Beijing Energy Clean Energy Privatization Conjecture: New Energy Business Integration Curtain Opened?

On the last day of 2020, the privatization offer of Beijing clean energy (00579. HK), a Hong Kong listed company, officially began. According to the timetable, if privatization goes well, the company will delist from the HKEx in three months.

As the most important listing platform of Beijing Energy Group (hereinafter referred to as Jingneng group), Jingneng clean energy, like other new energy companies listed in Hong Kong, is suffering from undervaluation and the lack of refinancing function. To this end, after announcing the offer in July last year, the company announced in November a privatization offer plan with a total scale of more than 4 billion Hong Kong dollars.

In fact, privatization and delisting is the best way for Beijing energy clean energy to maintain its assets. Since landing on the Hong Kong Stock Exchange in December 2011, the company's total market value has exceeded HK $30 billion in 2013, ushering in a high light moment. However, since 2016, the share price of Jingneng clean energy has been in a continuous downturn, with poor trading volume, and its valuation has been greatly restricted.

"Under the goal of carbon neutrality, the development of domestic new energy industry ushers in opportunities, and new energy enterprises need a lot of financial support to open up markets and invest and build projects." An analyst of the new energy industry told the 21st century economic report that in the past year, many new energy companies of central power enterprises announced privatization and delisting one after another, and continued to "wait" for Hong Kong stocks whose valuations were cold, which was not conducive to the refinancing of enterprises.

Moreover, behind the privatization and delisting of Beijing Energy's clean energy, a bigger chess game may be brewing.

Just before the official privatization, the Northwest Branch of the company and Jiaze Xinneng (601619. SH), a listed company of a shares, signed an agreement on the acquisition of photovoltaic and wind power projects with an installed capacity of nearly 500MW, and planned to continue to increase the new energy business.

At the same time, if privatization delisting, the integration of related assets becomes an expectation. At this time, whether Jingneng clean energy can produce "chemical reaction" with Jingneng power (600578. SH) and Beijing Energy International (00686. HK) is worthy of attention.

Helplessness behind high premium offer

On January 6, Beijing Energy's share price closed at HK $2.53 per share, with a dynamic P / E ratio of 8.2 times and a total market value of over HK $20 billion. In the past year, the average dynamic P / E ratio of the company was only 6.45 times, slightly higher than that in 2019. But it is difficult to change the embarrassment of Beijing energy clean energy in Hong Kong stock market valuation.

Jingneng clean energy stock is a listed company of Jingneng group, which directly holds 61.64% of the shares. The company's main business for gas power generation, heating and wind power, photovoltaic and other clean energy business. Among them, gas-fired power generation and heating business accounted for a relatively high proportion - in the first half of last year, this business accounted for more than 70% of revenue.

However, if we take the gas concept stock as an example, the valuation of Beijing energy clean energy is far less than that of A-share similar companies. The reporter of 21st century economic report found that, taking the closing situation on January 6 as an example, the average dynamic P / E ratio of Guizhou gas (600903. SH), Shenzhen gas (601139. SH), Dazhong (600635. SH), Chengdu Gas (603053. SH) and Chongqing gas (600917. SH) are 34.48 times. Among them, Guizhou gas has the highest P / E ratio of 71 times, while Shenzhen gas, with the lowest P / E ratio, has 16.7 times.

If we take the valuation of A-share photovoltaic and wind power concepts as a reference, Beijing energy clean energy is even more "frustrated" in terms of valuation. As of January 6, the dynamic P / E ratio of wind PV index was 53.6 times, while that of wind power index was 28.1 times.

Therefore, no matter from what concept, the valuation of Beijing energy clean energy is not satisfactory.

In fact, in recent years, the profitability of Jingneng clean energy is not poor. In the first three quarters of last year, the company achieved operating revenue of 12.272 billion yuan, a year-on-year decrease of 0.12%, and a net profit of 1.766 billion yuan, a year-on-year increase of 8.21%.

A few years ago, the abundant capital and diversified financing channels of Hong Kong stocks attracted many mainland enterprises to go public. The 21st century economic reporter found that when Beijing energy clean energy was first listed in 2011, it raised HK $2.093 billion. Since then, from 2013 to 2017, the company has made full use of the channels of share allotment, and has successively allotted shares for three times, with an accumulated refinancing of HK $5.711 billion. But since then, Beijing energy clean energy has no Refinancing Behavior.

"In recent years, the valuation of new energy companies in Hong Kong stocks has generally declined, which has become an obstacle for companies to refinance." The aforementioned analysts told the 21st century economic report that for many years, Hong Kong stock new energy companies have been troubled by subsidies not in place in time, and their valuation has been restricted. However, this problem is difficult to solve in the short term, which will lead enterprises into a vicious circle of undervaluation and refinancing difficulties.

When Jingneng clean energy announced the intention of the comprehensive acquisition offer of Jingneng group earlier, the investment bank HSBC research and released the research report that there may be several factors behind the privatization of the company, such as the low average p / E ratio of the group in recent years, the limited fund-raising ability, and the delisting may make the assets within the group merge more effectively and prepare to be listed in a shares in the future.

According to the subsequent privatization plan, the offeror and the persons acting in concert holding 81.74% of the shares of the company. The offer price is HK $2.7 per share, which is more than 60% and 90% higher than the average closing price of 30 and 90 trading days before the suspension of trading in July.

Up to now, in addition to the offeror and the persons acting in concert, Beijing energy clean energy has about 1.505 billion independent H shares. Accordingly, the total cost of privatization is about HK $4.064 billion.

New energy business integration conjecture

Judging from the current high premium purchase price and the high shareholding ratio of the offeror and the persons acting in concert, the delisting of Beijing Energy's clean energy privatization will be a big probability event.

Some analysts have pointed out to the reporter of the 21st century economic report that after privatization, there are only two ways to maximize the value of assets: the first is to return to the A-share market independently; the second is to inject into the A-share listed company system as high-quality assets. However, for Beijing energy clean energy, if it wants to achieve independent listing in a shares, business integration becomes an unavoidable obstacle.

According to the 21st century economic report, in addition to Jingneng clean energy, there are four important listed companies under Jingneng group: A-share Jingneng power, Haohua energy (601101. SH), Jingneng real estate (600791. SH) and H-share Beijing Energy International. Among them, the companies with similar business are Beijing energy power and Beijing Energy International. The former is mainly engaged in thermal power generation, while the latter is a new energy company acquired by Beijing energy group.

As a Hong Kong listed company acquired by Jingneng group, Beijing Energy International is regarded as an important measure to vigorously develop clean energy.

In February 2020, Beijing Energy Group's overseas investment and financing platform company successfully subscribed for the additional 7.177 billion shares issued by panda Green Energy Group Co., Ltd., thus holding 32% of the shares and becoming the largest shareholder. Established in 2000, the old brand photovoltaic power station company has changed its name several times in the past 20 years, reflecting the ups and downs of its development.

In 2019, panda green energy is in high debt, and its operation is facing great risks. Financial data show that the company had a loss of nearly 3.4 billion yuan in that year, with an asset liability ratio of 85.70%. Current liabilities amounted to 10.762 billion yuan. Once again, relying on external blood transfusion has become the fastest way for panda lvneng to alleviate the cash flow crisis. After that, Beijing Energy Group invested 1.79 billion Hong Kong dollars into the panda green energy.

Obviously, Beijing Energy Group does not regard the subscription of panda green energy shares as a financial investment. In February last year, the original management of panda green energy changed a lot, and many people with background of Beijing Energy Group entered the board of directors. In September last year, panda green energy also officially renamed Beijing Energy International.

The 21st century economic report reporter noted that after the new board of directors took office, Beijing Energy International also started the "buy and buy" rhythm and further expanded its installed scale. First, it spent tens of millions of yuan in September last year to buy back 17% shares of Huize photovoltaic energy, and then signed a photovoltaic power station acquisition agreement with Jiangshan holding (00295. HK) and other companies in October, The amount exceeds 100 million yuan.

The biggest asset acquisition took place in December. Beijing Energy International announced on December 4 that it plans to purchase Jiangshan's photovoltaic company in Shaanxi with RMB 1.178 billion. In addition, on the last day of 2020, the company will purchase a 20 MW photovoltaic power generation project owned by Tibet Huaxing new energy technology Co., Ltd. in Tibet, China.

It is worth mentioning that the largest foreign investment plan of Beijing Energy International last year took place in June - the company signed a memorandum of cooperation with the local government of Manas County in Xinjiang Uygur Autonomous Region of China, covering the comprehensive demonstration project of new energy development in Manas County. The project will be equipped with equipment for photovoltaic power generation, solar thermal power generation, energy storage and hydrogen production. It is expected that the total installed capacity will not be less than 1000 MW, and the total investment of the project is expected to be about 10 billion yuan.

With frequent actions, Beijing Energy International has become the most important new energy business platform of Beijing energy group. Therefore, after the privatization of Beijing energy clean energy, whether the company's photovoltaic and wind power businesses will be integrated under Beijing Energy International, or whether it will reorganize a new energy company has attracted much attention from the outside world.

According to the financial data, the total revenue of Beijing Energy's photovoltaic wind power business in the first half of last year amounted to 2.138 billion yuan. Superimposed on the 500 MW photovoltaic and wind power projects to be acquired by Jiaze Xinneng, the volume can not be underestimated.