1. Net cash recovered from the sale of PV assets was 1.6 billion, and the revenue from operation and maintenance business increased sharply by 50% year-on-year

On March 25, GCL New Energy announced its 2023 annual results.

Total revenue for the year was RMB 832 million (same unit). During the year, losses decreased by more than 25%, and net loss due to mother also recorded a book loss of more than 22%.

Among them, revenue from PV power plant operation and management services was 228 million yuan, which once again achieved rapid growth on the basis of 152 million yuan in the same period in 2022 (90.9% year-on-year increase in 2022), and recorded a 50% business growth rate in 2023.

Currently, GCL New Energy continues to provide operation and maintenance services for most of the sold photovoltaic power plant projects, and continues to develop other proxy operation and maintenance projects.

By the end of 2023, the company had contracted a total installed capacity of about 7.2 GW for contract operation and maintenance, involving nearly 260 photovoltaic power plants. Customers were distributed all over the country, and the market share was among the highest.

Furthermore, as a national high-tech enterprise, GCL New Energy was successfully awarded the first “5A PV Power Plant Operation and Maintenance Service Unit” in the country. In 2023, the company won awards such as the “Second Prize of the Electric Power Science and Technology Innovation Award” from the China Telecommunication Union and the “Most Influential PV Operation and Maintenance Enterprise” of the year from the “Solar Energy Cup”.

According to data released by the National Energy Administration, in 2023, the installed capacity of China's solar power generation will be about 610 GW, officially surpassing the installed scale of hydropower, becoming the second-most installed power source form in China, and its position in the power energy structure has further increased.

According to the well-known consulting agency Wood Mackenzie, in 2024-2028, the world's new PV installations will enter the platform period. The past period of rapid installed capacity growth will come to an end. The industry may enter a mature period of slow growth. The overall development idea may gradually shift to a strong operation management stage of cost reduction and efficiency, management mistakes, and active participation in the market-based electricity trading market to release performance.

According to data provided by the “2023 White Paper on China and Global PV Development”, it is predicted that the cumulative installed capacity of solar photovoltaics in China will reach 1,200 GW by 2030. According to the unified estimate of the operating and maintenance costs of the business side of about 0.06 yuan/W per year, it is estimated that by 2030, the PV operation and maintenance market space may reach 72 billion yuan, which is 4.29 times the size of China's PV operation and maintenance stock market of about 16.8 billion yuan in 2022. The CAGR reached 19.95% during this period, showing the potential for continuous growth of the PV operation and maintenance circuit.

Therefore, regardless of the changing thinking in the development stage of the industry, or judging from the track's long-term market potential, GCL New Energy's photovoltaic business continues to gather in segmented operation and maintenance management segments using an asset-light model. There is room for long-term development, and there is still much to be done in the future.

In October 2023, GCL New Energy will sell the last batch of 36 photovoltaic power plant projects with a total scale of about 584 MW in China. The net cash proceeds from the sale of photovoltaic assets during the year were approximately RMB 1.6 billion. The company plans to repay its debts and support investments in natural gas, liquefied natural gas, and operations and management services segments.

During the period, GCL New Energy completed redemptions and repurchases of US dollar notes totaling nearly US$240 million, and the company's balance ratio fell to a healthy and steady level of about 23.2%. As of the end of 2023, the amount of cash assets recorded on book reached about 615 million. Cash assets are abundant, and the working capital situation has improved significantly.

2. Diversified development of natural gas business: quickly enter natural gas LNG trade and continue to build a flagship talent pool

In 2023, GCL New Energy made new progress in the natural gas business. In order to further promote the diversified development of the natural gas business, the company maintained good communication with Poly GCL Natural Gas Group Co., Ltd. and explored entering the LNG business.

GCL New Energy achieved a breakthrough in LNG trade from 0 to 1 in the second half of 2023, participated in market-based competition, and quickly generated related business revenue. During the reporting period, GCL New Energy's active LNG trading business recorded RMB 8.6 million in revenue.

According to data released by the General Administration of Customs, in 2023, China's LNG imports reached 71.32 million tons (about 98.4 billion cubic meters), an increase of 12.6% over the previous year, once again surpassing Japan to become the world's largest importer of LNG. Domestic natural gas consumption has also maintained a steady increase. Therefore, with GCL Group's long-term strategic layout support in the energy industry chain, GCL New Energy is expected to rise rapidly in the natural gas LNG trade sector, seize market share, and become a rising star.

According to reports, GCL Poly Natural Gas Group has an upstream exploration and development period of 45 years in the Ogaden Basin in Ethiopia, Africa. The deposit has resources of 5 trillion cubic meters of natural gas and about 4 billion tons of crude oil, and is now fully equipped for large-scale commercial development.

Based on this, GCL New Energy entered the natural gas LNG trade and gradually established a complete and stable supply chain service advantage, which is in line with the company and group's long-term strategic plans for natural gas development. The scale of the company's related revenue is also expected to rapidly strengthen and expand, forming the company's “second growth curve”. Relaying growth, it may now have begun to take shape.

Meanwhile, in March 2024, Nanjing GCL New Energy Development Co., Ltd. (“Nanjing GCL New Energy Development”), an indirect wholly-owned subsidiary of GCL New Energy, signed an intermediary contract with GCL Smart Energy (Rudong) Co., Ltd. (“Rudong GCL Smart Energy”), an indirect wholly-owned subsidiary of GCL Energy Technology Co., Ltd. (“Rudong GCL Smart Energy”).

According to the intermediary contract, Nanjing GCL New Energy Development will use a professional team to find qualified international LNG resources and LNG receiving stations for Rudong GCL Smart Energy, and assist Rudong GCL Smart Energy in purchasing LNG. At the same time, around the Group's high-quality industrial chain clusters, we will accelerate the layout of global trade and help the high-quality development of clean energy. In 2024, natural gas LNG trade has an opportunity to quickly move from 0 to 1 to a new stage from 1 to 10 on the basis of last year's breakthrough, and rapid growth in business volume and business revenue can still be expected.

In the past two years, GCL New Energy has continued to move in introducing energy talents, continuously introducing energy industry elites and experts such as Xu Huilin and Xiong Xin, and continues to build a flagship talent echelon. The newly introduced talents all have deep insight into the oil and gas industry, and have advanced qualifications and deep resource accumulation. They have rich experience in investment and financing projects and capital operations in the commodity trade and energy sector. They are among the few scarce talents in the industry. The company's human resources system and management capabilities will also be further upgraded with the introduction of talents.

In the long run, the continuous improvement in the quality of human capital will help rapidly enhance the company's business development and the company's endogenous growth potential.

End section

Overall, with the release of the 2023 results announcement, GCL New Energy's overall performance this year slightly exceeded expectations, and the number of highlights gradually increased.

The company has officially established a profit bottom, the PV asset-light model has been implemented, the natural gas LNG trading business has begun to bear fruit, and the growth ideas of dual-wheel drive in the two major industries of the “photovoltaic+natural gas” circuit have gradually been explored and clarified.

However, the company has completely completed the difficult task of reducing debt over the years, and its balance sheet continues to be repaired and consolidated, and its resilience to risks has improved.