The first major IPO of the year has arrived, with a fundraising target of 24.5 billion yuan. This new energy “money-making machine” is set to make waves in the capital market!
On March 14, the Shenzhen Stock Exchange announced that China Resources New Energy Holdings Co., Ltd. (hereinafter referred to as “China Resources New Energy”) has had its IPO application accepted. This project marks the first major IPO approved on the Shanghai and Shenzhen main boards this year and sets a new high for expected fundraising since May 2022.
On March 22, 2023, China Resources Power announced plans to spin off China Resources New Energy for an A-share listing, receiving approval from the listing committee in June of that year. However, with tightening IPO regulations in August 2023, China Resources Power’s listing plans slowed down. Now, as the capital market shows signs of recovery, the launch of this mega IPO sends a strong signal.
China Resources New Energy is recognized as a leading powerhouse in renewable energy generation. It is a wholly-owned subsidiary of China Resources Power (HK:00836) and serves as the only platform under China Resources Power for investing, developing, operating, and managing wind and solar power plants. Within the industry, China Resources New Energy is considered a high-quality renewable energy company.
According to their prospectus, the company’s main assets cover 30 provinces in China, with power stations located in areas rich in wind and solar resources. As of September 30, 2024, the company has a controlled installed capacity of 28.2069 million kilowatts. Among state-owned large power generation companies, China Resources New Energy ranks just behind Huadian New Energy, Longyuan Power (SZ:001289), and Three Gorges Energy (SH:600905) in terms of installed capacity.
China Resources New Energy demonstrates significant market competitiveness in both wind and solar power generation. Its wind power projects have an installed capacity of 21.5664 million kilowatts, while its solar power projects have a capacity of 6.6405 million kilowatts, accounting for approximately 4.50% and 0.86% of the national market share, respectively. Wind power constitutes about 90% of the company’s main income source, while solar power revenue has been steadily increasing, making up 12.62% of the total revenue in the first three quarters of 2024.
Notably, the average utilization hours for wind and solar power generation at China Resources New Energy significantly exceed the industry average. From January to September 2024, the wind power projects achieved 1,731 hours of generation, compared to the industry average of 1,567 hours. In solar power projects, the utilization hours reached 1,121, while the industry average was 959 hours.
This exceptional market competitiveness has allowed China Resources New Energy to achieve impressive financial results, often referred to as a “money-making machine.” From 2021 to the first three quarters of 2024, the company reported operating revenues of 17.134 billion yuan, 18.198 billion yuan, 20.512 billion yuan, and 17.150 billion yuan, respectively. During the same period, net profits were 6.576 billion yuan, 6.458 billion yuan, 8.459 billion yuan, and 6.349 billion yuan, maintaining a high gross profit margin of 57.68% to 62.88% and a net profit margin of 35.49% to 41.24%.
Through this IPO, China Resources New Energy plans to raise 24.5 billion yuan, which will primarily be used to enhance its renewable energy generation projects. These projects include “new energy base projects,” “integrated multi-energy complementary projects,” “green ecological development and comprehensive utilization projects,” and “integrated development renewable energy projects.” China Resources New Energy stated that these fundraising projects will enhance the company’s asset scale, further expand and extend its advantages in wind and solar power generation, and solidify its competitive edge in its main business.
As opportunities for IPOs in the renewable energy sector are increasing, on August 27, 2023, the China Securities Regulatory Commission announced measures to optimize IPO and refinancing regulations. These measures tighten the financing of listed companies and enforce stricter regulations on refinancing. As a result, many companies in the solar, wind, and energy storage sectors have paused their IPOs since 2024, with at least 16 companies in the solar sector alone, collectively aiming to raise over 20 billion yuan. This includes industry leaders such as Jidao, Zhongrun, Runyang, Xinte, and Zhengtao Energy. The originally planned spin-off listing of Trina Solar has also been abandoned.
The obstacles to IPOs have exacerbated financial pressures for many renewable energy companies, which are already facing intense competition and pricing wars. Consequently, several companies have turned to the Hong Kong market for fundraising. A notable example is Zhongrun Guangneng, a photovoltaic cell manufacturer. The company submitted its A-share listing application to the Shenzhen Stock Exchange in May 2023, intending to raise 2.3 billion yuan. After several rounds of feedback, it was approved in December 2023 but has yet to receive the issuance approval from the CSRC. On March 13, Zhongrun Guangneng submitted a listing application to the Hong Kong Stock Exchange, officially shifting its focus.
The acceptance of China Resources New Energy’s IPO application sends a positive signal regarding the recovery of the capital market and suggests that the backlog of IPOs for renewable energy companies may soon be addressed. In fact, recent discussions about loosening IPO reviews have been circulating, including making IPO processes more routine, engaging with major investment banks, and lowering the thresholds for the Science and Technology Innovation Board. According to CITIC Securities, the number of IPOs in the A-share market could rise to around 150 in 2025. Based on an average fundraising estimate of 680 million yuan per company in 2024, the total IPO financing scale could reach 102 billion yuan in 2025.
On March 11, a meeting of the China Securities Regulatory Commission’s party committee emphasized the ongoing support for technological innovation and the development of new productive forces. It aims to enhance regulatory inclusivity and adaptability while supporting high-quality unprofitable technology companies in their issuance and listing. With the CSRC chairman Wu Qing’s public statement on March 6 regarding accelerating the establishment of a support mechanism specifically for technology companies, renewable energy enterprises with hard technology attributes are expected to benefit.
