Hete Energy's IPO “terminates” the company to focus on cogeneration business in industrial parks

The Zhitong Finance App learned that on January 29, Hete Energy (Fujian) Co., Ltd. (abbreviation: Hete Energy) changed the IPO review status to “terminated” on the main board of the Shanghai Stock Exchange. Due to the withdrawal of the issuance and listing application by Hete Energy (Fujian) Co., Ltd. and its sponsor, the Shanghai Stock Exchange terminated its issuance and listing review in accordance with the relevant provisions of section 63 of the “Shanghai Stock Exchange Stock Issuance and Listing Review Rules”.

According to the prospectus, Hete Energy has always focused on cogeneration business in industrial parks. Through the construction of cogeneration platforms, it provides customers with centralized heating, electricity supply, and general solid waste resource disposal services. In addition, the company relies on large-scale heating network facilities to provide customers with steam network transportation services. The company's main products include steam, electricity, steam network transportation and sludge disposal services.

The company uses coal as the main fuel, and also mixes part of the sludge, and relies on high temperature and high pressure circulating fluidized bed boilers and back-pressure steam turbine generators to carry out heat and power generation and sludge harmless and resource disposal services: steam and electricity are produced and supplied through cogeneration. Among them, the main customers of steam products are manufacturers in industrial parks, covering various industries such as textile, chemical fiber, grain, oil, and food: the customer of power products is the national grid, and the company will sell the remaining amount of electricity online after self-use. The company's main revenue and profits come from cogeneration business and steam network transportation services.

On the financial side, in 2020, 2021, 2022, and January-March 2023, Hete Energy achieved operating income of approximately RMB 314 million, RMB 383 million, RMB 455 million and RMB 107 million, respectively. In the same period, the company achieved net profit of 116 million yuan, 77.489 million yuan, 78.7055 million yuan and 18.399 million yuan, respectively.

It should also be noted that, according to the prospectus, there is a risk that steam prices will not be able to match fluctuations in raw material prices in a timely manner with the price of raw materials. The company's cogeneration has a coal-heat price linkage mechanism, that is, the price of steam sold changes as the price of coal changes. In the heating contracts signed by the company with major heating customers, one of the main coefficients of the coal-thermal linkage price set is the Bohai Rim Thermal Coal (5500) or CCI Thermal Coal (5500) Index. If the fluctuation of the relevant coal price index cannot match the actual coal transaction price due to delays or other reasons, the price adjustment effect of the company's coal thermal linkage pricing mechanism will be poor. That is, the increase in steam prices is not as high as the increase in raw coal prices, which will adversely affect the company's profit situation.