Datang Coal Chemical Industry undergoes further restructuring with the introduction of two investors

In the past two years, Datang has been held back by the coal chemical industry; otherwise, Datang Power’s profitability would be much higher

Dadang Keqi should be profitable, right? Does anyone know the situation?

It’s still profitable; the workers’ salaries are all paid in full, and the management covers everything as well. I’ve never seen such an amazing company before

Datang Power expects a loss of over 2.5 billion yuan; the divestiture of its coal chemical business has caused a loss of 5.5 billion yuan. Author/Source: Date: 2017-01-17. Clicks: 13. After shedding the \"burden\" associated with its coal chemical business at a high cost, Datang Power (601991, SH) is now prepared for a huge loss in 2016. Datang Power Generation announced on January 14 that it expects to incur a loss of 2.5 billion to 2.8 billion yuan in 2016, compared to a net profit of 2.809 billion yuan in 2015. According to Datang Power Generation, one of the main reasons for its losses was the divestiture of its coal chemical business, which resulted in a reduction in earnings on a consolidated basis of approximately 5.518 billion yuan. 　　Datang Power Generation also stated that, due to the **lowering of the on-grid electricity prices for coal-fired power generation at the beginning of the year, as well as changes in the company’s electricity generation mix, coupled with a sharp rise in coal prices in the second half of the year, the performance of its power and coal-fired power generation equipment businesses declined on a year-on-year basis. It is estimated that, excluding the one-time gains and losses of 5.518 billion yuan resulting from the divestiture of the coal chemical business unit, various segments of Datang Power Generation are still profitable, although their profit levels have declined significantly compared to the same period last year. Wu Zhonghu, an executive director of the China Energy Research Society, told reporters that under the dual pressures of a sluggish electricity market and rising coal prices, the development of power generation enterprises both upstream and downstream was not optimistic in 2016; improving the structure of power generation was an inevitable trend for the industry. The projected annual loss exceeds 2.5 billion. Compared to the figures for the first three quarters reported in its third-quarter report for 2016, the estimated annual loss is relatively modest. Previously, Datang Power Generation stated that from January to September 2016, its net profit attributable to the shareholders of the listed company dropped from 3.587 billion yuan at the end of 2015 to -3.145 billion yuan, a decrease of 187.69% compared with the same period in the previous year. 　　Datang Power explained that one of the main reasons for the expected annual loss was a reduction in profits on a consolidated basis of 5.518 billion yuan, resulting from the divestiture of its coal chemical business unit. This transaction was completed on August 31, 2016, and was considered a \"relief\" at that time. Upon completion of the transfer, the total assets of the company’s consolidated financial statements will decrease by approximately 75.492 billion yuan, while the total liabilities will drop by about 71.327 billion yuan; as a result, the debt-to-asset ratio will fall by roughly 4.87%. 　　A research report released by Qunyi Securities also indicates that by getting rid of its coal chemical operations, Datang Power Generation will be able to focus on its core business in the long term and optimize its asset structure. However, the price of achieving relief was high. A statement released by Datang Power in September indicated that it not only transferred the shares of the relevant companies at a price of 1 yuan each, but also waived a loan amounting to 9.997 billion yuan owed by the companies in its coal chemical sector. In addition to the losses incurred from the sale of coal chemical and related projects, the ‘Provisional Loss Announcement’ also indicates that as a result of the **lowering of the on-grid electricity prices for coal-fired power generation at the beginning of the year, as well as changes in the company’s electricity sales mix, the average on-grid electricity price decreased compared to the previous year, which led to a decline in the performance of the company’s power generation business. At the same time, coal prices rose year-on-year throughout the year, resulting in a decline in the performance of the company’s coal machinery business. Power structure sees adjustments during industry downturn Although Datang Power is expected to incur losses in 2016, excluding the one-time gains and losses resulting from the divestiture of its coal chemical business, its other business units are still profitable, though the profit levels are lower than in previous years. 　　Behind the decline in profits lies the sluggishness in the power industry. 　　First is the slowdown in growth in the electricity market. Xue Jing, deputy director of the Planning and Development Department of the China Electricity Council, said at an international seminar on the reform of China’s electricity system that during the 13th Five-Year Plan period, the growth rate of electricity consumption was 3.6%-4.2%, whereas during the 12th Five-Year Plan period it was 5.7% per year on average; during the 11th Five-Year Plan period, this figure reached 11.1%. 　　At the same time, affected by the **lowering of the on-grid electricity prices for coal-fired power generation at the beginning of 2016, the average on-grid electricity price for power generation companies also showed a downward trend. The semi-annual report for 2016 of Datang Power Generation shows that thermal power, which accounts for 74.25% of the company’s power generation mix, saw a reduction of 226 hours in operating hours compared to the previous year; coupled with the decline in the electricity price at which thermal power is sold to the grid, overall revenue dropped by approximately 5.85%. 　　In contrast, non-fossil energy sources used by Datang Power Generation are on the rise in its power generation operations. According to the third-quarter power generation report, the total amount of electricity generated and fed into the grid as of September 30 was approximately 123.2993 billion kWh, representing an increase of about 1.34% compared to the same period last year. The power generation from hydropower, wind power, and photovoltaic generators increased by 28.40%, 12.97%, and 24.89% respectively on a year-on-year basis. 　　Regarding this structural transformation, Wu Zhonghu analyzed for a reporter from the Daily Economic News that, against the backdrop of the 13th Five-Year Plan for renewable energy, optimizing the power structure by using non-fossil fuels is an inevitable trend in the power industry. However, due to the relatively high production costs per unit of electricity generated by non-fossil fuels at present, power generation companies face considerable cost pressures. Further reading: Datang Group’s coal chemical business unit – Sino-New Energy Chemical Technology Co., Ltd. Sino-New Energy Chemical Technology Co., Ltd. (Sino-New Energy Chemical) is a wholly-owned subsidiary of China Datang Group Corporation; it was established in Beijing on April 21, 2016. The company’s subsidiaries are located in provinces and municipalities such as Beijing, Inner Mongolia, and Liaoning, and there are multiple coal chemical demonstration projects that have been completed or are under construction. These mainly include: the 4 billion cubic meter coal-to-natural gas demonstration project in Keqi, Inner Mongolia, operated by Datang; the 460,000-ton coal-to-olefins industrialization demonstration project in Dolun, Inner Mongolia, also by Datang; the 4 billion cubic meter coal-to-natural gas project in Fuxin, Liaoning, carried out by Datang International; as well as projects such as Hulunbuir Fertilizer Company, Xilinhot Mining Company, Dolun Hydropower, Dashi Men Hydropower, the Chemical Technology Research Institute, Marketing Company, Engineering Company, Xilinhot Lignite Development Company, and Xilinhot Power Generation Company. List of companies under CNCEC: 1) Inner Mongolia Datang International Kesikteng Coal-to-Natural Gas Co., Ltd. 2) Datang Inner Mongolia Dolun Coal Chemical Co., Ltd. 3) Liaoning Datang International Fuxin Coal-to-Natural Gas Co., Ltd. 4) Datang Hulunbuir Fertilizer Co., Ltd. 5) Datang Fuxin New Energy Chemical Engineering Co., Ltd. 6) Datang International Chemical Technology Research Institute Co., Ltd. 7) Datang Energy Chemical Marketing Co., Ltd. 8) Inner Mongolia Datang International Dolun Water Resources and Hydropower Comprehensive Development Co., Ltd. (Inner Mongolia Datang International Kesikteng Dashi Men Water Resources Development Co., Ltd.) 9) Inner Mongolia Datang International Xilinhot Mining Co., Ltd

One month the workers had their salaries reduced by over 2,000, and then in December that amount was cut straight away – no more money, without any explanation