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Public company info - Inner Mongolia Energy Engineering Co. Ltd.-H shares , 01649.HK

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Inner Mongolia Energy Engineering Co. Ltd.-H shares, 01649.HK - Company Profile
Chairman Niu Jirong
Share Issued (share) 822,000,000
Par Currency Renminbi
Par Value 1.0
Industry Electricity Supply
Corporate Profile Business Summary: The group is a large comprehensive power industry solutions provider in China, focusing on power grid and new energy projects. The group provides the group’s customers with a comprehensive range of solutions, including services relating to survey, design and consultancy, construction contracting, as well as maintenance and overhaul. The group also engages in the investment, development, construction and operation of energy projects, and trading. Performance for the year: The Company’s revenue was RMB6,797.8 million, representing a decrease of 30.5% over the corresponding period of last year. Net profit was RMB559.3 million, representing a decrease of 9.4% over the corresponding period of last year. Basic earnings per Share were RMB0.23, representing a decrease of RMB0.06 or 20.7% over corresponding period of last year. Business Review: The group are a large comprehensive power industry solutions provider in China, focusing on power grid and new energy projects. The group provide a comprehensive range of solutions, including survey, design and consultancy, construction contracting and maintenance and overhaul services to serve the full life-cycle of power projects and the entire value chain of the power engineering industry. In 2017, the Company’s total new contract value of survey, design and consultancy business and construction contracting business reached RMB5,967.56 million, representing a decrease of 40.6% over the corresponding period of last year. In particular, the total new contract value of survey, design and consultancy business and construction contracting business amounted to RMB729.65 million and RMB5,237.91 million, respectively, and the proportion attributed by survey, design and consultancy business and construction contracting business was 12.2% and 87.8%, respectively. Survey, Design and Consultancy Business The group's survey, design and consultancy business, one of the group's core businesses, covers various services throughout the stages of preliminary discussion, definition and implementation, including master planning, proposal studies, environmental impact assessment, feasibility studies, project application report, basic engineering, detailed engineering and project management. The group provide design and engineering services mainly to power grids, wind power, solar power and fossil-fuel power companies in China and abroad. In 2017, revenue of the survey, design and consultancy business segment was RMB784.97 million, representing an increase of 38.3% over the corresponding period of last year. Total new contract value reached RMB729.65 million, representing an increase of 23.6% over the corresponding period of last year. In particular, new contract value of fossil-fuel power, wind power, solar power, transformation and transmission projects as well as other business were RMB101.34 million, RMB43.83 million, RMB272.91 million, RMB307.63 million and RMB3.94 million, respectively, each contributing 14%, 6%, 37%, 42% and 1%, respectively. Under the backdrop of national energy restructuring, investment in the construction of power sources and power grid witnessed glide in 2017, and competition in the survey, design and consultancy business was becoming fiercer. On the basis of consolidating the market in the autonomous region, the Company actively explored outbound and overseas markets and established strategic partnership with well-known domestic large-scale equipment manufacturers and construction companies to jointly identify overseas projects with low risk and high yields, during the course of which, the Company undertook the construction of the 2 * 350MW coal-fired power station of Tete, Mozambique and the 1 * 220MW efficient clean power station in Phonsavan, Xiang Khouang, Laos. In 2017, relying on its own technological advantages, the Company has undertaken a number of power transmission and transformation projects with poor weather conditions, complicated topographic and geological conditions, huge design difficulties requiring sophisticated technologies, which includes the Huaidong-Eastern China ± 1,100kV UHV DC Transmission Lines and Wuda North 500Kv Power transmission and transformation project, etc., enhancing its competitiveness in the market of power grid design. The Company insists on taking science and technology innovation as a powerful driving force to lead the development of the enterprise and continuously improves the overall capability of scientific and technological innovation, through which it has obtained a number of patents and proprietary technologies. At the same time, diversification of industries has helped extending the industry chain of power design and tapping the relevant market in-depth. Sectors and markets of municipal, environmental protection, surveying and mapping, informatization were opened up in an orderly manner. Construction Contracting Business The group's construction contracting business, one of the group's core businesses, mainly involves the provision of services for construction projects of power grids, power sources, industrial and civil buildings and other infrastructure in China and abroad. In 2017, revenue of the construction contracting business segment was RMB5,458.284 million, representing a decrease of 10.1% over the corresponding period of last year. Total new contract value reached RMB5,237.93 million, representing a decrease of 44.6% over the corresponding period of last year. In particular, new contract value of fossil-fuel power, wind power, solar power, transformation and transmission projects as well as non-electricity and other business were RMB320.41 million, RMB1,274.50 million, RMB1,043.70 million, RMB2,051.50 million and RMB547.80 million, respectively, each contributing 6.1%, 24.3%, 19.9%, 39.2% and 10.5%, respectively. Under the backdrop of national energy restructuring, the number of additional wind power and photovoltaic projects in Inner Mongolia dropped sharply in 2017 as compared to that of 2016, and competition in the construction contracting market was becoming more fierce; the UHV construction project of the State Grid that has been included in the national plan and commenced construction is basically drawing to a close; most of power grid investment was diverted to distribution network as well as the rural power grid; competition in distribution network construction contracting market was fierce as a result of the low access threshold. Faced with all these challenges, the Company strengthened its internal management and risk control to guard against funding risks and took a more cautious attitude in undertaking projects to ensure the quality of contracted projects. Due to the above factors, in 2017, the value of new contracts, especially those of new energy and power transmission and transformation projects, dropped off. Confronted with the severe market situation, the Company the Company took initiatives in taking part in UHV projects of State Grid Corporation of China (國家電網) and construction projects of China Southern Power Grid Co., Ltd.(南方電網) while securing its market position in the western Inner Mongolia market, successfully completed the Shanghai Miao -Linyi, Shandong ±800kV UHV DC transmission line project and the power grid interconnection project of central Tibet and Changdu, acquiring the eight split large crosssection conductor spreading technology and the construction technology for transformation and transmission projects with the highest altitude and the most complicated natural conditions in the world, engineering construction level increased significantly therefore. As affected by domestic regulatory policies concerning coal-fired power and the decrease in power source investment, the Company, in an extremely unfavorable fossil-fuel power market, made more efforts to further the market development and rallied to overcome obstacles in 2017. As a result, new contract value of fossil-fuel power projects recorded an increase of 4.4% over the corresponding period of last year, and the undertaking contract for Baotou Xinhengfeng 2*350MW power generation unit project was entered into. New contract value of non-electricity and other business under the construction contracting business sector recorded a year-on-year increase of 95.6%, covering fields of municipal and environment protection, and the structure of contracted projects is tending towards diversification. Trading Business The group started the group's trading business in May 2016 on a trial basis. The group trade commodities which primarily include petroleum products, coal and chemical raw materials. In 2017, the Company entered into 599 new contracts in respect of trading business, including 288 procurement contracts and 311 sales contracts, and generating a sales revenue of RMB230.4 million, down by 89.7% year-on-year. In 2017, the Company further enhanced its trading scale and profitability under strict control over risks, and actively and effectively expanded its business, which played an important role in the implementation of the diversified development strategic of the Company. Power Project Operation and Other Businesses The Company invest in and operate a variety of power projects and selectively commit the group's capital to those projects that meet the group's investment criteria. The Company also engage in operation maintenance and overhaul services for power plants, property development and power equipment manufacturing. Power projects operation. Adhering to the concept of green development, the Company vigorously implemented the new energy strategy by adopting the modes of construction investment, asset acquisition and joint operation, thereby facilitating the large-scale and clustering operation and development of new energy power projects. As at December 31, 2017, the installed capacity of new energy project in operation was 259MW, which comprises of Hengrun Wind Power Project (恒潤風電項目) with an installed capacity of 199MW, Urad Front Banner Photovoltaic Projects (烏拉特前旗光伏項目) with an installed capacity of 50MW and Alxa Right Banner Photovoltaic Project with an installed capacity of 10MW. In 2017, Hengrun Wind Power recorded annual power output of 379 million kWh, annual on-grid power of 373.06 million kWh, with the annual equipment utilization hours reaching 1,914 hours; Urad Front Banner Photovoltaic Projects recorded annual power output of 81.76 million kWh, annual on-grid power of 81.35 million kWh, with the annual equipment utilization hours reaching 1,635 hours; Alxa Right Banner Photovoltaic Project recorded annual power output of 17.95 million kWh, annual on-grid power of 17.11 million kWh, with the annual equipment utilization hours reaching 1,795 hours. In 2017, the revenue of the power projects operation segment was RMB149.26 million, representing an increase of 8.5% over the corresponding period of last year. Other businesses. The Company substantially expanded operation maintenance and overhaul services for power plants while engaging in property development and power equipment manufacturing. In 2017, the revenue of other businesses segment of the Company was RMB174.9 million, representing a decrease of 77.5% over the corresponding period of last year. Prospects: Domestic Power Market During the Thirteenth Five-year period, the power demand will present a new momentum of medium-and-low-speed growth by adapting to China’s “New Normal” economic cycle. Meanwhile, China’s power industry will enter a stage of high efficiency, low cost and sustainable development during the Thirteenth Five-year period. In terms of power source, pursuant to the statistics of China Electricity Council and given full consideration to macro economy, development trend of service industry and residential electricity consumption, air pollution control, electric power replacement and other factors, it is expected that the power consumption in 2018 will continue the stable and rapid growth in 2017. In light of the large amount in 2017, in the year with moderate precipitation or runoff and without extreme temperature in a large area, it is expected that the power consumption of the whole society will increase by approximately 5.5% in 2018 and the nation’s additional installed capacity in 2018 increased by approximately 120 million kW, of which the additional nonfossil energies power installed was approximately 70 million kW. It is expected that the nation’s power installed capacity will reach 1.90 billion kW by the end of 2018, of which non-fossil energy power generation will reach 0.76 billion kW, with the percentage in the total installed capacity up by approximately 40%. It is expected that the installed capacity of coal power will reach 1.02 billion kW, representing 53.6% of the nation’s installed capacity, 1.5 percentage points lower than that at the end of 2017. According to the data of the National Energy Administration, the investment in construction and transformation of power distribution network will not be lower than RMB2 trillion in 2015–2020 and not less than RMB1.7 trillion during the “Thirteenth Five-year” period. Along with the continuous retrofitting of UHV, smart power grid and distribution network as well as the rural power grid, the power grid market will steadily expand. Power industry in Inner Mongolia Autonomous Region Pursuant to the “Thirteenth Five-year Plan of Energy Development in Inner Mongolia Autonomous Region”, the proportion of installed capacity and consumption of non-fossil energies will be further increased during the “Thirteenth Five-year” period, of which the proportion of installed capacity of non-fossil energies will reach about 38% and the consumption proportion of non-fossil energies will meet national requirements. The consumption proportion of natural gas will go up to approximately 4% and the consumption proportion of coal will decrease to approximately 79%. The final consumption proportion of coal will decrease to approximately 16% and the consumption proportion of thermal coal will rise to about 55%. During the implementation of the Thirteenth Five-year Plan, the power industry in Inner Mongolia Autonomous will realize a total power installed capacity of about 0.165 billion kW thereunder, including about 0.1 billion kW of fossilfuel power, about 45 million kW of wind power and about 15 million kW of photovoltaic power. During the implementation of the Thirteenth Five-year Plan, Inner Mongolia strived to increase the local usage of new energy resources of about 8.5 million kW, including 3 million kW of wind power and 5.5 million kW of solar power. In respect of the base for outbound power transmission, the focus of development was placed on the construction of the eight new energy bases in Alxa, northern Baotou, Ordos, Ulanqa, Xinlingol, Chifeng, Tongliao and Hulunbuir. Leveraging the outbound power transmission lines in places including Ximeng–Shandong, Ximeng–Jiangsu, Shanghai Miao–Shandong the construction and development of outbound power transmission facilities will be accelerated, which will in turn promote the preliminary work of the base for outbound clean power transmission in Chifeng and western Inner Mongolia. The Company will further leverage on the regional advantages of Inner Mongolia Autonomous Region to proactively expand the business scope and proactively establish its presence in the industries including energy conservation and environment protection, clean heating, biomass power generation, equipment manufacturing, and repair and maintenance. Business cooperation will be conducted with the preponderant enterprises in the region to speed up project approval and cultivation of new benefit growth points. International market 2018 is a critical year for the Company to further implement the Thirteenth Five-year Plan based on the efforts made previously, and also a year for deepening reform and development, standardization of management and control, innovative management and improvement of quality and efficiency. The Company will strengthen the development of the group's overseas market in line with the group's market strategy of maintaining a leading market position in Inner Mongolia, expanding across China and exploring overseas markets. Leveraging on the group's Top Grade Qualification in general contracting of power engineering, advantages in terms of whole industry chain, talent and technology, the group will step up the implementation of the “go global” strategy, especially key projects in the countries covered by the “Belt and Road,” “China-Mongolia-Russia Economic Corridor” and “China Pakistan Economic Corridor” initiatives. Besides, the group will further proceed with the overseas thermal power and new energy projects in Pakistan, Bangladesh, Sri Lanka, U.K. and other countries and strive to promote investment or construction of a batch of overseas projects.

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