CHANT GROUP(SZ:002616)2022-03-30 16:00Market Demand and Operational Challenges - The company reported a significant increase in biomass fuel market demand and prices due to rising coal prices, impacting operational costs [4]. - The company has successfully launched multiple biomass power generation projects, but new projects may face delays in achieving commercial operation, affecting performance [6]. - Early biomass power projects are transitioning to a combined heat and power model to mitigate risks associated with subsidy expiration after 15 years of operation [6]. - The company plans to enhance local yellow straw fuel procurement to reduce the impact of fuel supply and price fluctuations on operations [4]. - Rising labor costs in China are prompting the company to implement technological upgrades and automation in production processes [9]. - The company is facing risks related to delayed subsidy payments for renewable energy projects due to increased demand and funding gaps [7]. - Environmental compliance risks may affect subsidy eligibility for biomass power projects under new regulations implemented in 2021 [7]. - The company has established a pricing adjustment mechanism in supply agreements to manage coal price volatility for centralized heating projects [7]. - The company emphasizes the importance of risk awareness regarding future plans and projections, which do not constitute binding commitments to investors [4]. Financial Performance - The company's operating revenue for 2021 was ¥2,651,221,583.61, a decrease of 12.28% compared to ¥3,022,380,872.43 in 2020 [26]. - The net profit attributable to shareholders was -¥159,289,914.39 in 2021, representing a decline of 145.46% from ¥350,381,888.04 in 2020 [26]. - The net cash flow from operating activities decreased by 64.79% to ¥86,661,523.47 in 2021 from ¥246,128,727.06 in 2020 [26]. - The total assets at the end of 2021 were ¥9,662,413,985.97, an increase of 3.58% from ¥9,328,133,393.72 at the end of 2020 [28]. - The net assets attributable to shareholders decreased by 11.04% to ¥2,444,752,352.70 at the end of 2021 from ¥2,748,183,074.13 at the end of 2020 [28]. - The basic earnings per share for 2021 was -¥0.2147, a decline of 145.46% compared to ¥0.4723 in 2020 [26]. - The weighted average return on net assets was -6.19% in 2021, down from 13.59% in 2020 [26]. - The company reported a significant increase in the amount deducted from operating revenue, which rose to ¥34,644,171.31 in 2021 from ¥12,470,321.21 in 2020 [28]. - The company has indicated uncertainty regarding its ability to continue as a going concern due to negative net profits in recent years [28]. Project Development and Capacity - The biomass power generation capacity in China reached 37.98 million kW by the end of 2021, with a year-on-year growth of 23.4% [38]. - The company has made progress in expanding its heating business in Shandong province, where biomass power projects have seen close to 20% growth [38]. - The government of Heilongjiang province has implemented subsidies for straw utilization, positively impacting the company's biomass projects in the region [39]. - The company is positioned to benefit from national policies promoting clean heating projects in northern regions, which are expected to enhance its heating revenue significantly [40]. - The establishment of a national carbon trading market is anticipated to create new profit opportunities for the company's biomass power projects through carbon credit trading [41]. - The company's main business segments include biomass cogeneration, waste-to-energy, and centralized coal heating, focusing on the comprehensive utilization of agricultural and municipal waste [42]. - The company's biomass power generation projects have a total installed capacity of 491 MW, with 266 MW already in operation, including 35 MW newly commissioned during the reporting period [46]. Emissions and Environmental Compliance - The company is classified as a key pollutant discharge unit by environmental protection authorities [188]. - The company reported emissions of 6.262 tons of particulate matter, 16.916 tons of sulfur dioxide, and 185.74 tons of nitrogen oxides, with specific discharge standards set [188]. - The company has a total of 3 emission outlets for smoke and dust, with emissions exceeding the standard in some cases [188]. - The company has undertaken revisions to over 40 internal regulations to enhance compliance with the latest business conditions and legal requirements [182]. - The company plans no cash dividends, stock distributions, or capital reserve transfers for the current fiscal year [180]. - The company reported a sulfur dioxide emission level of 17.27 mg/m³ at a designated emission point, which is below the regulatory limit of 50 mg/m³ [190]. - Nitrogen oxide emissions were recorded at 105.83 mg/m³, compared to the regulatory limit of 200 mg/m³, indicating compliance [190]. - The company achieved a dust emission level of 1.95 mg/m³, significantly lower than the limit of 10 mg/m³ [189]. - Future expansion plans include enhancing emission control technologies to further reduce pollutants [191]. - The company is investing in new technologies aimed at improving air quality and compliance with environmental regulations [191]. Strategic Focus and Business Adjustments - The company aims to focus on high-efficiency, low-emission biomass cogeneration projects and pure heating projects, transitioning its main business to solely environmental thermal energy [125]. - The company plans to enhance its operational management capabilities for biomass cogeneration, waste-to-energy, and industrial park coal heating projects, which are expected to improve overall efficiency [124]. - The government has set a target for urban buildings to achieve a renewable energy substitution rate of 8% by 2025, indicating significant growth potential for biomass heating projects in densely populated areas [121]. - The company is committed to increasing non-subsidy revenue from biomass heating projects, with a focus on expanding the scale of heat supply [128]. - The company has completed renovation projects covering nearly 3,000 square meters in employee dormitories, canteens, and workplaces during the reporting period [128]. - The company plans to implement multiple contingency plans for fuel supply strategies to enhance risk resistance and increase the proportion of non-subsidy revenue in total revenue [129]. - The biomass heating industry is expected to benefit from favorable policies and environmental pressures, indicating a positive outlook for the company's future development [124]. - The company is actively expanding its biomass energy portfolio, with multiple projects in different stages of development, reflecting a strategic focus on renewable energy [197]. Corporate Governance and Management - The company has established a series of performance evaluation standards and incentive mechanisms, with 122 middle and senior management personnel participating in stock incentive plans from 2014 to 2016 [140]. - The company has independent operational capabilities, with no overlap in personnel between the company and its controlling shareholder, ensuring fair pricing in related transactions [144]. - The company has a complete financial accounting system, with independent decision-making on fund usage according to its articles of association [145]. - The company held several shareholder meetings in 2021, with attendance rates of 4.60%, 60.81%, 60.82%, and 64.39% for various meetings [147]. - The company reported a total shareholding of 362,314,800 shares at the beginning of the reporting period, with no changes during the period [150]. - The current chairman, He Qiqiang, holds 191,213,800 shares, while the president, Mai Zhenghui, holds 171,101,000 shares [149]. - The company appointed Huang Rongtai as vice president on February 26, 2021, to meet operational needs [151]. - Independent director Bao Qiang was elected on March 15, 2021, following the resignation of independent director Zhu Hongjun [151]. - The company has a total of 10 board members, including 4 independent directors [153]. - The current financial director, Huang Rongtai, has been in position since February 12, 2018, and also serves as a director and vice president [154]. Employee and Labor Management - The total number of employees at the end of the reporting period was 2,372, with 2,363 from major subsidiaries and 9 from the parent company [175]. - The company implemented a phased incentive plan for project management teams to respond to market changes, focusing on non-subsidy income development strategies [176]. - The total hours of outsourced labor amounted to 529,676.97 hours, with total payments for outsourced labor reaching ¥16,749,510.25 [178]. Financial Derivatives and Risk Management - The company engages in financial derivative transactions primarily for overseas financing, aiming to lock in exchange rates and avoid foreign exchange losses [100]. - The total derivative investment at the end of the reporting period was 14.66 billion RMB, with a risk control strategy in place to mitigate market and liquidity risks [99]. - The company reported a 2.98% proportion of derivative investments in its total assets, indicating a significant engagement in this area [99]. - The independent directors support the company's derivative trading activities, stating they are necessary for expanding financing channels and reducing financial costs [100]. - The company has established internal control systems for forward foreign exchange transactions to manage investment risks effectively [100]. - The company plans to select highly liquid and controllable financial derivatives for hedging purposes [100]. - The company has not reported any significant changes in accounting policies related to derivatives compared to the previous reporting period [100]. - The company has a dedicated team to monitor derivative contracts and report significant fluctuations to the decision-making level promptly [100]. Subsidiary Management and Divestitures - The company completed the sale of its subsidiary, which contributed a transaction price of 22,779.64 million CNY, resulting in a net profit contribution of 433.47 million CNY, accounting for -2.72% of the total net profit [110]. - The company will no longer hold equity in the sold subsidiary, which will no longer be included in the consolidated financial statements, allowing the company to focus on its core environmental business [110]. - Major subsidiaries include Zhongshan Changqing Environmental Energy Co., Ltd., which reported a net profit of 72,177,428.00 CNY, and Changqing Environmental Energy (Zhongshan) Co., Ltd., with a net profit of 23,592,700.78 CNY [115]. - The company has divested from several subsidiaries, including Zhongshan Chuangert Intelligent Home Technology Co., Ltd., with no significant impact on overall operations and performance [117]. - The company’s divestitures are part of a broader strategy to enhance operational efficiency and focus on core competencies [117]. - The company’s financial performance remains stable, with no significant adverse effects from the asset sales on its overall financial condition [112]. - The company aims to concentrate on its environmental business, which is expected to drive future growth and profitability [110].