 to 2022 (hereinafter referred to as the "reporting period"), the performance growth rate of Huadian New Energy fluctuated greatly. According to the prospectus, in each period of the reporting period, Huadian New Energy's revenue was 16.507 billion yuan, 21.668 billion yuan and 24.453 billion yuan respectively, with a year-on-year growth rate of 8.87%, 31.27% and 12.85% respectively, and in the same period, the net profit was 4.437 billion yuan, 7.860 billion yuan and 8.962 billion yuan respectively, with a year-on-year growth rate of 14.12%, 77.15% and 14.02% respectively.
In the first half of 2023, its revenue and net profit increased by 23.13% and 20.88% year-on-year respectively.
It should be noted that Huadian New Energy's performance is more dependent on renewable energy subsidies.
According to the prospectus, Huadian New Energy's main business income includes two parts: benchmark electricity fee income and renewable energy subsidy income. Among them, the renewable energy subsidy funds mainly come from the special funds arranged by the national financial public budget and the additional income from renewable energy electricity prices levied on electricity users in accordance with the law。
In each period of the reporting period, the renewable energy subsidy income from wind power generation and solar power generation projects built and acquired by Huadian New Energy was 8.547 billion yuan, 10.466 billion yuan and 11.014 billion yuan respectively, accounting for 53.24%, 48.64% and 45.49% of the current revenue respectively. It can be seen that in each period of the reporting period, about half of the company's revenue came from renewable energy subsidies.
The prospectus also shows that at the end of the reporting period, the total book balance of renewable energy subsidies receivable of Huadian New Energy was 19.112 billion yuan, 29.797 billion yuan and 24.960 billion yuan respectively, which is huge.
It should be noted that in March 2022, the National Development and Reform Commission, the Energy Administration and the Ministry of Finance jointly issued the Notice on Carrying out Self-inspection of Renewable Energy Power Generation Subsidies to carry out the verification of renewable energy power generation subsidies nationwide.
As of June 30, 2023, Huadian New Energy has written off all renewable energy subsidy revenues for 16 power generation projects, and 10 power generation projects have not confirmed relevant renewable energy subsidy revenues based on caution, according to the response document to the inquiry letter. As of December 31, 2022, Huadian New Energy had written off the amount of subsidy income and the amount of asset impairment losses totaling 935 million yuan, of which 587 million yuan was written off and 348 million yuan was provided for asset impairment losses.
In addition, starting from 2021, the central government will no longer subsidize newly registered centralized photovoltaic power stations, industrial and commercial distributed photovoltaic projects, and newly approved onshore wind power projects, and implement grid parity. Therefore, Huadian New Energy also reminded the potential risk of subsidy decline in the prospectus.
Monetary funds cannot cover short-term borrowingsWith more than 10 billion yuan of renewable energy subsidies receivable lying on the books, Huadian New Energy's capital flow will inevitably be affected.
According to the prospectus, from 2019 to 2022, Huadian New Energy's investment expenditure is relatively high, and the investment cash flow is in a state of net outflow, with a cumulative net outflow of 125.643 billion yuan in four years. In this regard, Huadian New Energy said in the prospectus that this is mainly due to the rapid expansion of the company's business scale, the increase in new wind and solar power generation projects year by year, and the increase in the company's capital expenditure.
According to the prospectus, Huadian New Energy plans to build wind power and solar power projects with an installed capacity of 15,165,500 kilowatts, for which the company will invest in the construction of wind and solar base projects, on-site load center projects, new power system coordinated development projects and green ecological civilization coordinated development projects, with a total investment of 80.446 billion yuan.
In this IPO, Huadian New Energy plans to raise 30 billion yuan, of which 21 billion yuan will be used for the construction of wind power and solar power generation projects, accounting for 70% of the proposed fundraising, and 9 billion yuan will be used to supplement working capital, accounting for 30% of the proposed fundraising.
Or due to large-scale investment in new energy projects, Huadian New Energy's capital chain continues to be under pressure, and in recent years, the monetary funds on the books have been unable to cover short-term borrowings.
According to the prospectus and the reply documents to the inquiry letter, at the end of each period from 2021 to 2022, Huadian New Energy's short-term borrowings were 17.432 billion yuan and 38.501 billion yuan, respectively, and at the end of the same period, monetary funds were 9.272 billion yuan and 9.554 billion yuan, respectively, which could not cover short-term borrowings.
In addition to short-term borrowings, Huadian New Energy also has a large number of non-current liabilities due within one year. At the end of each period from 2021 to 2022, the non-current liabilities due within one year of Huadian New Energy were 8.939 billion yuan and 9.099 billion yuan respectively, both exceeding 8 billion yuan.
It should be noted that the indicators that measure Huadian New Energy's solvency have sounded the "alarm".
According to the prospectus and the reply documents to the inquiry letter, at the end of the reporting period, Huadian New Energy's current ratio and quick ratio were the same, which were 0.53 times, 0.68 times and 0.54 times respectively, which were lower than the theoretical safety value, and at the end of the same period, its asset-liability ratio was 75.92%, 71.32% and 71.26% respectively.
This issue has also attracted the attention of the Shanghai Stock Exchange. During the on-site inquiry at the meeting, Huadian New Energy was asked whether there was a significant debt repayment risk.
In the case of a large funding gap and a delay in listing, Huadian New Energy had to borrow a large amount of money to "replenish blood".
On March 26 this year, the company announced that it had been approved to issue no more than 20 billion yuan of corporate bonds, and the first phase of the issued amount did not exceed 2 billion yuan (including 2 billion yuan), and the issuance work had ended on March 22, 2024.
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