Baofeng Energy has another safety accident, and the refinancing of tens of billions of yuan is not smooth

China Visit Network Finance

2024-04-25 10:13Published in Sichuan

At 1:54 a.m. on April 18, 2024, Ningxia Dongyi Environmental Protection Technology Co., Ltd., a subsidiary of Ningxia Baofeng Energy Group Co., Ltd. (hereinafter referred to as "Baofeng Energy"), leaked the conversion gas of the 200,000 tons/year coke oven gas to methanol unit, and a flash ignition accident occurred during the leak plugging process. As a result of the accident, 2 on-site workers were killed and 4 employees were injured. The cause of the accident is currently under investigation.

Baofeng Energy stated in the safety accident announcement that the scope of the accident is limited to this device, and the company's other production units are in normal production, and the production and operation order has not been affected. The methanol production capacity affected by this accident is 200,000 tons/year, accounting for 3.4% of the company's total methanol production capacity, and the accident has little impact on the plant and the company's normal production and operation.

Safety accidents occur frequently, and he has been fined many times

According to public information, Baofeng Energy has had a number of safety accidents before.

On May 25, 2023, the Ningxia Bureau of the State Mine Safety Supervision Bureau issued the "Notice on the Closure of the "3.19" General Roof Accident in Baofeng Energy Dingjialiang Coal Mine", which shows that when the tunneling team of Baofeng Energy Dingjialiang Coal Mine was carrying out roadway maintenance in the +350m transportation roadway, a gangue chip gang slipped and injured people, resulting in one death and a direct economic loss of 1.88 million yuan.

The investigation showed that the direct cause of the accident was that the on-site operators did not strictly implement the "knocking on the top" system, and the indirect cause was that the risk control was not in place, the on-site management was chaotic, the safety education and training effect was poor, and the main responsibility of safety was not in place.

In August 2023, Baofeng Energy had two accidents in succession. At around 8:30 on August 8, 2023, an employee of the contractor of Baofeng Energy's cathode material project was cleaning up garbage in the sewage regulating tank when an object strike accident occurred, resulting in one death. According to the information released by the Emergency Management Department of Ningxia Hui Autonomous Region, at around 14:50 on August 7, 2023, a nitrogen suffocation accident occurred in the joint workshop of Baofeng Energy Methanol Plant No. 1 during the maintenance operation of the "first inlet separator" of the third phase of the coke oven gas compressor, resulting in 2 deaths.

On January 31, 2024, a deflagration accident occurred at Baofeng Energy's fine chemical plant, resulting in minor injuries to two inspectors near the scene. Fortunately, Baofeng Energy was able to lift the fire within 14 minutes without secondary disasters.

Perhaps because of the frequent safety accidents, the Shanghai Stock Exchange issued a regulatory work letter to Baofeng Energy on April 18 regarding safety production accidents, and Baofeng Energy issued an announcement about the accident. In the above-mentioned historical accidents, Baofeng Energy did not issue a similar announcement.

Baofeng Energy's hidden dangers of accidents have long been hinted at. In February 2024, the Ningxia Ningdong Energy and Chemical Base Management Committee issued a notice to adjust and determine the key fire safety units and high-risk fire units in 2024, showing that Baofeng Energy was listed as one of the 21 high-risk fire units, and its Baofeng Energy Methanol Plant No. 1 and Olefin Plant No. 123 were also identified as flammable and explosive dangerous goods sites.

On April 4, Baofeng Energy said in response to an inquiry from the Shanghai Stock Exchange that from January 1, 2021 to February 29, 2024, the company and its subsidiaries received 120 administrative penalties. Of these, 90 were related to work safety.

For two consecutive years, the increase in revenue has not increased profits, and refinancing may be affected

According to the financial report data of previous years, from 2021 to 2023, Baofeng Energy's revenue growth rate will be 46.29%, 22.02%, and 2.48%, and the net profit growth rate will be 52.95%, -10.86%, and -10.34% respectively. Baofeng Energy not only slowed down its revenue growth significantly, but also saw a decline in net profit for two consecutive years.

Some analysts pointed out that the slowdown in Baofeng Energy's revenue growth was due to its limited production capacity. According to the financial report, the capacity utilization rate of Baofeng Energy's coking project is 99.72%, of which the capacity utilization rate of the first and second phase olefin projects reaches 106.39% and 123.18% respectively. This means that Baofeng Energy needs to expand its production capacity. The fluctuation of net profit is affected by the continued high global energy prices and the decline in profits of the polyolefin industry.

On April 20, 2023, Baofeng Energy disclosed its refinancing plan, planning to carry out the construction of coal-to-olefin projects through private placement, with a fundraising scale of no more than 10 billion yuan. According to the plan, the total investment of 2.6 million tons/year of coal-to-olefins and supporting 400,000 tons/year implantation of green hydrogen-coupled to olefins is as high as 47.811 billion yuan. Baofeng Energy is preparing to expand its production capacity.

However, according to the "Announcement on the Resolution of the Tenth Meeting of the Fourth Board of Directors" recently released by Baofeng Energy, the company will extend the validity period of the resolution related to the issuance of A shares to specific targets by 12 months. Baofeng Energy's fundraising did not go well.

In 2023, Baofeng Energy's various expenses will increase at a higher rate. For example, during the reporting period, administrative expenses were 769 million yuan, and Baofeng Energy explained that production and sales increased, and the labor costs of management personnel increased. However, it is worth noting that 44 of the 90 safety accident-related penalties of Baofeng Energy mentioned above occurred in 2023. The increase in Baofeng Energy's management expenses has failed to materialize into a guarantee of safe production.

Baofeng Energy's R&D expenses in 2023 will reach 431 million yuan, a year-on-year increase of 185.76%, and Baofeng Energy said that the company attaches great importance to the research and development of new products and increases R&D investment. According to the financial report, in 2023, Baofeng Energy will implement 33 scientific and technological research projects and new technology application research projects, participate in 10 national, industry and group standard revisions, apply for 130 patents, and obtain 38 patent authorizations.

But on the other hand, the expansion of production and research and development have also brought a lot of debt pressure to Baofeng Energy. As of the end of 2023, Baofeng Energy has interest-bearing liabilities of 20.994 billion yuan, a debt ratio of 46.20%, and only 1.283 billion yuan of monetary funds on the books. (Content source: Seahawk Finance)

View original image 258K

•