Crosby Research: China Everbright Greentech (1257 HK/BUY): Business update
In 2H18, CEG secured 12 (1H18: 12) new projects (3 biomass, 2 HWT and 7 environmental remediation), which is in line with management’s earlier expectations in which the number of new projects in 2H18 should be no less than that of 1H18. For Biomass, the number of projects in operation increased by 3, to a total of 22 projects (end-1H18: 19), thereby increasing biomass power generation capacity from 403MW to 472MW. On the cost side, construction costs were on the rise in FY18 (up by ~20% YoY), and therefore we have tuned down our GPM forecasts for biomass construction segment from 25% to 23% to reflect rising costs. Unit raw material cost of biomass energy sold was stable at Rmb0.37/kWh in FY18 and the management expects it to stay flat in FY19.