Now I need to settle down and spend more energy to return to the business and management of the company. At 3 p.m. on July 28, 2020, Zhao Lijun told the Economic Observer in a small reception room of poten Environment Group Co., Ltd. (hereinafter referred to as poten environment or poten, 603603. SH).
Compared with his exclusive interview with a reporter a year ago, he still looks energetic and runs at high speed every day.
At that time, Zhao Lijun said, poten has a high asset liability ratio, which has the business structure characteristics of PPP (government and social capital partnership), and we have always insisted on spending money for the future, firmly investing in new business, and even accounting for more than 50% of the profits in some years.
From the listing of the company to the emergence of liquidity tension, and then to the introduction of state-owned assets for mixed reform, Zhao Lijun also reflected on the problems in the whole process, such as the aggressive enterprise strategy when the financial environment was loose. However, there are also some problems that can not be solved through individual reflection of business owners, such as the difference of loan interest rates between state-owned enterprises and private enterprises.
The crisis ridden poten introduced the state-owned assets war investment twists and turns, can this time highlight the encirclement? There are many conjectures.
But in Zhao Lijuns heart, he firmly believed that poten would tide over the difficulties. Because any organization will experience difficulties and counter fragile challenges in the process of growth and evolution. The greater the impact, the greater the reaction force will be, and the greater the rebound force may give you to start again. He said that after experiencing difficulties, poten has greatly adjusted its business structure, personnel structure and expense structure this year, and the cost has been greatly reduced.
Until July this year, there will be a turnaround. In the near future, the actual control of poten will be transferred to a state-owned asset platform: Zhongshan Zhonghui group, which will become another case of mixed ownership reform in the environmental protection industry.
Zhao Lijun disclosed that after the mixed reform of poten, Zhongshan will appoint the chairman of the board, the legal representative, and the chief financial officer. On many matters discussed with Zhongshan state-owned assets, the general principle direction is quickly agreed. They want to set up a co chairman to better reflect the importance they attach to the team.
This may be Zhao Lijuns new post in Bo Tian.
Break through 300 days
Since last year, poten has experienced more than 300 days of breakout.
During this period, Zhao Lijun kept a low profile. As chairman of poten environment and President of the environmental chamber of Commerce of all China Federation of industry and commerce, Zhao Lijun, who held a series of positions, said that in the past year, those who can not participate in any activities are as few as possible, and they will not go to various occasions to make public speeches..
At the beginning of 2020, an insider of poten once described to reporters the plight of poten at that time with the words life and death at stake. In 2019, poten environment realized a net profit of - 720 million yuan, a year-on-year decrease of 489.74%. The profit was 185 million yuan in the same period of last year. In 2019, the net cash flow from operating activities was 460 million yuan, with a year-on-year increase of 45.47%.
Moreover, from the perspective of the whole industry, only three non-state-owned holding companies remain in the top 25 environmental protection companies (Yingfeng environment, Lingnan shares and poten environment), of which the top two are Guangdong enterprises. Therefore, from the perspective of supply, there are not many alternative opportunities for mixed reform. In the future, if environmental protection companies want to get more opportunities, the market-oriented challenges will be more and more big.
Therefore, there are a lot of central enterprises and state-owned enterprises looking for us. Poten itself is also a scarce resource for them. They prefer to purchase such listed companies as poten with larger income and technology accumulation. And when the stock market fell lower, it was a time when asset values were low. Zhao Lijun told the economic observer that since the second half of last year, many central enterprises and state-owned enterprises have come to visit. Although various schemes have been discussed, as the major shareholders are still in the sales restriction period, they can not get around the issue of controlling shareholders equity restrictions. If some central enterprises have other goals, they will choose new opportunities.
Some local state-owned assets platforms have also invested olive branches.
There are six or seven local state-owned enterprises that have visited us, and several in Shandong alone. Zhao Lijun told the economic observer that under the layout of environmental industries related to the water industry, poten maintains the dual wheel drive of industry and municipal administration, especially in industrial water treatment. Local state-owned assets have capital advantages and have very realistic environmental governance needs. They also hope to establish a more friendly mechanism arrangement to better play and mobilize the enthusiasm of the team.
In June this year, poten announced that it plans to introduce Qingdao financial control to solve the difficulties, and the actual controller plans to change to the state owned assets administration of Qingdao West Coast new area. However, no formal agreement has been reached since then.
Zhao Lijun explained that in fact, we had earlier contact with Zhongshan, Guangdong Province, but in the process, Qingdaos state-owned assets were also more active, and several state-owned assets platforms in Shandong also visited us, hoping to make a decision. Poten also truthfully informed Qingdao rongkong that it was negotiating with other local state-owned assets. Therefore, the framework agreement signed with Qingdao is not binding.
It is a common choice for both sides to join hands with Zhongshan state-owned assets. In 2020, poten will usher in a major turning point. He said.
After several twists and turns, it finally ushered in a turning point. But Zhao Lijun and his team are also constantly reflecting.
Zhao Lijun said frankly, in fact, all problems of poten point to the same problem, that is, lack of money. Before the green debt problem was exposed in October last year, poten had paid off 1.19 billion yuan of bank loans. Before that, it was withdrawn from loans one after another, reducing the liquidity of poten.
Some of our liquidity loans are invested in some long-term PPP projects. The business itself decides that the project capital is 20% and the loan is 80%. It takes time to repay. However, the deleveraging is too fierce. The boundary and scope of PPP projects are relatively complex. We have hundreds of millions of limited project funds in our account, but the project is slow to advance, and it is difficult to quickly return the funds. By the end of last year, we had more than 800 million cash in our account. One is the lack of money, the other is the cash can not be used He said.
Zhao Lijun introduced that the cost of state-owned financing is low even if there is no guarantee by issuing bonds through government platforms. However, for private enterprises, which are also government credit projects, there is a big difference in terms of loan terms and interest rates given by banks compared with those of central enterprises and state-owned enterprises due to ownership differences.
At that time, after the IPO, the management of poten sat down and held a weekly meeting to analyze the PPP mode rationally. Zhao Lijun thought that this was a toxic asset, and the environmental protection industry would probably experience a cliff. However, when potens team went to the market and looked around, it was almost all PPP business. It seemed that if it did not follow up, it would be very difficult to get an opportunity.
Its hard to find a balance between reason and reality. Because I got too many projects at that time, which magnified the leverage. But if you cant get the project, youre also facing survival problems. In Zhao Lijuns opinion, it is difficult to judge right and wrong. It can only be said that in the process of enterprise growth and evolution, it is necessary to experience.
So we dont complain. Its just that the environment we live in and the industrys pattern in the past is like this. In the future, we will not only have the original rational analysis, but also have painful lessons, which will become our wisdom. Zhao Lijun said that the poten team has realized the value of pursuing more quality growth and attached more importance to the building of the companys core competitiveness rather than following the trend in the market opportunities.
Zhao Lijun thinks that this is a two-way choice. Private enterprises need the support of state-owned assets, and state-owned enterprises hope to bring in the genetic mechanism of private enterprises and extend the business chain through equity structure adjustment. However, in the process of integration of different ownership systems, there will be some incompatibility with each other, which is normal.
He judged that the environmental protection industry would be integrated in a more rational and healthy direction. Only by following the trend can private enterprises get more resources. However, this kind of following the trend does not mean that it will slide down. It is necessary to resist the waves and provide the advantages of capital resources for itself with the help of the background of state-owned assets. However, we should still maintain the vitality of the team and the market-oriented mechanism. Especially for the listed companies, if you want to keep healthy development, your power system and brake system are better. You need to have both innovation and systematic risk management.
Behind the lead War: why Zhonghui?
In the course of the war, many state-owned assets were within the scope of potens option, and poten was also observing the efficiency of all parties and the rationality of the scheme.
But why did it end up in Guangdong?
In fact, Guangdong has more advantages in the concept of mixed reform, the efficiency of resource allocation and the rationality of the scheme, and the progress is faster. Zhao Lijuns experience is that, from the beginning, Guangdong is relatively mature and rigorous in all aspects of procedures, and the overall business environment and understanding of private enterprises are in line with potens value pursuit. Indeed, Guangdong has formed a new highland of environmental industry.
Zhonghui group was established in August 2007 with a registered capital of 2 billion yuan. It is a wholly state-owned enterprise group established by Zhongshan municipal Party committee and municipal government through major asset restructuring and overall listing of the former Zhongshan public utility group. By the end of 2019, the total assets of Zhonghui group were 22.167 billion yuan, the net assets were 16.081 billion yuan, and the asset liability ratio was 27.45%. In the past three years (2017-2019), its financial indicators have increased steadily, with an accumulated revenue of 6.475 billion yuan and a net profit (belonging to the municipal government) of 1.165 billion yuan.
Zhonghui group is the largest shareholder of Zhongshan public utility, accounting for 48.29% of the shares. Zhongshan public company itself is engaged in water treatment. Previously, it mainly served water projects in Zhongshan, and 90% of its business income came from Zhongshan.
Zhonghui hopes to go to the whole country, while poten has been in the national market since its birth. Because of Zhongshan public utility, Zhonghui has a deep thinking and understanding of the environmental protection industry. This understanding is reflected in the following aspects: firstly, it is easier to communicate; secondly, Zhonghui has basic understanding and ideas on how to expand and strengthen the environmental protection industry.
From the beginning, Zhonghui was very clear about the environmental protection industry and market. It saw that the industrial chain of water was longer, and that poten maintained two wheel drive in the industrial and municipal fields. It also understands that at present, domestic environmental water companies have limitations to varying degrees, some of which are strong in municipal administration and weak in industry. Zhonghui has Zhongshan public utility and poten. If it is further integrated in the future, it is likely to become a company with good industrial and municipal layout like Veolia and Suez. Zhao Lijun preached.
Zhonghui has also seen the historical evolution of poten, which has experienced state-owned, foreign-funded and private-owned, which has resulted in the unique inclusive culture of poten, the diversified management team with international vision and core technical capabilities. Zhao Lijun believes that to build a world-class environmental enterprise, we must participate in global environmental governance. And Guangdong, Hong Kong and Macao Bay area is a very export-oriented economy. Poten has done a lot of overseas projects in the past. On this point, China exchange can see clearly.
The choice must be mutual. Many central and state-owned enterprises come to visit poten, but we dont have a deep discussion with each one. What Zhongshan state-owned assets see is the value behind the problem. He thinks that poten is a company with strong resource carrying capacity, and has a team capable of enlisting and fighting well. He sees the ability of poten to start again after the support of state-owned assets and the value of returning to the battlefield. So on balance, we think this is the best choice. Zhao Lijun told reporters. Next, poten will carry out the next step of cooperation with Zhongshan state owned assets. Zhao Lijun said, we still have a lot of confidence expectations for each other. The plans of poten and Zhonghui include fixed increase arrangements. The completion of the fixed increase can supplement 800 million yuan for listed companies and reduce the asset liability ratio. We are also in the process of recovering funds through disposal of assets to ease the capital pressure. In the second half of this year, potens business will have some strategic adjustments. Zhao Lijun said that poten will focus on the emission control and resource recycling of industries and industrial parks. In terms of urban water environment, poten will position its technology solutions and asset light operation mode of construction management, and the part of heavy assets investment is likely to be invested through Zhonghui and Zhongshan public utilities. Source: Guo Chenqi, editor in charge of the Economic Observer_ NBJ9931
The choice must be mutual. Many central and state-owned enterprises come to visit poten, but we dont have a deep discussion with each one. What Zhongshan state-owned assets see is the value behind the problem. He thinks that poten is a company with strong resource carrying capacity, and has a team capable of enlisting and fighting well. He sees the ability of poten to start again after the support of state-owned assets and the value of returning to the battlefield. So on balance, we think this is the best choice. Zhao Lijun told reporters.
Next, poten will carry out the next step of cooperation with Zhongshan state owned assets.
In the second half of this year, potens business will have some strategic adjustments. Zhao Lijun said that poten will focus on the emission control and resource recycling of industries and industrial parks. In terms of urban water environment, poten will position its technology solutions and asset light operation mode of construction management, and the part of heavy assets investment is likely to be invested through Zhonghui and Zhongshan public utilities.