In the past three months, Xiexin New Energy (00451) has bought back more than 200 million US dollar debt, but the significance behind these three buybacks has been underestimated by the market.
On October 17th, Xiexin New Energy issued an announcement proposing to repurchase in cash the outstanding principal value of not more than US $78.4 million of the 10.00% preferred notes ("US dollar debt") due in 2024 at a price of US $0.83, and an offer to pay the relevant interest.
Prior to this, Xiexin New Energy bought back two US dollar bonds on January 25 and March 18, respectively, totaling US $76.9 million and US $45.1 million respectively. The three payments add up to 200.4 million dollars.
Three dollar bonds are an important part of Xiexin New Energy's Bermuda restructuring plan to reach its $500 million debt.
The Bermuda restructuring plan, proposed by Xiexin New Energy on December 23, 2020, aims to restructure $500 million in debt with a coupon of 7.1% preferred notes due in 2021 and was finally approved by the Bermuda Supreme Court on June 11, 2021.
At this pace, Xiexin New Energy may pay off all its $500 million debt by 2023 and clear the way for domestic debt processing.
But this is not the key, the most important thing is the meaning behind the $200 million debt buyback, that is, the cash flow of Xiexin new energy may have improved rapidly, while laying the groundwork for the future Ethiopia-Djibouti natural gas project.
"previously, Xiexin New Energy has begun to refund the sale of the power plant to the central enterprises, and it is expected to pay back all the money in 2023, which is worth tens of billions of yuan (it is necessary to prove the approximate amount of the outstanding money from the sold power station)." A source close to Xiexin New Energy frankly told Zhitong Financial APP that coupled with the gradual return of state subsidies, five ministries and commissions have also introduced 10 measures to deal with wind power photovoltaic subsidy arrears and other new policies to solve problems. Xiexin New Energy's owed photovoltaic power station subsidies will be gradually recovered in about three years, which is as large as 9.2 billion yuan.
It is understood that Xiexin New Energy has successfully achieved light asset transformation with a significant reduction in overall debt liquidity and financing pressure has been greatly improved.
According to the data, Xiexin New Energy's 2022 half-year report shows that its interest-bearing debt has fallen by about 70 per cent to 5.54 billion yuan from the same period last year, and financing costs have also fallen by about 66 per cent to 319 million yuan. The debt ratio is maintained at a more robust level of 52 per cent.
According to the previous estimate of Xiexin New Energy, with the follow-up power plant delivery, cash recovery and debt repayment, the debt will be further reduced by about 6 billion yuan in 2022, and the company's asset-liability ratio will continue to decline to a more robust level.
After the removal of the debt ticking time bomb, a clear main line is about to emerge: Xiexin Group may build Xiexin New Energy into an important platform to undertake the company's natural gas and hydrogen industry strategy; with the help of Xiexin New Energy to LNG, photovoltaic hydrogen production field, re-integrate the group's resources.
On September 9, the management of Xiexin New Energy was reshuffled: Zhu Gongshan will be the chairman and executive director of the company, Zhu Yufeng will be the vice chairman and executive director, and Wang Dong, chief executive of Xiexin Group, will be the president of the company. as a result, three senior executives of Xiexin Group will be seated in Xiexin New Energy at the same time.
In addition, independent non-executive director Cai Xianhe and chief operating officer and chief engineer Li Jianjun also parachuted into Xiexin New Energy. Like Wang Dong, the two men share a common background in the field of oil and gas development and operation, and have accumulated decades of experience in the industry.
Their airborne cleared the last kilometer barrier for the injection of Ethiopia-Djibouti oil and gas project into Xiexin New Energy.
At the end of 2013, Xiexin Group officially launched the Ethiopia-Djibouti oil and gas project, which is currently the largest natural gas development project for non-"three-barrel oil" enterprises in China. The project has reserves of 5 trillion cubic meters of natural gas and about 4 billion tons of crude oil. Xiexin has 45 years of exploration and development of the project.
On July 28th, Xiexin New Energy raised HK $314 million, 90% of which went to the natural gas business. Then, Xiexin New Energy announced that it planned to invest in the Ethiopia-Djibouti natural gas project through Poly Xiexin Natural Gas Group. The company provides management services for the project.
At present, the investment in the Ethiopia-Djibouti natural gas project will become an important option for the project and related industries to be injected into listed companies in the future; on the other hand, the company hopes that through its investment in the Ethiopia-Djibouti natural gas project, when the time for the development of hydrogen energy is more ripe, it can quickly lock in natural gas supply and technology, consolidate its first-mover advantage and enhance its core competitiveness.
A clean company with little debt is the ideal vehicle for injecting Ethiopia-Djibouti natural gas projects, which may be the deep meaning behind Xiexin's three consecutive repayments of $200 million in debt.
From the perspective of stock price, the placement price of Xiexin New Energy on July 28 is 0.138 Hong Kong dollars, and the current price is much lower than the additional offering price. From the perspective of market transactions, the daily trading volume of Xiexin New Energy is still within the range of 10 million Hong Kong dollars. It shows that investors are still trading actively; from the future point of view, if only the injection of Xiexin natural gas, that is, several times the current market value of HK $20.
But has the market noticed?