PVTIME – Clenergy Technology Co., Ltd. has made an important announcement regarding its growth strategy. The company intends to raise 500 million yuan through the issuance of convertible bonds. These funds will be used in three key areas: the construction of a smart factory for distributed photovoltaic mounts, the establishment of an energy research and development centre, and the replenishment of working capital.
The cornerstone of this initiative is the plan to expand production capacity by 10GW of distributed mounts. Once fully operational, the new capacity is expected to generate annual revenues of 2.313 billion yuan. This is a particularly striking figure when compared to the company’s 2023 revenue, which is only 1.936 billion yuan. Clearly, the expected revenue from the expansion dwarfs the previous year’s total.
However, Clenergy is currently struggling with performance issues. In the first three quarters of 2024, while revenue was up a modest 2.76% year on year, net profit took a significant hit, plunging 32.49% year on year. Net profit excluding non-recurring items also fell sharply, by 30.03%. These figures paint a picture of a company facing headwinds, mainly due to fierce industry competition and rising costs.
To make matters worse, Clenergy has set ambitious targets for revenue growth. It is targeting growth rates of at least 20%, 44% and 72.8% in 2024, 2025 and 2026 respectively. Given the current performance slump, these targets appear overly optimistic, leading to market scepticism about the company’s growth potential.
Analysts are sounding a note of caution. While the convertible bond issue provides the necessary capital for expansion, underlying problems such as deteriorating performance, sluggish receivables and inventory turnover, and potential debt-structure risks could prevent the full benefits of expansion from being realised. Indeed, if Clenergy doesn’t simultaneously improve order quality, accelerate cash inflows and streamline inventory management, the capacity expansion could become a financial albatross.
Stay tuned to see how Clenergy tackles these challenges and pursues its expansion plans.
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