Reflections on Environmental Protection Enterprises

"The news that the Ministry of Finance and the National Development and Reform Commission has verified that half of the projects in the trillion-level PPP project library have been withdrawn" has appeared in the newspapers a few days ago.Since the beginning of this year, environmental protection enterprises have encountered financing difficulties, which has become a major concern both inside and outside the industry.From the failure of environmental protection enterprises to issue bonds, to the default of corporate debts or the risk of default, PPP projects. there is a direct relationship with the hasty launch of a large number of Under PPP projects and promote their healthy development, how can environmental protection enterprises avoid project risks and achieve healthy development.the situation that the state continues to regulate

From the nature of business, a reasonable business model, cash flow and net profit "double positive" is an important condition for the stable development of an enterprise.However, many companies forget this.

Traditional performance is king, thinking needs to be changed"

Investment should be " Buddhist ", cash flow and net profit " double positive " is an important condition for the stable development of enterprises

The State Council recently made another move to stabilize investment, stimulate the vitality of private capital, and support private capital to hold a controlling stake in the field of environmental protection.This policy is undoubtedly beneficial to private environmental protection enterprises.Since then, some environmental protection listed companies have successfully responded to the policy market by issuing bonds.

When the attitude of capital towards environmental protection enterprises is picking up, the industry has also reflected on the competition for PPP projects by enterprises.

The reporter learned that not long ago, the problems of many environmental protection enterprises were concentrated in the capital chain."Because of the problem of market selection, the low gross profit of the environmental protection industry has been caused. In recent years, many PPP projects have appeared, which has put financial pressure on environmental protection enterprises." A person in charge of the company said.

Under the trend of three years PPP in the past , whether companies are competing for good projects has become a hot topic in the industry.An investor in an environmental protection company said frankly, "I think investment should still be 'Buddhist', and it is very important to guard against greed. The investment of any company depends on the quality of the subject matter, and it cannot take projects for the sake of taking projects."

During the 16th China International Environmental Protection Exhibition this year, Xu Guodong, chairman of China Holding Co., Ltd., said in an interview with this reporter, "If the project invested by the enterprise is very good, financing will not be a problem. If it is a very good innovative project, money will compete. Let me tell you, in fact, what is connected with financing is the issue of investment."

For some environmental protection companies encountering financial difficulties, he believes that it is related to the external policy environment and the market competition environment.But as an enterprise, you should pay attention to whether the project you invest in is a good project and whether it has created value.If it can create value, it will definitely gain investor support.

Environmental protection enterprises should fully consider the conditions for undertaking projects themselves.An industry expert told reporters that not long ago, several private listed companies had the problem of getting PPP projects, but they could not pay the capital."The company is expanding too fast, and some of the income earned from the project is not enough to invest in the capital of the new project. Coupled with the delay in receiving accounts receivable, the company will of course have financing risks."

He also said that some PPP projects of some companies have flaws, and the projects are mostly concentrated in small towns and county towns. At the same time, many projects cannot be found in the Ministry of Finance's PPP project management database and reserve list, that is, projects that have not been included in the database.For these projects, the government may not be able to list spending responsibilities in the budget, and project financing will also be affected.Enterprises should note that the main risks of PPP projects are not the government, but the enterprises."Knowing that some local governments have payment risks, enterprises still enter the project to grab the project, and the funds are all financed or advanced by the enterprise. Of course, there is a greater risk."

In addition, competing for PPP projects is the traditional performance of environmental protection enterprises is king. one of the important reasons for As long as there is engineering performance, even if the profit is very low or even no profit, there are companies that take orders. This kind of thinking needs to be changed.

Obviously, environmental protection enterprises should pay attention to customer needs, which is the way for enterprises to survive and develop.

Xu Guodong said frankly that in PPP projects, it is a very bad tendency to focus on engineering rather than operation, especially in terms of performance." PPP project is like a decoration company providing services to customers, and customer needs should be considered."

The next few years will be the era of environmental construction. In terms of ecological environment governance, many places PPP model. still need the However, environmental protection enterprises should pay more attention to customer needs. "From the essence of business, a reasonable business model, cash flow and net profit 'double positive' are important conditions for the stable development of enterprises. However, many enterprises forget this point. "A former person in charge of an environmental protection enterprise gave advice.

Big Mac is also confused ? "

Industrial model innovation faces risks and uncertainties, and the project size, cycle length, capital turnover, etc. need to be considered

Some industry researchers believe that PPP projects have a greater impact on the investment and financing of private enterprises.Among the environmental protection PPP projects, river basin water environment governance projects account for a large proportion. Compared with state-owned enterprises and central enterprises, which have stronger credit endorsements, private enterprises have narrower financing channels and are affected more deeply.

However, central state-owned enterprises must not take risks lightly.Recently, the state-owned Three Gorges Group has won a project of 100 million yuan for the comprehensive treatment of water environment system in the central urban area of ​​Jiujiang, Jiangxi Province 77 that Konka Group, which is supported by the background of the central enterprise, has entered environmental protection 3 and won a 100- million-dollar project. 41 . The news The "counterattack" of the world.However, there are still risks and opportunities.

The reporter browsed the website of the Three Gorges Group and found that in recent 3 months, the Three Gorges Group has made frequent moves.Signed strategic cooperation agreements with many places and many central enterprises.For example, it signed a strategic cooperation framework agreement with the Hunan Provincial Government to jointly grasp the protection of the Yangtze River, and signed a cooperation framework agreement with the Wuhu Municipal Government of Anhui.In terms of enterprise cooperation, it can be said that they are all heavyweight central enterprises. China State Construction, China Railway Construction, China Energy Construction, China Railway Construction, and China Power Construction have all confirmed cooperation with China Three Gorges Corporation.

Different from the central enterprises that entered the environmental protection industry in the past, the Three Gorges Corporation can be called a "Big Mac" among the central enterprises, which is likely to affect PPP projects. the format of environmental protection

Some analysts told reporters that the annual net profit of the Three Gorges Group is 300 about 100 million yuan, and it has demonstrated a strong comprehensive strength in the construction of major projects such as the Three Gorges Project and the Jinsha River upstream hydropower station.In the great protection of the Yangtze River, 4demonstration projects in Jiujiang, Yueyang, Wuhu and Yichang will be successively promoted."The Three Gorges Group is to complete the major tasks assigned by the state in a specific area and solve the long-standing problem of the protection of the Yangtze River system."

Taking the Jiujiang project as an example, the innovation of the industrial model also faces risks and uncertainties.According to people familiar with the matter, when the rate of return of the engineering enterprises in the consortium is extremely low ( about 5% ) , the Three Gorges Group is likely to promise profits to other enterprises, increasing its profit rate to 7% to 8% .There is no risk in business strategy, but it may be unfair to other businesses in the market."This may be related to the positioning of the Three Gorges Group. The large-scale protection of the Yangtze River Economic Belt requires the contribution of large central enterprises. But from an industry perspective, some risks should be avoided in advance."

The person familiar with the matter analyzed that the Three Gorges Group is currently facing some problems. There are doubts about where to start with the protection of the Yangtze River system, the size of the project, the length of the cycle, and the turnover of funds. It needs to be considered in overall planning and gather the wisdom of the government, enterprises and industries.First, whether relying on PPP can ensure that the Jiujiang River Water System Changzhi Jiuqing the discrete, fragmented, and point-to-point operation of ?project will become bigger, and it may break through the red line of PPP projects , without financial support.10% of the financial expenditure of Second, the demonstration project of the Three Gorges Group is positioned at "three ones"—"a city, a piece of water, and a main body", and the group wants to make a thorough understanding of the final governance effect.If the project is small, it may be difficult to achieve the expected governance effect."For example, the Jiujiang project may 77 be difficult to achieve the national water function zoning requirements for 100 million yuan, and it will only work if more investment is required."