Develops Both Catering and New Energy Businesses; Strategically Expands Business to Enlarge Income Streams
HONG KONG — Northern New Energy Holdings Limited (“Northern New Energy” or the “Group;” stock code: 8246) today announced its annual results for the year ended 31 December 2017. During the financial year, the Group pushed its business strategy forward on two fronts, with the catering business serving as foundation while expanding into the new energy business. By developing both operations at the same time, it hopes to broaden income streams and steer the Group towards comprehensive and professional development. During the year, revenue amounted to RMB302,427,000, with profit and total comprehensive income attributable to owners of the Company amounting to RMB42,425,000. Both basic and diluted earnings per share were RMB1.2 cents.
Review of New Energy Business
In 2017, “providing dynamic integrated new energy solutions” was the primary objective set by the Group. With regard to technical consultancy, Northern New Energy provided technical services for heating systems, technical services for pre-stage coal-to-natural gas conversion systems, technical services for de-nitrification of coal-fired boilers and de-plume engineering solutions for its wide range of clientele. As for the engineering construction segment, the Group undertook projects including sale, installation and debugging of equipment for de-nitrification of coal-fired boilers, sale and installation of bag filter equipment for coal-fired boilers, installation of heat exchanger units as well as the pipeline layout and construction of outdoor network projects. In response to market demand, the Group has expanded its business to the sale and purchase of new energy related industrial products by way of trading, thus venturing into the market and broadening income streams.
In the fourth quarter, the Group entered into a memorandum of understanding (“MOU”) with two independent third parties. Pursuant to the MOU, it has conditionally agreed to purchase liquefied nature gas (“LNG”) stations of Tianjin Jin Re Natural Gas. The deal was officially completed in February 2018. The Group is actively applying for the necessary industrial license and permit with which it will subsequently be able to start the LNG business. The business covers sale of natural gas; gas pipeline engineering; sale, installation and maintenance of gas transmission equipment; development, consultation, service and transfer of heat supply technology; development of new energy technology; leasing and commercial services industry; installation of electric and mechanical equipment; and centralized urban heat supply service.. As such, the Group will be able to expand the new energy business towards the upstream segment of the natural gas industrial chain, diversify the operations of the Group and potentially raise the business to the next level.
Review of catering business
During the year, following review by the management based on market conditions and the existing operating model, it took the initiative of adjusting and reorganizing associated businesses. The efforts gradually improved the catering business, which realized a turnaround and subsequently achieved breakeven, which suggests that this approach was correct. Given the difficult macro-environment of the industry, this was by no means an easy task. The Group hopes to remain on track to stimulate development of the catering business going forward.
Prospects
At the end of 2017, the Chinese government published the “Clean Winter Heating Plan for Northern China (2017-2021)”, which provides policy guidelines for the new energy industry in Northern China and creates enormous business opportunities. The Group’s business and development direction corresponds with this government plan, hence will facilitate its overall development. The Group has strived to provide “dynamic integrated new energy solutions” for an extensive period. With the acquisition of assets of the independent third party in early 2018, its business coverage has expanded horizontally and vertically, becoming an all-round solutions and services provider that includes supplying LNG and gasified natural gas and providing consultation expertise on technical facilities in Tianjin. The Group’s existing customer base is growing steadily. While it gradually enlarges its market share and actively builds its presence in the industry, the Group is also considering developing the new energy business to include other areas in Northern China as part of its long-term strategic plan. At the same time, the Group will continue to strengthen its professional capabilities and the proficiency of its teams, so as to consistently deliver top solutions to customers. The management will also explore appropriate opportunities for acquisitions as well as link-ups with strong partners, in order to further enhance profitability.
In respect of the catering business, the management will continue the review and adjust operations, with the goal of consolidating and strengthening the foundation of this arm. As for property development, it will further search for quality properties to invest in, so as to secure stable cash inflows and generate stable returns for shareholders.
By adhering to the strategy of pursuing two business and development objectives of “diversification and professionalism”, the Group hopes to generate greater revenue while leading Northern New Energy to a new journey.