Shares in an industrial waste-to-energy solution provider China Recycling Energy Corp. (Nasdaq: CREG) dropped 2% on Monday as the company reported nil sales in the first quarter.
The Xi’an-based company said in a statement today that its net sales reached zero, compared to $0.6 million for the same period in 2019. Its net loss narrowed to $598,551, or 28 cents per share, from $1.9 million, or $1.61 per share, down 69% year-over-year.
No corporate announcement or any other indication of a significant public event except for the COVID-19 outbreak could be found to explain the zero revenue.
Amid the almost nil sales in the first three months, the company conducted a cost-cutting and turned to a safe haven of cash equivalents, with a balance of approximately $55 million, according to its statement. At the same time, the company said it had total liabilities of just $44.6 million.
“We believe our financial position and contingency plans will allow us to retain the financial flexibility to pursue the fast-growing smart power sector,” Guohua Ku, the chief executive officer of CREG, said in the statement.
The company provides environmentally-friendly waste-to-energy technologies to recycle industrial byproducts for steel mills, cement factories, and coke plants in China.
Ku said the company was back on track to weigh opportunities to reinvest in innovative growth initiatives in the energy sustainability business. The company aimed to invest in smart power integrated solutions “to vastly improve climate change efficiency in China,” he added.
China’s renewable energy ranked top in electricity production from renewable energy sources, as data from REN21’s 2016 report showed. A forecast by the China Electricity Council said China likely had a total installed capacity of 200 GW of solar and 210 GW of wind by the end of 2019, up 15% and 14% from 2018, respectively.
China formally released Renewable Portfolio Standard (RPS) in mid-September last year, setting a goal of 35% of electricity consumption by 2030. In addition to the solar and wind, Chinese authorities mandated six new entity categories that must meet the renewables obligation.
“The RPS should increase consumption of renewable energy and reduce curtailment rates, thus strengthening the operating environment for renewable energy companies,” Ivy Poon, a Moody's senior analyst, said in an analysis on May 20 last year before the official release.
China is targeting a non-fossil fuels’ share of 20% of primary energy consumption by 2030. The portion in 2018 hit 14.3%, close to the country's medium-term target of 15% set by 2020, according to Moody’s.
“Currently, recycled energy represents only an estimated 1% of total energy consumption, and this renewable energy resource is viewed as a growth market due to intensified environmental concerns and rising energy costs as the Chinese economy continues to expand,” CREG said in the company’s statement.
Shares in China Recycling Energy closed at $2.32 per share, down 1.28% on Monday.