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Why Concord New Energy Slashed Its Staff By 30% Despite The Green Boom In FY2025 · Investor Exchange

• 0:02
  Time for another Investor Exchange Podcast. Here are your hosts, Matt and Sally.
• 0:08
  So imagine you're looking at a company's balance sheet and you see their net
• 0:12
  profits have just plummeted by like over 80 percent. Oh, yeah.
• 0:15
  That's usually a massive red flag. Exactly. Yeah. I mean, your first instinct
• 0:19
  as an investor is probably just to run for the hills.
• 0:22
  But then, you know, you look a little closer at the paperwork and something
• 0:25
  just doesn't add up at all.
• 0:26
  Right. Because their operating cash flow actually went up. Yes, it went up.
• 0:31
  And while their home market is seemingly collapsing around them,
• 0:35
  they've just signed this massive game-changing deal to power the United States'
• 0:40
  artificial intelligence boom. It's a huge pivot.
• 0:43
  It really is. So, welcome to the paradox of Concord New Energy Group Limited, or CNE.
• 0:48
  Today, we're taking a deep dive into their recently released 2025 annual results.
• 0:52
  And our mission today is to figure out exactly what is happening under the hood
• 0:57
  of this company for you, the investor.
• 0:59
  Yeah. And it really is one of the most fascinating corporate survival stories we've seen this year.
• 1:04
  Like when you dig into these financial documents, you aren't just reading a
• 1:07
  standard yearly review.
• 1:09
  You're really reading the real time forced evolution of a major energy player.
• 1:13
  I mean, they are caught between this brutal domestic reality and a massive international opportunity.
• 1:19
  So let's actually start with that brutal domestic reality, because,
• 1:22
  well, looking at the top line numbers for their operations in China,
• 1:25
  it's honestly a bloodbath.
• 1:27
  Yeah, it's pretty rough. My immediate reaction looking at this profit warning was just panic.
• 1:32
  I mean, revenue fell 7.6% down to 2.54 billion RMB, but the absolute floor just
• 1:38
  fell out on their net profit.
• 1:39
  Yeah, the profit attributable to equity shareholders completely collapsed.
• 1:43
  By 82.6%. We're talking about a drop from over 805 million RMB in 2024 down
• 1:50
  to roughly 139.7 million RMB in 2025.
• 1:54
  Basic earnings per share fell
• 1:55
  to a mere 1.78 RMB cent. So, walk me through the actual mechanics here.
• 2:01
  How does a seemingly stable renewable energy business lose, you know,
• 2:06
  over 80 percent of its profit in just 12 months?
• 2:09
  Well, to understand the collapse, you really have to look at the physical limitations
• 2:13
  of the Chinese power grid.
• 2:14
  The primary culprit here is this phenomenon called curtailment.
• 2:18
  OK, curtailment. Yeah. In 2025, China's renewable capacity grew at just an astonishing rate.
• 2:24
  Wind installations surged by nearly 23 percent and solar capacity blew up by over 35 percent. Wow.
• 2:30
  So a massive boom in building the actual plant. Exactly.
• 2:33
  But the total social electricity consumption, so the actual demand from factories,
• 2:39
  homes, and businesses, that only grew by about 5%. Right.
• 2:42
  So you have this massive oversupply of power being generated.
• 2:46
  I've heard curtailment described before to you guys listening using like a farming metaphor.
• 2:51
  Oh, the apple farmer one? Yeah, like a farmer who grows this record-breaking
• 2:55
  crop of apples, but the local dirt roads connecting the farm to the city are
• 2:58
  just way too small, so the apples just sit there and rot.
• 3:01
  That's a great way to think about
• 3:02
  it. But how does that translate to the actual physics of a power grid?
• 3:06
  So the dirt roads in this scenario are the lack of ultra-high voltage or UHV transmission lines.
• 3:14
  Most of China's prime wind and solar resources are located out in the sparsely
• 3:18
  populated western and northern regions. Right, where there's lots of space. Exactly.
• 3:23
  But the massive energy demand is concentrated in the heavily industrialized
• 3:27
  eastern and southern coastal cities. You have to move the power thousands of miles. Oh, I see.
• 3:32
  And the physical grid infrastructure simply could not keep up with the sheer
• 3:36
  volume of new solar panels and wind turbines being connected in the west.
• 3:40
  Because the grid couldn't handle the load, grid operators were forced to tell
• 3:44
  energy companies to literally disconnect.
• 3:46
  Wait, really? Just turn off? Yeah, they had to just throw the power away.
• 3:50
  So they're generating electrons, but they aren't allowed to actually put them
• 3:53
  on the wire to sell them. Exactly.
• 3:55
  Man, how badly did that hit C&E's specific projects? Severely.
• 4:01
  I mean, C&E's solar curtailment rate spiked from 18.5% in 2024 to a staggering
• 4:07
  31.7% in 2025. A third of their solar power. Yeah.
• 4:12
  And their wind curtailment also rose to over 14%.
• 4:15
  I mean, when you're a power company and you're mandated by the government to
• 4:20
  throw away nearly a third of your total solar production, your revenue per and
• 4:24
  spelled megawatt is going to take an immediate catastrophic hit. That is just brutal.
• 4:30
  But from my notes, the volume of power they couldn't sell was actually only
• 4:34
  half the problem, right?
• 4:36
  The price they were getting for the power they could actually sell also dropped. Right.
• 4:40
  Yes. How does that happen? Because historically, renewable energy in China was
• 4:44
  heavily subsidized with fixed prices, wasn't it? It was.
• 4:47
  And this is where a massive structural shift in Chinese policy comes into play.
• 4:51
  It's specifically this landmark directive known as Notice No. 136.
• 4:55
  Historically, you're totally right. Renewable companies enjoyed these guaranteed feed-in tariffs.
• 5:01
  The government basically promised to buy your power at a set profitable price.
• 5:04
  But notice number 136 effectively forced renewables fully into open market competition.
• 5:09
  It mandated spot market pricing.
• 5:12
  And spot market pricing means the price of electricity fluctuates,
• 5:16
  like minute by minute, based on real-time supply and demand.
• 5:19
  Precisely. And remember that massive surge in solar installations we just talked
• 5:22
  about? Right, the 35% jump. Yeah.
• 5:25
  Because solar panels only generate power when the sun is shining.
• 5:28
  Millions of panels across the country are all flooding the grid with electricity
• 5:32
  at the exact same time midday.
• 5:34
  Oh, wow. So everyone is selling at once. Exactly.
• 5:38
  That massive, localized oversupply completely crashes the spot price of electricity
• 5:43
  during peak sunlight hours.
• 5:45
  Sometimes the price even goes negative. That's insane. So not only is C&E throwing
• 5:50
  away a third of their solar power, but the power they do manage to sell into
• 5:53
  the grid at noon is fetching just a fraction of what it used to.
• 5:57
  Their average comprehensive price for solar dropped to just 0.3783 RMB per kilowatt hour.
• 6:04
  That is a vicious double whammy. You're selling less volume and you're getting
• 6:07
  paid less for the volume you actually do sell. Yeah, it's a nightmare scenario.
• 6:11
  Though looking really closely at the 2024 numbers, I see there's a slight tax
• 6:16
  anomaly that makes this 82% drop look just a tiny bit worse than the underlying
• 6:21
  operations might suggest.
• 6:23
  Yeah, that's a vital point for an investor to catch.
• 6:25
  The year-on-year comparison is slightly distorted by a high base effect.
• 6:29
  Okay, explain that. So in 2024, CNE qualified as a Hong Kong tax resident,
• 6:34
  and that allowed them to reverse a bunch of previously recognized withholding
• 6:38
  taxes on dividends that were coming from their mainland China subsidiaries. Oh, so they got a payout.
• 6:44
  Exactly. That triggered a massive one-time 90 million RMB tax refund,
• 6:49
  which artificially inflated the 2024 net profit.
• 6:53
  Right. So 2024 looks better than it actually was. Right. And since that refund
• 6:56
  obviously didn't repeat in 2025, the drop looks steeper. But,
• 6:59
  I mean, make no mistake, even accounting for that tax anomaly,
• 7:02
  the core operating environment in China was just incredibly hostile.
• 7:06
  Which brings us to, honestly, the absolute core mystery of this deep dive.
• 7:10
  Looking at this profit warning, revenues are down, they're throwing away a third
• 7:14
  of their product, and their margins have just been eviscerated by spot market pricing.
• 7:18
  I would assume this company is burning through cash at an alarming rate.
• 7:23
  Yet, the document clearly states that cash generated from operating activities
• 7:28
  actually increased year on year. It did.
• 7:31
  Walk me through the actual math of how they pulled that off,
• 7:34
  because on the surface, that completely defies logic. The math works because
• 7:39
  management immediately realized that the era of easy subsidized growth in China was over.
• 7:44
  They pivoted to this really ruthless game of financial defense.
• 7:48
  They aggressively restructured the entire cost base of the company.
• 7:52
  And the most immediate impact came from a massive workforce reduction.
• 7:56
  In just 12 months, they cut their full-time workforce by 31%. Wow.
• 8:00
  Yeah. They dropped from 814 employees down to 560. Wait, hold on.
• 8:04
  A 31% cut in a single year is a drastic, borderline desperate move.
• 8:11
  My question as an investor looking at this is, did they cut into the fat or
• 8:17
  did they cut into the muscle? That's a fair question.
• 8:19
  Right. Because if you're an asset heavy company that builds physical power plants
• 8:23
  and you fire a third of your staff, doesn't that introduce massive operational risk?
• 8:29
  Like, who is actually building and maintaining the infrastructure at that point?
• 8:33
  That is the exact question you should be asking. But the data shows they didn't
• 8:36
  just blindly fire people.
• 8:38
  They fundamentally changed their operating model. How so?
• 8:41
  They heavily optimized their structure by shifting toward outsourcing.
• 8:45
  Specifically, they outsourced a massive chunk of their engineering,
• 8:49
  procurement, and construction, or EPC business.
• 8:51
  Oh, I see. Yeah. By relying on third-party contractors to manage the actual
• 8:55
  physical building of the plants, They were able to cut their internal construction
• 8:59
  management headcount by nearly 60%. Ah, okay.
• 9:02
  So they shifted a massive fixed cost, like full-time employee payroll and benefits,
• 9:07
  into a variable cost. Exactly the mechanism.
• 9:10
  You only pay the EPC contractors when you're actively building a project.
• 9:14
  And if you stop building, your costs drop to zero. Yep.
• 9:18
  It immediately slashed their fixed administrative expenses by 20% year on year.
• 9:23
  And, you know, to signal to the market that this was a company-wide austerity
• 9:27
  measure, the board of directors and senior management actually voluntarily cut
• 9:31
  their own base salaries.
• 9:33
  Yeah, it set a precedent for strict expenditure control across the whole organization.
• 9:39
  Okay, so they stopped the bleeding on the administrative side.
• 9:42
  Yeah. But let's talk about the balance sheet for a second.
• 9:44
  Building wind and solar farms requires massive amounts of capital.
• 9:48
  Oh, huge amounts. And C&E carries a heavy debt load. I mean,
• 9:51
  their debt-to-assets ratio sits at nearly 74%. Right.
• 9:55
  In a typical distressed environment, a highly leveraged company with plunging
• 9:59
  revenues is a massive red flag.
• 10:01
  So how did they manage that debt burden without just going under?
• 10:05
  Well, they executed a very aggressive refinancing strategy, and they really
• 10:08
  leveraged macroeconomic timing to their advantage.
• 10:11
  What do you mean? In 2024 and 2025, we saw a global trend of central banks cutting
• 10:16
  interest rates. The People's Bank of China, the U.S. Federal Reserve,
• 10:20
  the European Central Bank,
• 10:21
  They were all lowering the cost of borrowing. Okay.
• 10:24
  So even though C&E's domestic revenues were down, they still had this massive
• 10:29
  portfolio of existing cash-generating power plants.
• 10:32
  They basically took those physical assets to the banks and said,
• 10:35
  look, interest rates are down
• 10:37
  globally. We want to refinance our existing loans at today's lower rates.
• 10:41
  But wait, how does a company with an 80% profit crash convince a bank to give them better terms?
• 10:47
  Why wouldn't the banks look at that? Notice 136 margin compression and view
• 10:52
  C&E as a higher risk and therefore demand a higher interest rate.
• 10:55
  Because C&E paired their refinancing request with extreme capital discipline,
• 11:00
  they showed the banks that they were stopping the bleeding. By halting the new builds. Exactly.
• 11:04
  They instituted a really rigid investment threshold. If a planned wind or solar
• 11:09
  farm in China no longer make financial sense under the new lower spot market
• 11:13
  prices, C&E simply suspended or deferred construction entirely.
• 11:17
  They just refused to build it. Right. They refuse to borrow money to build unprofitable
• 11:21
  assets. And banks love that kind of discipline.
• 11:25
  That makes sense. By demonstrating that strict cash preservation,
• 11:28
  they successfully negotiated their overall comprehensive financing rate down to 3.51%. Wow.
• 11:35
  That's a drop of 47 basis points.
• 11:38
  And when you're carrying nearly 19 billion RMB in interest-bearing debt,
• 11:43
  shaving a half percent off your interest rate frees up a massive amount of free cash flow.
• 11:48
  Okay, so fewer fixed employees, cheaper debt, and halting unprofitable construction. That is the formula.
• 11:55
  They essentially built a fortress around their cash flow to survive the storm in China. Absolutely.
• 11:59
  But as we know, you cannot simply shrink your way to long-term greatness.
• 12:03
  Cost-cutting only buys you a runway, right? It doesn't give you a plane to fly.
• 12:07
  So where's the growth engine? The growth engine is the defining pivot of this entire deep dive.
• 12:13
  CNE used the cash and the time they bought themselves through those domestic cuts to look outward.
• 12:18
  They realized the Chinese market was structurally flawed for the foreseeable
• 12:21
  future, so they accelerated a major strategic pivot into international markets.
• 12:26
  And they didn't just go anywhere. They targeted the single largest macroeconomic
• 12:30
  trend driving global energy demand right now. Artificial intelligence. Yes.
• 12:35
  While they were playing defense in China, CNE secured a staggering 502 megawatts
• 12:42
  in grid connections and long-term contracts abroad in 2025 alone.
• 12:47
  And the mechanism behind those international contracts is vital for you all
• 12:50
  listening to understand.
• 12:52
  They secured what are called Power Purchase Agreements, or PPAs,
• 12:55
  Instead of dumping power into a chaotic spot market where the price fluctuates
• 12:59
  wildly based on daily supply, a PPA locks in a predetermined selling price for
• 13:04
  the electricity with a specific buyer, usually for like 10, 15 or even 20 years.
• 13:09
  Yeah, it creates a massive financial mode. So C&E is completely insulated from
• 13:13
  the exact kind of market volatility that destroyed their margins back home. Exactly.
• 13:17
  That insulation layer is exactly why these contracts are so valuable to investors.
• 13:21
  You have total revenue visibility for a decade or more.
• 13:24
  And the crown jewel of that 502 megawatt portfolio is highly specific.
• 13:30
  Out of that total, 469 megawatts are utility-scale solar PV projects located
• 13:37
  entirely in the United States.
• 13:39
  Furthermore, they signed the PPA with what the financial report refers to as
• 13:43
  a global top-tier tech company, specifically to power its AI data centers.
• 13:49
  I mean, we can all guess the short list of names that fits that top tier tech company description.
• 13:53
  The reality is that the generative AI boom requires an absolutely astonishing amount of electricity.
• 13:59
  These new data centers are incredibly power-hungry, far more so than traditional
• 14:03
  cloud computing infrastructure.
• 14:05
  The power draw is immense, and this creates a major bottleneck for the tech industry.
• 14:10
  The U.S. electrical grid is aging, and securing grid connections for traditional
• 14:14
  natural gas or nuclear plants can take years, sometimes a decade,
• 14:18
  due to regulatory red tape.
• 14:19
  Tech companies are in an arms race to build AI infrastructure right now.
• 14:23
  They cannot wait 10 years for power.
• 14:24
  And this is where renewable energy, particularly solar, becomes the ultimate
• 14:28
  solution. Just to ground that for a second, it's not just about tech companies
• 14:31
  wanting to look green for their PR campaigns.
• 14:34
  It's a pure financial and logistical calculation. It is entirely practical.
• 14:39
  Solar has a highly scalable capacity and a relatively short construction cycle.
• 14:44
  You can build a solar farm in a fraction of the time it takes to build a gas plant. Right.
• 14:48
  Furthermore, the underlying economics are unbeatable. We measure this using
• 14:53
  a metric called the levelized cost of energy, or LCOE.
• 14:57
  Okay, LCOE. Essentially, if you take the total lifetime cost of building and
• 15:01
  operating a power plant and divide it by the total amount of energy it will
• 15:04
  produce over its lifespan, solar currently offers some of the lowest LCOE in
• 15:09
  the world. It's the ultimate bang for your buck. Exactly.
• 15:12
  C&E recognized this bottleneck in the U.S. Market tech companies desperate for
• 15:17
  fast, cheap, reliable power and position themselves to supply it.
• 15:21
  It's an incredibly smart pivot, but it brings up a major logistical question.
• 15:26
  Building 469 megawatts of utility-scale solar in the United States requires
• 15:31
  an enormous amount of upfront capital.
• 15:33
  Yes, it does. So if their Chinese operations are under strict austerity measures
• 15:37
  and Chinese banks are tightening up, how on earth is CNE funding this massive global expansion?
• 15:45
  That is where their corporate structuring comes into play. To fund this international
• 15:48
  pivot and sidestep the constraints of the Chinese domestic market,
• 15:52
  CNE executed a secondary listing on the main board of the Singapore Exchange,
• 15:57
  the SGX, which became official in early January 2026.
• 16:01
  Why Singapore? Like, why not list in the U.S. if that's where the projects are
• 16:05
  or just rely on their existing Hong Kong listing? Well, Singapore acts as the
• 16:09
  perfect, neutral financial bridge.
• 16:12
  Listing directly in the U.S. right now carries significant geopolitical friction
• 16:16
  and regulatory hurdles for a company with heavy Chinese ties.
• 16:20
  Oh, that makes total sense. And Hong Kong capital markets have been somewhat sluggish.
• 16:24
  Singapore, however, is a highly capitalized, globally integrated market that
• 16:27
  is really eager to fund green infrastructure.
• 16:30
  So it's a strategic middle ground. Yeah.
• 16:32
  By listing on the SGX, CNE opened up entirely new international financing channels.
• 16:38
  It allows them to tap into global institutional investors and work with Western
• 16:42
  banks who are very comfortable financing U.S.-based solar projects,
• 16:46
  especially when they're backed by 20-year PPAs with tech giants.
• 16:49
  It functionally decouples their
• 16:51
  international growth engine from their Chinese cash flow constraints.
• 16:54
  So we're looking at a company executing a fascinating high-wire act here.
• 16:59
  Intense, ruthless defense at home while planting massive, highly capitalized
• 17:05
  seeds for growth abroad.
• 17:07
  Beautifully put. What does this mean for you, the listener, looking ahead to 2026?
• 17:12
  Like, what should investors actually expect to see in the next few earnings reports?
• 17:16
  The outlook for 2026 presents a tale of two entirely different business models
• 17:20
  operating under one roof. Okay.
• 17:22
  Let's start with China. The environment there will remain highly challenging.
• 17:25
  The physical infrastructure problems, you know, the lack of those ultra high
• 17:29
  voltage transmission lines to solve the curtailment issue, that cannot be fixed
• 17:32
  in a single year. And notice now.
• 17:35
  $136 ensures that spot market pricing will just continue to pressure margins.
• 17:40
  So if they aren't building new physical power plants in China,
• 17:43
  what is their actual domestic strategy moving forward?
• 17:46
  Do they just sit on their existing assets and wait for the grid to catch up?
• 17:50
  Not quite. They're attempting a major pivot in their domestic business model.
• 17:55
  They're shifting away from being an asset-heavy owner and operator and moving
• 17:59
  toward what they call professional services.
• 18:02
  Professional services. Yeah. They want to leverage the decade of expertise they've
• 18:05
  built to offer consulting, design engineering, smart operation and maintenance,
• 18:10
  and power trading services to other renewable energy operators.
• 18:14
  Wait, a heavy asset builder pivoting to become essentially a consulting and
• 18:18
  services firm? That's the plan. Isn't that a massive identity crisis?
• 18:22
  Like, can a company that built its DNA on pouring concrete and erecting steel
• 18:25
  actually win in the lightweight services sector? It's a completely different skill set.
• 18:29
  It is a significant risk, and investors really should monitor it closely.
• 18:34
  However, their thesis is that the entire Chinese market is struggling with the
• 18:38
  exact same complexities of spot market trading and smart grid integration that CNE just navigated.
• 18:45
  Ah, OK. CNE has the proprietary data platforms and the hard-won experience.
• 18:50
  By selling that expertise as a service, they can generate high margin capital
• 18:54
  light revenue without taking on the massive debt required to own the physical power plants.
• 18:59
  So it's an attempt to entirely de-risk their domestic footprint. Exactly.
• 19:03
  OK, I can see the logic, even if the execution will be tough.
• 19:06
  But let's look at the international side, because that is the golden goose here. For sure.
• 19:09
  If these overseas AI data center projects in the U.S. are the future,
• 19:14
  when do investors actually see the financial payoff?
• 19:17
  Will the 2026 annual report show a massive spike in profit from these tech PPAs?
• 19:23
  No, and this is the most crucial takeaway for anyone analyzing this stock.
• 19:27
  Investors need to exercise patience.
• 19:29
  The financial payoff will not be immediate. Those 469 megawatts in the U.S.,
• 19:35
  along with their smaller projects in South Korea and Singapore,
• 19:38
  are currently in the construction phase.
• 19:40
  Right, because a PPA is really just a piece of paper until the plant is built.
• 19:44
  You only start generating revenue when the solar panels are actually bolted
• 19:47
  down, connected to the grid, and flowing electrons to the data center. Exactly.
• 19:52
  2026 is fundamentally a building year. The earnings contribution from these
• 19:57
  international PPAs will take time to materialize on the income statement.
• 20:00
  Got it. The primary focus for management this year will be strict execution, navigating the U.S.
• 20:05
  Supply chain, managing construction timelines, and ensuring these plants come online smoothly.
• 20:11
  However, the long-term tailwinds are undeniable.
• 20:14
  The AI power demand is only accelerating globally. Yeah, it's not going anywhere. Right.
• 20:20
  C&E has successfully secured the contracts and the international financing.
• 20:23
  Now they just have to build the physical infrastructure to realize the revenue.
• 20:27
  It really feels like we are looking at a company standing in the middle of a bridge.
• 20:32
  I mean, they've recognized that their old comfortable model in China is broken,
• 20:36
  And they've shown incredible competence in protecting their cash flow while
• 20:40
  the house was burning down. Yeah, that defense was key.
• 20:42
  And now they're walking across that bridge toward a highly lucrative,
• 20:46
  AI-driven future, but they just haven't quite reached the other side yet.
• 20:50
  That's the perfect way to contextualize their current valuation.
• 20:54
  The impressive cash flow preservation in 2025 proves that management can handle
• 20:59
  a crisis. But the ultimate success of this company depends entirely on their
• 21:03
  ability to flawlessly execute this international pivot over the next 18 to 24 months.
• 21:09
  As we wrap up our analysis of C&E's transition today, it really leaves you with
• 21:13
  a fascinating, broader question to mull over.
• 21:16
  We are watching a traditional renewable energy company fundamentally alter its
• 21:20
  corporate DNA, restructuring its global footprint to serve the specific needs
• 21:25
  of artificial intelligence.
• 21:27
  Yeah, it's a huge shift. It makes you wonder about the future of the entire energy sector.
• 21:32
  As grid constraints tighten globally, are renewable energy companies deftened
• 21:37
  to become simply the physical logistical extensions of the big tech industry?
• 21:41
  Will the voracious, endless energy appetite of AI be the ultimate savior for
• 21:46
  green energy companies struggling with the limits of their local markets?
• 21:49
  It is a profound shift in the global economic landscape, and C&E is sitting right on the fault line.
• 21:54
  This content is intended to serve strictly and only as an informational,
• 21:59
  independent, objective summary of recent events and should in no way be interpreted,
• 22:04
  construed, or relied upon by any party as inside information or financial advice.