Environmental protection companies that relied on

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After the reduction of subsidies, the capital chain of environmental protection companies that relied on PPP to expand in the past few years has tightened.

many companies in the environmental protection industry have developed through PPP mode, equity pledge and M & A financing in the past two years. Although their revenue has increased, they have also formed a high degree of dependence on local finance, and further put their operations into a dangerous situation of high debt ratio, high pledge ratio, high goodwill and tight cash flow

ppp refers to the cooperation between government and social capital. In the specific operation, the government usually issues the public works project bidding. After the enterprise wins the bid, the government and the enterprise jointly invest to establish a special target company (SPV) for selecting plywood according to the size of the specimen. Subsequently, the enterprise advanced funds and SPV company borrowed money from the bank to finance the project construction. The payment received by the enterprise comes from the installment payment of the local finance

under the PPP mode, orders for environmental protection projects encouraged by the Ministry of finance are quickly approved. However, in the implementation stage, because private companies need to advance funds for development, their cash flow has become tight. The seemingly autonomous and controllable revenue and the accompanying operating cash flow actually come from local finance

since the beginning of this year, with the tightening of local finance and the massive retreat of PPP, the operational risks of a large number of environmental protection companies have been immediately exposed. Recently, listed companies in the environmental protection/environmental protection engineering industry have successively released semi annual reports, and many companies' revenues and profits have declined. Shengyun environmental protection, with the largest profit reduction, saw a year-on-year decrease of 267% in the first half of the year

after leveraging under PPP mode, many companies have tight cash flow, and their share prices have fluctuated sharply. For example, Shenwu environmental protection and Shenwu energy conservation, whose revenue decreased by more than 95% year-on-year, Kaidi ecology, which fell by the limit for 24 consecutive times, Xingyuan environment, which fell by the limit for 10 consecutive times, and so on

the problem of the environmental protection industry is far more than the apparent decline in revenue and profits

taking Xingyuan environment as an example, its original main business was the production and sales of filter presses; Since 2015, the main business of Xingyuan environment has become landscape engineering and water conservancy engineering, and dozens of PPP projects have been won

In the year of

, the revenue of Xingyuan environment was 884 million yuan, 2.103 billion yuan and 3.032 billion yuan respectively, and the net profit was 102 million yuan, 186 million yuan and 362 million yuan respectively. It seems to be growing rapidly, but it is only rich on paper, and its cash flow is getting worse and worse. In, the net cash flow from operating activities was -40.91 million yuan, -44.18 million yuan and -905 million yuan respectively

in other words, the environmental protection projects it invested in and constructed have not been fully paid back, and the funds on its account are very tight. In order to maintain its business, Xingyuan environmental protection began to borrow. From 2015 to 2017, the interest bearing liabilities of Xingyuan environment increased rapidly from 179 million yuan to 2.171 billion yuan, and the annual interest repayment also increased from 3.94 million yuan in 2015 to 58 million yuan in 2017

in addition to borrowing, shareholders of Xingyuan environment also began to pledge their shares in exchange for cash. By August this year, Han Xiaofang, the actual controller of the company, had pledged 83% of the shares held by him, indicating that this material has certain advantages over similar materials

the cash flow is poor, the debt is getting heavier and heavier, and the proportion of Pledged Shares is high. The Xingyuan environment at the end of 2017 is already on the brink of crisis. This situation has not improved since 2018. Moreover, as the credit of the Chinese team continued to tighten, the scale of PPP began to shrink faster. In the environmental protection and garden industries, Shenwu environmental protection, Oriental Garden, Kaidi ecology and Shengyun environmental protection have successively experienced pledge explosion, bond issuance failure and stock price collapse

Xingyuan environment is just one of the doomed. According to this semi annual report, at present, there are 111million yuan of overdue uncollected accounts receivable, which is almost equal to its profit scale. Among them, 1. Industry status, scope, competitive advantage and development trend that are overdue for more than one year account for 99.64%, which may eventually become bad debts

in short, PPP projects have the characteristics of high debt and slow cash collection. For enterprises, the biggest test is the pressure of advance funds in the early stage, which is to have money and financing ability. PPP mode is suitable for airports, highways, parking lots and other fields with relatively stable cash flow. For environmental protection projects greatly affected by local financial fluctuations, PPP mode is very risky

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