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Public company info - China Boqi Environmental (Holding) Co. Ltd. , 02377.HK
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China Boqi Environmental (Holding) Co. Ltd., 02377.HK - Company Profile
Chairman Cheng Liquan Richard
Share Issued (share) 1,007,000,000
Par Currency U.S. Dollar
Par Value 1.0E-5
Industry Environmental Goods
Corporate Profile Business Summary: The principal activities of the Group are providing independent flue gas treatment service and environmental protection solution service by various business models, including environmental protection facility engineering, operation and maintenance and concession operation. Performance for the year: In the 2019 Financial Year, the Group’s total revenue increased by 5.2% to RMB1,836 million as compared with RMB1,745 million for the 2018 Financial Year. The gross profit of the Group for the 2019 Financial Year decreased by 3.5% to RMB307 million as compared with RMB318 million for the 2018 Financial Year, while the gross profit margin of the Group for the 2019 Financial Year deceased to 16.7% as compared with 18.2% for the 2018 Financial Year. The Group recorded a net profit of RMB183 million for the 2019 Financial Year, as compared to a net profit of RMB393 million for the 2018 Financial Year. Profit attributable to the owners of the Group for the 2019 Financial Year was RMB183 million, while the profit attributable to the owners of the Group for the 2018 Financial Year was RMB394 million. Business Review EPC A typical EPC business model involves project design, procurement of equipment and materials, project construction and equipment installment services in relation to SO2 or NOx emission control and dust removal primarily for power plants, aluminum factories, steel factories and chemical plants. The Group acts as the main contractor and is responsible for the design of the project; procurement and selection of various environmentally-friendly materials and equipment from domestic and overseas suppliers; construction subcontracting and supervision of the project construction and equipment installment; testing, inspection and trial operation of the facilities; and delivery of a project to the customer upon its completion and inspection by the competent government authority or independent third parties or customers. In 2019, the Group further expanded its market share in steel flue gas treatment by entering into contracts in relation to the flue gas treatment project for 350m2 sintering machine of Tianjin Iron Factory and the flue gas treatment project for 90m2 sintering machine with Jinyuan Industrial Co., Ltd.. As such, the Group’s flue gas treatment performance in the steel industry continued to grow steadily. In the meantime, the Group entered into a contract for the 4 x 600 t/d lime doublehearth kiln flue gas SCR (selective catalytic reduction) denitrification project with Hebei Jinxi Africa Metal Mine Industry Co., Ltd., which is the Group’s first time participating in the industrial kiln flue gas treatment, thus further expanding into the new non-electricity flue gas treatment market for the Group. In 2019, the Group entered into a contract on the flue gas desulfurization and denitrification project for the LUCKY 1 x 660MW coal-fired power station in Pakistan, which was the Group’s another breakthrough in the overseas market in response to China’s “Belt and Road” and “China-Pakistan Economic Corridor” policy initiatives. In 2019, the Group entered into an EPC project which is of the high-voltage electrode boiler heating and thermal storage load shifting auxiliary service project of the State Power Investment Fushun Thermal Power Company. As such, the business scope of the Group has been expanded. In 2019, the total contract value of new EPC projects (including desulfurization, denitrification and dust removal projects) of the Group in operation amounted to RMB486 million, of which the contract value of new EPC projects in steel industry was RMB226 million. O&M The provision of O&M services mainly includes operation services and regular maintenance services for desulfurization and denitrification facilities owned by the customers. The Group acts as a contractor to provide desulfurization, denitrification and dust removal operation services. The scope of work involves the full operation, repair, upgrade and maintenance of flue gas treatment system/facilities of coal-fired power plants. Under the O&M projects, the Group’s customers are either charged service fees for the O&M services based on the total amount of on-grid electricity generated during the service period, or a price predetermined at the commencement of the project based on the pre-agreed scope of work. Revenues from the O&M business can be a recurring one, generating stable cash flow for the Group. In 2019, the Group acted as a contractor under the O&M projects to provide operation services in desulfurization, denitrification, dust removal and industrial sewage treatment. Regular maintenance services included a provision of technical support, facilities testing, maintenance services and spare parts replacement. Prior to 2019, the Group’s O&M customers were mainly concentrated in the thermal power sector. In 2019, the Group successfully expanded its O&M business to the steel, coking and industrial sewage sectors, and the O&M services for the Lubao Sewage Treatment Center in China which was acquired in the same year, and have been undertaken by the Group independently. As of 31 December 2019, the Group had a total of 19 O&M projects under operation, which have operated consistently with their emissions in compliance with required standards and shall provide a stable source of business growth of the Group. Concession Operation Business Under the concession operation business model, the Group is responsible for the financing, investment, construction and upgrading of a project according to its concession contracts with its customers. In general, the concession projects are funded by the Group’s internal funds or borrowings from local banks. Upon the completion of construction, the Group owns the project assets and operates the project for a period specified in the concession agreement, which is typically 15 to 20 years, and the Group is entitled to collect revenues generated from the project during the term of the contract. Revenues generated from the concession operation business during the operation phase of the relevant projects are calculated based on the on-grid power generation of the customer during the operation phase multiplied by the unit price specified in the concession contract, which is generally settled every calendar month. Further, the Group also generates revenues from the sales of by-products during the operation of the environmental protection facilities. The fees that the Group receives for the provision of concession services under concession agreement typically include service fees based on a guaranteed minimum flue gas treatment volume multiplied by a fixed unit price (pre-determined at the time the concession agreement is entered into with the customer) and such fees are subject to adjustment by certain variable costs the Group incurred. In 2019, the Group continued to carry out its concession operation business, including desulfurization, denitrification and green island (which is an integrated flue gas treatment system to treat synergistically the flue gas pollutants produced by the boilers of coal-fired power plants, including denitrification, desulfurization, dust removal, induced drafted fan system, reheating system). As of 31 December 2019, the Group has accumulated nine concession operation projects and all of which have been under operation smoothly, laying a strong foundation for the Group to operate continuously and develop steadily. Industrial Sewage Treatment Business In 2019, the Group acquired the Lubao Sewage Treatment Center at a cash consideration of RMB300 million. The designed capacity of the wastewater (sewage) biological treatment unit, the wastewater (sewage) advanced treatment and recycling unit, and the reclaimed water and sewage recycling unit is 560m3/ h, 560m3/h and 400m3/h, respectively. The operation of Lubao Sewage Treatment Center applies advanced technologies, including ultrafiltration, nanofiltration, reverse osmosis and other processes. With wastewater biochemical treatment, wastewater advanced recycling equipment and reclaimed water and sewage recycling, it operates throughout the business chain. The industrial sewage treatment business is one of the new directions for the Group’s future development. Through the acquisition of Lubao Sewage Treatment Center, the Group has successfully explored a new sector in the environmental protection market, which will bring continuous and stable benefits to the Group’s performance. The Group regards Lubao Sewage Treatment Center as a demonstration project for such industry and intends to train a team of technology and operating professionals in industrial wastewater treatment, so as to lay a solid foundation for the development of the sewage treatment market of chemical parks in China. Prospects: With the changes in the market demand for environmental governance, the requirements for enterprises in the environmental protection industry has been increasingly demanding and will bring about a change in the industry structure. In the future, the development of the environmental protection industry will enter a new era characterized with intensive pollution control, demutualized equities in enterprises, diversified investment channels and personalized service models. In the future, the Group will continue to aim at creating a comprehensive environmental protection platform enterprise by adjusting its business structure, optimizing resource allocation and expanding market share. Besides, it will continue to expand its multiple business areas comprising (i) flue gas governance, (ii) industrial sewage treatment and (iii) hazardous and solid waste treatment/disposal, striving to develop into a world-class group in the environmental protection industry. Looking ahead, the Group will carry out the following key tasks: (1)Maintain stable development of the Group’s main business and continue to expand its air pollution governance business in nonelectricity sectors The Group will continue to promote smart and intelligent O&M, provide all-round services and vigorously build a “Boqi O&M” brand in the industry, so as to expand its O&M project market in the traditional flue gas governance field. The Group will optimize the proportion between its concession operations and O&M business and improve the profitability of the Group. While the current flue gas desulfurization and denitrification business in the electricity sector has entered a stage of in-depth governance, the Group will seize opportunities brought about by national policies and utilize its own technology and extensive project experience to strive to develop its business in non-electricity sectors. The Group will fully tailor its one-stop service of “EPC+O&M” to the actual needs of customers in the steel industry, with a view to continuously consolidating the foundation for the Group’s sustainable development. (2)Further establish market presence for industrial wastewater treatment sector The Group has actively responded to the ecological and environmental protection policies issued by national, ministerial and local authorities. Leveraging on the opportunity to improve water discharge standards, the Group has pursued its strategic goals, actively integrated its internal resources and acquired Lubao Sewage Treatment Center in 2019, successfully taking the first step of establishing a market presence in the industrial sewage treatment industry. In the future, the Group will leverage on the industrial technology and project experience of Lubao Sewage Treatment Center to nurture a team of professional talents, enhance technology reserves and further develop its industrial treatment business. (3)Realizing the implementation of hazardous and solid waste treatment/disposal projects As the country has attached great importance to the environmental protection industry and the environmental protection awareness among the public has been growing, coupled with the fact that the outbreak of COVID-19 has intensified the problem of the insufficiency of the capacity of treatment facilities to cope with the production of hazardous and solid waste and medical waste, the hazardous and solid waste treatment industry has gradually entered a rapid development phrase and has a promising prospect of industrial development. By seizing tightly the market opportunities, the Group will combine its actual needs and strategic positioning to actively make deployments in the Beijing-TianjinTangshan regional market and roll out its specific projects. In addition, the Group will also enter new business areas through various forms of technical cooperation, investment, mergers and acquisitions.

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