Beijing control's fast-growing clean energy listing platform. Beijing Control Clean Energy Group Co., Ltd. (Beijing Control Jianneng, 1250 HK) is the development, operation and maintenance platform for clean energy projects under the Beijing Control brand. Since June 2015, the platform has been integrated by Beijing Water Control through reverse mergers and formed a characteristic mixed ownership holding structure. By the end of 2017, Beijing Water Control (371 HK), CITIC Industrial Fund and Enlightenment Holdings held 31.9%, 23.9% and 6.4% of the total share capital of Beijing Control Jianneng respectively. The company has started business transformation since the acquisition and has achieved rapid expansion through the business portfolio held and operated by the unique photovoltaic project EPC+. The company achieved outstanding results in 2017, with revenue and net profit up 247.4% and 208.9% to HK $10.04 billion and HK $1.56 billion, respectively.

With the development and utilization of clean energy as the goal, three arrows are fired at the same time. After two years of business transformation, we believe that Beijing Control Jianneng has gradually shaped a relatively clear business line, that is, it is strategically aimed at the broad market for the development and utilization of clean energy. The three arrows are 1) the development and operation and maintenance of solar photovoltaic power stations, 2) the development and operation and maintenance of wind farm projects, and 3) the provision of efficient and stable clean heating services.

The ability of new energy project development and EPC is becoming stronger and stronger. Despite the beginning of the transformation of the business platform, Nortel's photovoltaic and wind power project development capabilities are impressive. As a latecomer to the development of new energy projects, on the one hand, Beijing Control Jianneng has obtained considerable engineering capacity through mergers and acquisitions in a short time, and has undertaken many EPC projects with the development of the market; on the other hand, the company has accumulated 2.2 gigawatts of photovoltaic projects and 76 MW projects by the end of 2017 through mergers and acquisitions, cooperative development and internal development. In terms of business model, we believe that the better cash flow and profitability of the EPC business side will help the company to alleviate the sluggish situation of new energy subsidies. The company plans to develop and hold 1 gigawatt of photovoltaic and wind power projects each year in non-power-limited areas in the next 2-3 years.

Clean heating: blue ocean business. Under the guidance of active government policies, the clean heating market is developing rapidly. According to government statistics, China's heating market was about 20.6 billion square meters by the end of 2016, but only 34 per cent of the heating market provided clean heating. At present, the residential heating market is highly dispersed, and the largest heating service provider in the market accounts for less than 3% of the market share. We expect the clean heating business to become similar to a natural gas distributor, charging an initial installation fee during the heating connection phase and an advance payment before the start of the heating season. The company expects the investment cost of clean heating projects to be recovered in the short term, and expects that clean heating business will provide the company with a stronger business cash flow. By the end of 2017, Beijing Jianneng has a reserve of more than 20 million square meters of clean heating projects, and the company aims to become a leader in the field of clean heating within 3 years.