China Recycling Energy Corporation
China Recycling Energy Corporation (NASDAQ:CREG) is a pioneer and leader in the industry and has investments for the completion of projects including direct investment in overall cycle energy solutions involving technology and other full-service operations. The second largest shareholder is the Carlyle group. Customers are offered a complete range of services relating to separating energy systems in the industrial applications of design, the financing of energy cycling plants and equipment and civil engineering custom tailored to the requirements of customers to produce energy recovery equipment and devices after the cyclone energy equipment operational service have been completed. The focus is on a business model which provides a win-win situation for customers and includes taking responsibility of the financing of each project and the generation of the sentient project benefits. This means that customers can concentrate on capital investment in the principal lines of business and not bother about additional capital expenditure to satisfy environmental regulations. At the same time, they can achieve a reduction in energy bills and reduce the level of pollution.
The company based in Xi’an, China specialises in environmentally friendly waste-to-energy technologies to recycle industrial by-products for steel mills, cement factories and coke plants in China. By-products such as heat, steam, pressure, and exhaust generate large amounts of lower-cost electricity and reduce the need for outside power sources. The Chinese government is following policies to encourage the use of recycling technologies in a bid to optimize resource allocation and cut down on pollution. Currently, recycled energy represents only an estimated 1% of total energy consumption and this renewable energy resource is viewed as a growth industry because of intensified environmental concerns and rising energy costs following the continued expansion of the Chinese economy. The management and engineering teams have over 20 years of experience in industrial energy recovery in China.
Financial highlights first quarter 2016.
Interest income on sales type leases declined by 24.8% from USD $6.67 million in the previous year to USD $ 4.89 million in the current quarter. Total revenues, inclusive of sale of systems, contingent rental income and interest on sales type leases fell 26.7% from USD $ 6.67 million in the previous year to USD $ 4.89 million in the current quarter. Operating expenses declined by 30.3% year-on-year to USD $ 0.49 million and not operating expenses fell by 402% year-on-year to – USD $ 4.14 million. Net income came to USD $ 93,000 down 97.8% from USD $4.14 million in the first quarter of the previous year.
Chairman and CEO of the company Quohua Ku said that net income for the quarter declined by 97.8% because of a fall in contingent rental income and interest income on sales type leases resulting from the downturn and the decline in iron and steel companies in China. During the quarter, the Zhongtai CDO project was transferred to Zhongtai as part of a planned integration to repurchase all its outsourced projects. Operations were strengthened further and operational efficiencies increased while maintaining cost controls and fiscal discipline.
TRT is the use of energy in industrial production because of the pressure difference generated by the recovered into mechanical energy used to drive generator technology. Steel plant TRT is the use of blast furnace bye products – blast furnace top gas pressure energy and heat, so that gas turbo-expander is converted to mechanical energy to drive a generator or other device drivers in a secondary energy recovery process. Petrochemical plants TRT takes advantage of the pressure and heat generated during the production of petrochemicals,through a turbo expander which converts it into mechanical energy to drive a generator or other device driver for secondary energy recovery.
Cogeneration technology involves the recovery of production wasted in the low-temperature waste steam, gas and other heat exchange to generate steam for power generation. It can be applied to iron and steel, building, petrochemicals, chemicals, nonferrous metals and other industries. Steel plant waste heat power generation is the use of waste heat in sintering machines produced by heat exchange to generate electricity. Building materials mainly cement kiln production, grate cooler and preheater kiln produced at a temperature below 300 ~ 400 degreesin low temperature waste steam heat contained in the flue gas of low grade to generate electricity. Sinopec in the process of petrochemical production uses the waste generated in the low-temperature steam, gas and other heat exchange to produce steam, which in turn generates electricity.
High efficiency gas is the use of combustible gas emissions generated in production of industrial combustion power generation, power generation by the reduction of emissions, atmospheric pollution; cogeneration technology in gas boilers and efficient gas combustion engine – steam combined cycle power generation. It can be used in industries such as iron and steel, building materials, petrochemicals and mining. In gas boiler power, a fuel or other heat energy is used to heat water the kinetic energy is converted into electrical energy. In combustion engine generation: fuel is introduced into the cylinder resulting in the rapid expansion of high temperature high pressure gas, which drives a piston converting kinetic energy into electrical energy. In gas – steam combined cycle power generation, compressed turbo air is mixed with fuel combustion in the combustion chamber and the sharp expansion powers the power turbine acting rotary drive generators.
The bottom line
With the disappointing results for the first quarter of FY 2016, the stock has declined by more than 40% since 23. December, 2015 and has under performed the S&P 500 more than 47%. However, the company is operating in business segments which are potentially extremely lucrative and could lead to substantial future growth. The Chinese government has been encouraging the use of recycling technology to maximise resource allocation and reduce levels of pollution and this will continue to be a priority area in the future. Considering that recycled energy is only an estimated 1% of total energy consumption, it is definitely a growth market and business could explode in the future. As such, we believe that this could be a promising stock investment which could deliver substantial returns in the long run.
Traders News Source (TNS) produces compensated and non-compensated reports, articles, blogs, and investment newsletters covering companies listed on NYSE and NASDAQ exchanges. TNS has two distinct and independent operating segments. One produces non-compensated analyst and or expert certified content generally in the form of press releases, articles and reports. The other produces compensated content, which typically consists of compensated investment newsletters, articles and reports. Compensated content is outside the scope of procedures detailed below.
Traders News Source has not been compensated, directly or indirectly, for producing or publishing this document.
This press release may contain certain forward-looking statements and information, as defined within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the Safe Harbour created by those sections. This material contains statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. Such forward-looking statements by definition involve risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the subject company in this report to be materially different from the statements made herein.
Content is researched, written and reviewed on a best-effort basis. Information in this release is fact checked and produced on a best efforts basis by Ramus Iyer. An outsourced research services provider represented by Ramus Iyer, provided Traders News Source this article or report. However, we are only human and are prone to make mistakes. If you notice any errors or omissions, please notify us below. Traders News Source is not entitled to veto, interfere or alter the articles, documents or report once created and reviewed by the outsourced research provider represented by Ramus Iyer. The subject Company has not compensated Traders News Source or Ramus Iyer for the creation or dissemination of this report. Traders News Source is the party responsible for issuing the press release and for hosting the full analyst report on Traders News Source website. Ramus Iyer is the author of research report.
NOT FINANCIAL ADVICE
Traders News Source makes no warranty, expressed or implied, as to the accuracy or completeness or fitness for a purpose (investment or otherwise), of the information provided in this document. This information is not to be construed as personal financial advice. Readers are encouraged to consult their personal financial advisor before making any decisions to buy, sell or hold any securities mentioned herein.
NO WARRANTY OR LIABILITY ASSUMED
Authors Bio and Disclaimer
Traders News Source is not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. Traders News Source has compensated Ramus Iyer, for the distribution rights to disseminate this report. No liability is accepted by Traders News Source whatsoever for any direct, indirect or consequential loss arising from the use of this document. Traders News Source expressly disclaims any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on the information in this document. Traders News Source does not (1) guarantee the accuracy, timeliness, completeness or correct sequencing of the information, or (2) warrant any results from use of the information. The included information is subject to change without notice.
I’m a Chartered Accountant by qualification and have extensive experience in the financial services industry. I have held senior positions in the HSBC group and have also been a consultant to ANZ Grindlays Bank and the Thomas Cook Group. I have written thousands of articles and received more than 60 five star reviews for my work.
You will find a number of my articles on Seeking Alpha and Capital Cube.
TNS Contributor Info
Author’s Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in the article.
Source: Traders News Source