Russia-Ukraine conflict has caused the unsteadiness of energy supply and storage, more countries across the world are undergoing the shortage of energy and accelerating their energy transition. Mr. Yang Xiaohu, Executive Director and General Manager of CIMC Enric Holdings Limited (3899.HK), accepted an exclusive interview with Hong Kong Economic Times and mentioned, the renewable energy-based energy structure supplemented by natural gas will be more common in the future as the natural gas storage technology is going mature which improves the energy efficiency to a larger extent by its use together with renewable energy.
Natural Gas Sale Mitigates the Impact of Lockdown
The most profitable business of CIMC Enric was directly affected by the epidemic, according to Mr. Yang, the “Zero Covid” policy had been implemented in the mainland for a long time. During the epidemic, there were sporadic outbreaks and the lockdown in some regions which has impacted the processing and distribution equipment business in the third and fourth quarters of last year. Fortunately, the negative impact caused by epidemic was partially offset by the Company’s other businesses, such as the sale of natural gas benefited from high energy prices.
Russia-Ukraine conflict sent energy prices soaring over the past year, but currently natural gas futures have now fallen back to the pre-war level. Oil & gas price disparity is a key indicator of profitability for the Company, a stable price disparity can help stabilize its business growth, benefiting from a high demand for natural gas equipment in the market, mitigating the impact of unstable energy prices.
Mr. Yang mentioned, hydrogen energy is rapidly developing in mainland with the launch of first-ever national hydrogen strategy – a medium and long-term plan for the development of hydrogen energy. In addition, hydrogen vehicles offer more stable performances in extreme conditions to avoid the risk of freezing lithium batteries. However, hydrogen usage is limited by geography and will potentially incur huge transportation costs. Mr. Yang said, there are rich wind power and photovoltaic resources in Inner Mongolia and Xinjiang. This facilitates the extraction of hydrogen from water and encourages the future use of hydrogen-powered trucks and lorries in the northern China.
CIMC Safeway’s IPO is in Good Progress
CIMC ENRIC proposed to spin off its environmental and chemical business (CIMC Safeway) for a potential A-share listing in October last year, Mr. Yang said, the preparation work is in good and well-managed progress, which will attract more attention on clean energy sector in the future.