It took six years for GCL New Energy (00451) to complete the long journey to reduce debt. In total, it reduced its debt ratio by 61 percentage points. Over the past year, it also dropped 27 percentage points to reach a safe margin of 23.2%, and finally reached a new starting line.

On March 25, GCL New Energy announced its 2023 annual results. During the reporting period, GCL New Energy's total revenue was 832 million yuan, down 10% from 929 million yuan in 2022; the highlight was that PV power plant operating and management service revenue was 228 million yuan, an increase of 50% over 152 million yuan in the same period last year.

“The decline in revenue was mainly due to previous sales of power plants, which led to a decline in electricity sales, which ultimately affected revenue.” On March 25, a person close to GCL New Energy told the Zhitong Finance App that GCL New Energy's last dollar debt was paid off last year, and “photovoltaic+natural gas” has become the company's two major driving forces.

The Zhitong Finance App notes that despite difficulties, GCL New Energy successfully achieved an asset-light transformation in 2023. The overall debt was significantly reduced, and the liquidity situation and financing pressure were greatly improved: GCL New Energy signed a total installed capacity of 7.2 GW; the sale of assets effectively reduced the size of debt; and the US dollar debt restructuring work completed within 2023.

In October 2023, GCL New Energy will transfer all of its shares in its 583.86MW photovoltaic power plant to the A-share listed company GCL Energy Technology (002015.SZ), with a total repayment of approximately RMB 1,602 billion. RMB 1.6 billion, all to repay its debts and support investments in the natural gas, liquefied natural gas, and operations and management services segments.

According to the announcement, during the reporting period, GCL New Energy completed redemptions and repurchases of nearly US$240 million in US dollar notes, and the company's balance ratio fell to a steady level of about 23.2%, down 27 percentage points from 50.9% in 2022.

After 2018, under the “531 New Deal”, due to factors such as declining subsidies and arrears, the performance of GCL New Energy, which owns a large number of high-asset photovoltaic power plants, was hit hard, and the debt ratio was high. From 2018 to 2020, GCL New Energy's debt ratios reached 84.14%, 81.68%, and 81.04% respectively.

Under heavy pressure, GCL New Energy is seeking strategic transformation and frequently sells its power plant business to carry out asset-light transformation. In 2021, GCL New Energy's debt ratio fell to 56.31%, fell to 50.9% the following year, and eventually fell sharply again in 2023, creating an excellent debt reduction sample for the Hong Kong stock market.

If this isn't intuitive enough, then another figure can prove that GCL New Energy reached the highest debt ratio of 51.5 billion yuan in 2018, but dropped to 1.4 billion yuan in 2023.

After the debt time bomb is removed, a clear main line is ready to emerge: GCL Group may make GCL New Energy an important platform to undertake the company's natural gas business; from a technology-leading photovoltaic power plant builder to the world's leading photovoltaic power plant operation and maintenance service provider.

Take power plant operation and maintenance as an example. In addition to continuing to provide operation and maintenance services for most sold photovoltaic power plant projects, GCL New Energy continues to develop other proxy operation and maintenance projects. The total installed capacity of the contract for contract operation and maintenance in 2023 was about 7.2 GW, an increase of 80% compared to 4 GW in 2022), involving more than 260 photovoltaic power plants.

Specifically, in terms of revenue, business management service revenue (that is, operation and maintenance revenue) in 2023 was 228 million yuan, an increase of 50% over 152 million yuan in 2022. More importantly, according to contracts with more photovoltaic power plants, in this business, GCL New Energy will receive revenue of 194 million yuan in the next year, and after one year (within three years), the amount will be 414 million yuan, for a total amount of more than 600 million yuan.

This means that in the next 4 years, GCL New Energy's revenue in the operation and maintenance business can be at least 827 million yuan, which is equivalent to the total revenue of all revenue in 2023.

In the long run, relying on “Internet of Things+Big Data” technology, GCL New Energy aims to become the most specialized, most growing, and most competitive PV power plant operation and maintenance service provider, and strive to have an operation and maintenance scale greater than 20 GW in 2027, ranking first in the industry.

Looking at the extension, if we add revenue from solar modules and related supporting services — this revenue was 18.6 million yuan and 16.74 million yuan respectively in 2022 to 2023, and additional liquefied natural gas revenue — this revenue of 8.61 million yuan in 2023 can completely cover the lack of electricity sales (after the sale of photovoltaic power plants).

Natural gas revenue, in particular, is one of the most imaginative highlights, and it points to GCL Group's natural gas project in Ethiopia.

At the end of 2013, GCL Group officially launched the Ethiopian oil and gas project, which is currently the largest natural gas development project for “three barrels of oil” companies at home and abroad to “go overseas”. The project has resource reserves of 5 trillion cubic meters of natural gas and about 4 billion tons of crude oil. GCL has 45 years of exploration and development for the project.

Global demand for natural gas is exploding. In 2023, China will once again become the world's largest importer of LNG, and domestic natural gas production will continue to increase steadily; the National Energy Administration expects domestic natural gas consumption to reach 430-450 billion cubic meters in 2025, doubling the demand from 2201 billion cubic meters in 2022.

According to information released by GCL Group to the outside world, GCL New Energy may become the trading platform for this oil and gas project. In August 2022, GCL New Energy raised HK$310 million through placement, 90% of which was invested in the natural gas business; in September 2022, GCL Group founder Zhu Gongshan became the chairman of GCL New Energy's board of directors, clearing the last-mile hurdle for injecting the Ethiopian oil and gas project into GCL New Energy.

In March 2024, according to an agreement, GCL New Energy will find qualified international LNG resources and LNG terminals for Rudong GCL Smart Energy; at the same time, it will accelerate the layout of global trade around the Group's high-quality industrial chain clusters. This represents GCL New Energy's natural gas industrial business, which has reached a high speed track.

Today, it seems that a clean company without much debt is the ideal vehicle to transform the new energy business and inject it into the Ethiopian gas project. This is probably the deep intention behind GCL Group's three years of perseverance in completing the repayment of the 500 million US dollar debt.