Relevant Documents:Presentation H1'20 financial results
Chinese renewable energy company Concord New Energy Group (CNE) is holding a series of non-deal roadshows this week to test the market for a potential refinancing of its maturing $200 million 7.9% senior notes due Jan. 23, 2021, while company management maintains that it can cover the repayment through asset sales and potential equity investment from state-owned firm Three Gorges Capital, three buysiders who attended an investor call on Monday said.
Company management told an investor call on Monday that it has already disposed of three subsidised projects in the first half of 2020 with a total generation capacity of 196MW and an asset valuation of RMB 1.5 billion ($215.8 million). CNE has already received RMB 400 million from the sale in the first half and is expected to receive the remaining RMB 250 million in the second half of the year. It also plans to further sell around 104MW of assets in the second half worth RMB 1.9 billion.
The management did not comment on the progress of the talks with Three Gorges Capital, which signed a non-exclusive investment intention agreement in June for a potential acquisition of a 20% equity stake in Yongzhou Jiepai Century Concord Wind Power, the wind power arm of CNE, for around RMB 1 billion to RMB 1.5 billion.
CNE announced its financial results for the first half of 2020 to the Hong Kong stock exchange on Monday, reporting a 3.8% year-over-year increase in revenue to RMB 999.5 million. The year-over-year revenue growth significantly slowed down compared to the 19% recorded in the first half of 2019, while net profit also declined 5% year over year to RMB 379.4 million. Company management attributed the slowdown in growth and drop in profit to Covid-19 and decline in radiation.
A breakdown of the company’s revenue:
The company had cash and cash equivalents of RMB 1.267 billion as of end-June, down 10.6% from RMB 1.462 billion at the end of 2019, against a total liabilities of RMB 13.552 billion, of which RMB 4.653 billion is current, including the $200 million senior notes due in January next year.
Company management said on the call that CNE repaid around RMB 600 million debt in the first half while adding close to RMB 1 billion new credit lines, including RMB 700 million bank loans and RMB 300 million onshore notes. Meanwhile, capex payments in the first half amounted to RMB 1 billion and the company is expected to further pay RMB 1.7 billion in capital expenditures in the second half of the year.
As of end-June, CNE held equity interests in 74 grid-connected wind power and PV power plants with a total installed capacity of 3,251MW and an attributable installed capacity of 2,266MW, of which 86.1% was wind power projects.
85% of attributable operating capacity has been listed in or already applied for subsidy catalogue or grid parity projects, while 80% of pipeline projects with approval or construction quota are grid parity projects.
CNE $200 million 7.9% notes due Jan. 23, 2021 were indicated at 96/98 this week, after first dropping from above par during the market crash in March. S&P and Fitch both revised its outlook on the company to negative in early this year, with the former downgrading its rating to from BB- to B+ due to rising leverage and insufficient liquidity to meet its upcoming dollar notes maturity in January amid uncertainty over its refinancing plan during the current unfavourable market conditions. CNE later in June requested S&P to withdraw its ratings due to disagreements over the company’s operational and financial performance.