Puxing Clean Energy Announces 2019 Annual Results and Proposed Change of Company Name

Net Profit increased by 20.3% to RMB 54.85 million

Declared a final dividend of HK$0.04

Financial highlights:

CHINA – Media OutReach – 31 March 2020 – Puxing Clean Energy Limited (“Puxing Clean Energy” or the “Company”, together with its subsidiaries, the “Group”; stock code: 00090), one of the leading clean energy providers in Zhejiang Province, is pleased to announce its annual results for the year ended 31 December 2019 (the “Year”).

Revenue of the Group for the Year amounted to RMB292,209,000, representing an increase of 3.76% as compared with the previous year which was attributable to the decrease in output VAT rate applicable to the main business of the Group and an increase in the heat selling price during the Year.

Benefiting from the decrease in finance expenses and the positive influences of adjustments in VAT rates during the Year, the profit attributable to equity shareholders of the Company for the Year was RMB54,854,000, representing an increase of 20.35%. The basic and diluted earnings per share of the Company amounted to RMB0.12 (2018: RMB0.099). The Board recommended the payment of a final dividend of HK$0.04 per share (2018: HK$0.035) for the Year, representing an increase of 14.29%.

With the overall economic restructuring and the structural adjustment in electricity procurement demand of Zhejiang Province in 2019, the relevant government departments in Zhejiang Province optimised and adjusted the annual production plan of the Group’s four power plants to meet the maximum demand within the power grid during the Year.

The Group’s overall power generation in 2019 decreased by 5.07% to 84,015MWh as compared to 88,505MWh in the previous year. Meanwhile, in view of the overall decrease in electricity generation during the Year, the consumption of natural gas for electricity generation decreased by 8.82% to 19,293,888m³ from 21,160,000m³ in the previous year.

As export enterprises for the Year had less demand for heat consumption under the influence of Sino-US trade war, the Group’s heat sales volume during the Year decreased by 6.41% to 97,639 tons. In order to increase profit from the heating business, the Group raised the heat selling price during the Year.

The average selling price of steam for the Year (inclusive of VAT) was approximately RMB322.28/ton, representing an increase of 18.84% as compared to that in the previous year. During the Year, benefiting from the rise in heat selling price, notwithstanding the heat sales volume decreased by 6.41% to 97,639 tons, the revenue from sales of heat for the Year increased by 10.97% to RMB28,740,000 with an increase in the gross margin of 7.05 percentage points to 10.23%. Given the decrease in heat sales volume during the Year, the consumption of natural gas for heating decreased by 7.89% to 9,175,600m³.

The Group’s photovoltaics production volume was approximately 645MWh for the Year (2018: 420MWh), of which approximately 89MWh (2018: 75MWh) was sold to the power grid. During the Year, the Group saved power consumption cost of RMB302,000 (2018: RMB185,000) from the above photovoltaic power generation, and realised a revenue from sales of electricity of RMB174,000 (2018: RMB106,000).

During the Year, the Zhejiang Provincial Development and Reform Commission adjusted the volume tariff of natural gas power generating units and gate station price for natural gas (inclusive of value-added tax (VAT)) in January, April, November and December 2019, respectively. After several adjustments during the Year, the volume tariff (inclusive of VAT) of each of Deneng Power Plant, Bluesky Power Plant and Jingxing Power Plant under the Group was adjusted from RMB0.79/kWh at the beginning of the Year to RMB0.686/kWh at the end of the Year, representing a decrease of approximately 13.16%; the volume tariff (inclusive of VAT) of Anji Power Plant was adjusted from RMB0.73/kWh at the beginning of the Year to RMB0.626/kWh at the end of the Year, representing a decrease of approximately 14.25%; the price of natural gas (inclusive of VAT) of power plants under the Group was also lowered from RMB3.27/m³ at the beginning of the Year to RMB2.88/m³ at the end of the Year, representing a decrease of approximately 11.93%; the capacity tariff (inclusive of VAT) of the power plants remained unchanged.

During the Year, due to the rise in average natural gas price (inclusive VAT) for the Year, the Group’s average unit fuel cost for power generation was approximately RMB587.99/MWh (2018: approximately RMB524.93/MWh), representing an increase of 12.01% as compared to the previous year; the average unit fuel cost for heating was approximately RMB240.76/ton (2018: approximately RMB219.93/ton), representing an increase of 9.47% as compared to the previous year. The fuel costs for the Year amounted to RMB72,908,000, representing an increase of 5.05% as compared to that in the previous year. Fuel costs accounted for 98.51% of the related revenue (i.e. volume tariff revenue (excluded revenue from photovoltaics power generation) and revenue from sales of heat), representing a decrease of 3.29 percentage points as compared to 101.80% in the previous year.

To better reflect the Group’s vision of developing into an integrated energy supplier, the Board proposed to change the name of the Company from “Puxing Clean Energy Limited” to “Puxing Energy Limited” and to change the dual foreign name in Chinese of the Company from “普星潔能有限公司” to “普星能量有限公司”. The proposed change of company name is subject to the shareholders’ and the Registrar of Companies in the Cayman Islands’ approval.

Mr. Wei Junyong, Chairman of Puxing Clean Energy, concluded, “We believe that the natural gas power generation business is still a promising industry in the next five to ten years. As an enterprise with its core development of providing integrated energy, we wholeheartedly embrace the great energy era and will transform into an integrated energy supplier based on the core philosophy of ‘Energy + Technology’ to develop diverse energy businesses and instill new energy into the Group for enhancing its long-term growth potential and value to shareholders.

In the coming years, apart from focusing on expanding its installed capacity and heating business, the Group will pursue new businesses such as auxiliary power service, energy contracts management and energy storage as its future development goals in order to maximise benefits and returns to shareholders with its utmost efforts.”

About Puxing Clean Energy
Puxing Clean Energy is a leading clean energy provider in Zhejiang Province. It is mainly engaged in development, operation and management of natural gas-fired power plants. Presently, the Group owns four natural gas-fired power plants with a total installed capacity of approximately 458MW (including 578kW rooftop photovoltaic power generation facilities installed in 2018) and a maximum heating capacity of approximately 160 tons per hour.