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Public company info - China Renewable Energy Investment Ltd. , 00987.HK

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China Renewable Energy Investment Ltd., 00987.HK - Company Profile
Chairman Oei Kang, Eric
Share Issued (share) 2,506,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Alternative Energy
Corporate Profile Business Summary: The Group is principally engaged in renewable energy business. Performance for the year: For the year ended 31 December 2020, China Renewable Energy Investment Limited (“CRE” or the “Company”, and with its subsidiaries, collectively, the “Group”) recorded HK$206.1 million in turnover led to a 14% increase in revenue as compared to last year’s HK$181.2 million. The net profit after tax attributable to the equity holders of the Group for the year ended 31 December 2020 increased 50% to HK$86.2 million or earnings per share of HK3.44 cents. For the same period in 2019, net profit after tax attributable to the equity holders of the Group was HK$57.4 million or earnings per share of HK2.29 cents. Business Review Amid the Coronavirus Disease 2019 (“COVID-19”) pandemic, total power consumption in China increased 3% as compared to 2019, reaching 7,511,000 Giga-Watt-hours (“GWh”) in 2020. China’s wind and solar power generation capacity increased 34% and 23% to an aggregate total of 282 Giga-Watt (“GW”) and 253 GW respectively. Total wind power output was 466,500 GWh, an increase of around 15% compared to 2019, accounting for 6% of total power generation across the country. Total solar power output was 260,500 GWh, an increase of around 16% compared to 2019, accounting for 3% of total power generation across the country. Construction of the entire Songxian Wind Farm was completed during the first half of the year. As a result, Songxian’s contribution to revenues began to increase starting in May 2020. As at 31 December 2020, with the inclusion of the Group’s new Songxian Wind Farm, the Group now has eight wind farms and one distributed solar project under operation with a total gross power generating capacity of 738 MW. Net power generating capacity has increased 10% to 427 MW. Adhering to the general principle of making progress and optimization in a steady way, the Group have continually improved the operations of the Group’s existing wind farms, reducing costs and curtailment. The COVID-19 pandemic had a relatively minor impact to the Group compared to other industries. The lockdown on infected regions lengthened the maintenance and repair lead time slightly and therefore lowered some of the wind generators’ availability. Poor wind conditions in the northern part of China reduced the power despatch of the Group’s wind farms. However, with the full contribution from Songxian project, total power despatch of the Group’s wind farms in 2020 was 1,350.1 GWh, similar to 2019’s 1,356.3 GWh. Mudanjiang and Muling Wind Farms Mudanjiang and Muling wind farms, located in Heilongjiang province, have a total of 59.5 MW of wind power capacity. The wind farms started commercial operation in the fourth quarter of 2007. The Group holds majority stakes of 86% and 86.7% respectively. The power dispatched in 2020 was approximately 68.7 GWh, which was equivalent to 1,155 utilization hours, worse than 2019’s power dispatch of 87.4 GWh (equivalent to 1,470 utilization hours). Siziwang Qi Phase I & II Wind Farms Siziwang Qi Phase I & II wind farms have a total of 99 MW of wind power capacity and are wholly-owned by the Group. They are located 16 kilometres north of Wulanhua under Siziwang Qi of The Groupstern Inner Mongolia. Commercial operation of Phase I and II started in January 2011 and January 2015 respectively. The wind farms were the first two phases of a strategic 1,000 MW wind farm base for the Group. In 2020, Siziwang Qi Phase I & II wind farms dispatched power of approximately 184.1 GWh, which was equivalent to 1,859 utilization hours. Wind resources in 2020 were less than last year and curtailment increased. In 2019, the wind farm’s power dispatch was 196.9 GWh (equivalent to 1,989 utilization hours). Danjinghe Wind Farm The Group has a 40% effective equity interest in the 200 MW Danjinghe wind farm located in Hebei. The majority and controlling shareholder is the wind power division of China Energy Conservation and Environmental Protection Group (“CECEP”), which holds 60%. The entire wind farm commenced commercial operation in September 2010. As this project was obtained through the national tendering process, the wind farm enjoyed minimal curtailment. The power dispatched in 2020 was approximately 381.8 GWh, which was equivalent to 1,909 utilization hours, lower than 2019’s power dispatch of 390.1 GWh (equivalent to 1,951 utilization hours). Changma Wind Farm Changma wind farm, located in Gansu province, is a joint venture with CECEP. The Group has a 40% effective interest in the project company. The 201 MW wind farm started commercial operation in November 2010. As this project was also obtained through the national tendering process, the wind farm enjoyed minimal curtailment. The power dispatched in 2020 was approximately 401.7 GWh, which was equivalent to 1,999 utilization hours, lower than 2019’s power dispatch of 437.4 GWh (equivalent to 2,176 utilization hours). Lunaobao Wind Farm Lunaobao wind farm is a joint venture with CECEP and is adjacent to the Danjinghe wind farm. The Group has a 30% effective equity interest. The wind farm capacity is 100.5 MW and started commercial operation in February 2011. Unlike Danjinghe, Lunaobao was not obtained through the national tendering process, hence it does not enjoy low curtailment. The power dispatched in 2020 was approximately 190.6 GWh, which was equivalent to 1,897 utilization hours. Wind resources in 2020 were slightly better and curtailment reduced when compared to last year. In 2019, the wind farm’s power dispatch was 190.0 GWh (equivalent to 1,890 utilization hours). Songxian Wind Farm Songxian wind farm, located in Songxian of Luoyang city in Henan province, has a total of 74 MW wind power capacity and is wholly-owned by the Group. The first 36 MW wind power capacity commenced commercial operation in February 2019, and the entire 74 MW started full operation from May 2020. The power dispatched in 2020 was approximately 123.2 GWh, which was equivalent to 1,665 utilization hours. Wind resources were similar to last year. However, with the additional new contribution from the remaining wind power generating capacity, the performance more than doubled 2019’s power dispatch of 54.5 GWh (equivalent to 1,514 utilization hours). Nanxun Distributed Solar Project Nanxun distributed solar project is located in Nanxun district of Huzhou city in Zhejiang province, and is the Group’s first wholly-owned distributed rooftop solar project. The 4 Mega-Watt-peak (“MWp”) distributed solar project was installed over 60,000 square meters of rooftops on Nanxun International Building Materials City, a commercial complex owned by CRE’s parent company, HKC (Holdings) Limited. Power generated is sold to Nanxun International Building Materials City and any excess power is sold to the local grid company. The project commenced commercial operation in March 2018. The power dispatched in 2020 was approximately 4.5 GWh, which was equivalent to 1,127 utilization hours. The performance was better than 2019’s power dispatch of 4.2 GWh (equivalent to 1,046 utilization hours). Prospects: The renewable energy business is one that rewards expertise, patience, commitment and innovation. With the Group’s Songxian Wind Farm commencing full operation and generating revenues starting from May 2020, the Group’s net capacity has now increased 10% to 427 MW. The Group will adhere to its principle of focusing on profitability instead of blind pursuit of expansion. The Group will continue to work diligently, develop the Group’s businesses efficiently and steadily, and will consider strategic alliances, with an aim to create sustainable, increasing returns for shareholders as the Group work towards a smarter and cleaner tomorrow. With the election of a new President in the United States (“U.S.”), the world is now unified on promoting renewable energy. The U.S. announced it will re-join the Paris Agreement. On 12 December 2020, President Xi announced that China will voluntarily increase its contribution to the Paris Agreement and that by 2030, he expects non-fossil fuel energy to account for 25% of the country’s energy consumption. On 29 December 2020, the State Grid announced its goal for carbon emissions to reach a peak by 2030 and for the country to be carbon neutral by 2060 (“30 • 60 Carbon Targets”). The State Grid will actively promote the use of renewable energy and strengthen cross regional renewable energy transmission. It is expected that by 2030, carbon emission will drop by 65% when compared to 2005 and the aggregate total of wind power capacity and solar power capacity will increase to 1,200 GW. These new targets are expected to have a positive impact on the Group’s wind farms as well as on future business developments. However, the renewable energy industry continues to face challenges such as the removal of tariff subsidies for new wind power projects and delays in the settlement of tariff subsidies, resulting in high accounts receivables. In view of these delays, in September 2020, the National Development and Reform Commission (“NDRC”), the National Energy Administration (“NEA”) and the Ministry of Finance (“MoF”) released a document titled, “Recommendations Relating to the Promotion of the Healthy Development of NonHydro Renewable Energy.” This document specifies a reasonable amount of utilization hours for wind farms. Category one wind farms should have an operational period of 48,000 hours, category two of 44,000 hours, category three of 40,000 hours, and category four of 36,000 hours. The purpose is to limit the amount of tariff subsidy and to ensure reasonable returns for existing projects. Wind farms with an excess of power generation above the stated reasonable utilization hours will no longer receive tariff subsidies, and instead will be compensated through the market trade of green certificates. Therefore, at the beginning of this year, on 5 January 2021, the Ministry of Ecology and Environment also announced the “Management Policy for Carbon Emission Rights Transactions (Trial Implementation)”. This will be effective starting from 1 February 2021 and it is hoped will set the blueprint for carbon emissions trading. Moreover, in November 2020, the NEA proposed the “Policy for the Tariff Settlement Between Power Generation Companies and Grid Companies”, which clarifies the requirements for State Grid companies concerning the settlement of basic tariffs and subsidies with renewable energy companies. At the same time, the MoF released the “Notice Concerning the Acceleration of Approval Procedures for Subsidized Renewable Energy Projects Checklist”. This further clarifies the simplified procedures for the application and approval of tariff subsidies. By simplifying the procedures, the Chinese government expects that the settlement of tariff subsidies can be accelerated, thereby improving the cashflow position of renewable energy companies. Facing the challenges and opportunities, the Group continues to proactively respond. The Group continue to adhere to the Group’s principle of investing only in top quality renewable energy projects, focusing only on those projects with high potential return and in regions not subject to curtailment. For the Group’s existing wind farms, every kWh energy output counts, as outlined in the Group’s strategy. The Group have decided to participate in some of the pilot electricity market trading schemes. This is expected to reduce curtailment, to help increase power dispatch, and to increase overall profitability of these projects.

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