Shenzhen Nandian Power A intends to invest 29.29 million yuan in cross-border investment in prefabricated parks

Limited by the natural gas power generation dilemma, Shenzhen Nandian Power A announced on the evening of September 28 that it plans to invest 29.29 million yuan in the Zhongshan Prefabricated Industrial Park project. Shenzhen Nandian Power A said that it intends to use this investment to enhance the company's profitability and reduce the company's survival pressure. Analysts believe that cross-border investment in prefabricated construction industrial parks allows Shenzhen Nandian Power A to enter a new field, but it is difficult to reverse the severe situation of its main business.

According to the announcement, Shenzhen Nandian Power A intends to take advantage of the new round of infrastructure investment boom triggered by the development of the Guangdong-Hong Kong-Macao Greater Bay Area, with its own funds of RMB 29.29 million, Shenzhen SEZ Construction Group Co., Ltd. or its authorized subsidiary, Zhongshan Tsuhang Investment Co., Ltd. jointly invested in the construction of the first large-scale prefabricated industrial park in Zhongshan City.

Shenzhen Nandian Power A said that the company is actively seeking high-quality project resources based on the severe operating situation and future development strategy. Investing in the Zhongshan Prefabricated Construction Industrial Park project can enhance the company’s profitability, reduce the company’s survival pressure, and further promote the company’s sustainable development. The reporter noticed that Shenzhen Nandian Power A also issued another investment announcement that night. The company plans to use idle self-owned funds not exceeding 1 billion yuan to purchase wealth management products.

The main business of Shenzhen Nandian Power A is the production and operation of power supply and heating, and related technical consultation and technical services for power plants (stations).  In the first half of 2020, electricity sales accounted for 90.73% of revenue. The semi-annual report shows that, in the first half of the year, Shenzhen Nandian Power A’s net profit attributable to its parent was 52.0405 million yuan and a net loss of 25.2832 million yuan in the same period last year. Although it achieved a turnaround, 33.53 million yuan was investment income.

In fact, the main business of Shenzhen Nandian Power A has been in trouble for a long time. The data shows that after Shenzhen Nandian Power A suffered continuous losses in the two fiscal years of 2014 and 2015, the Shenzhen Stock Exchange implemented a "delisting risk warning" in accordance with relevant regulations. In 2016, Shenzhen Nandian Power A finally realized its loss through the sale of its two subsidiaries, Shenzhen China Real Estate and Shenzhen China Development. Since then, Shenzhen Nandian Power A has been affected by factors such as the reduction in the on-grid price of natural gas, deducting 13.52 million yuan in non-net profit losses in 2018. In 2019, Shenzhen Nandian Power A’s revenue decreased by 35.14% year-on-year. At a time when the main power business is facing difficulties, Shenzhen Nandian Power A announced in March this year the sale of 70% of the shares of Shenzhen Nandian (Dongguan) Weimei Power Co., Ltd. and an investment of 200 million yuan in equity investment funds.

An analyst told reporters that from the perspective of the reform of the electricity market, market-oriented transaction electricity prices are currently on a downward trend compared with non-market-oriented catalog electricity prices. In the second half of this year, the "large gas and power provinces" Zhejiang and Guangdong successively lowered power generation prices. Natural gas power generation on-grid power prices. Shenzhen Nandian Power A’s natural gas power generation business accounted for a relatively large proportion of revenue. In the future, this part of revenue and performance will still face downward pressure. The company needs to improve marketing plans and reduce fuel procurement costs. The investment in the prefabricated industrial park project may be difficult to solve the main business dilemma of Shenzhen Nandian Power A.