On July 3, the General Department of the National Energy Administration issued a consultation draft of the Notice of the National Energy Administration of the National Development and Reform Commission on Resolving Relevant Issues in the Process of Clean Heating Promotion such as “Coal to Gas” and “Coal to Electricity” (hereafter as the “Consultation Draft”), which proposed to expand a variety of clean heating methods according to local conditions, to ensure the balanced development of clean heating, and to focus on the development of clean coal-fired centralized heating and the development of biomass heating.

Industry insiders said that it is very wise to “ensure the balanced development of clean heating” and vigorously develop clean coal combustion. In 2018, China’s coal consumption accounted for 59% of total energy consumption. For a long time to come, coal will still be the main energy source in China. The development of clean coal combustion is a reasonable choice that suits China’s most basic national conditions.

It is understood that Luen Mei Quantum (600167.SH) is a leading company in the clean heating industry and has deep technical barriers in the fields of clean coal combustion technology and biomass energy technology. As the company’s strategy of remote replication continues to accelerate, with its own competitiveness and favorable policies, Luen Mei Quantum’s performance may enter a new development period.
 

“Key Developments” For Clean Coal Combustion and Biomass Energy

Jin Yong, academician of the Chinese Academy of Engineering and professor of Tsinghua University, believes that “rich in coal, poor in oil, and insufficient in gas” are the most prominent characteristics of China’s energy structure. “De-coalization” has little benefit in improving the status quo of the energy structure, and it is particularly important to improve the efficiency of coal energy conversion. In order to carry out the energy revolution, on one hand, the proportion of clean energy must be increased, and on the other hand, clean and efficient use of coal must be realized.

The Consultation Draft points out that in order to alleviate the pressure on natural gas supply and security and rural gas safety during the process of natural gas heating, local governments should use electricity, gas, coal, and biomass energy based on the specific conditions, combined with resource conditions, environmental protection requirements, financial strength, heating habits and other factors to expand clean heating channels.

Specifically, the Consultation Draft proposes that in urban areas, we should focus on the development of clean coal-fired centralized heating, and increase the area of clean coal-fired central heating in urban areas and surrounding areas. In rural areas, we should focus on the development of biomass-energy heating, which will solve a large number of environmental problems caused by direct burning of agricultural and forestry wastes.

In the context of the country’s expansion of multiple heating methods to suit local conditions, coal clean combustion heating technology may become the general direction of future development. Xie Kechang, member of the Chinese Academy of Engineering, believes that through ultra-low emission technology and end-of-pipe treatment, particles in coal power generation can be minimized, and clean and efficient use of coal should be considered as a kind of clean energy.

Luen Mei Quantum agrees with policies and its growth is within expectation

Clean heating, as the traditional main business of Luen Mei Quantum for more than 10 years, has been in the leading position in the industry in terms of clean coal combustion technology and biomass energy technology.

In the field of clean heating, Shenyang Hunnan heat-supplying Co., Ltd, Shenyang Xinbei, and Guohui New Energy are subsidiaries of Luen Mei Quantum, which are among the top 3A heating companies in Shenyang’s heating industry.

In order to achieve clean coal combustion, Luen Mei Quantum has taken multiple approaches. For example, when choosing a boiler, it does not take the highest combustion efficiency of the boiler as the sole criterion, but analyze the most economical and applicable coal type in the local area to design and customize the most suitable boiler. For the coal type, the company has developed a suitable boiler with the Harbin Institute of Technology and other universities. The boiler highly matches with the coal, which can achieve the maximum environmental and economic benefits.

In terms of operation, Luen Mei Quantum started from the aspects of heat source plant, transmission, heat network balance, toll, etc., to achieve refined management, and significantly improved profitability. The gross profit margin of heating has been maintained at 40% -50% for a long time, far exceeding the industry average. Through continuous technological innovation, there is still room for cost reduction.

In the field of biomass energy, Luen Mei Quantum, as the only steam supplier in the biomass energy industry in Taizhou Pharmaceutical Development Zone, Jiangsu Province, uses incineration technology with its own intellectual property rights to generate electricity and heat by using agricultural and forestry waste as fuel to meet the high-quality heating and electricity demand of the Zone, and makes great contributions to the comprehensive utilization of agricultural and forestry waste in Taizhou.

Relying on the rich practical experience of biomass co-generation, it may not be far away for Luen Mei Quantum to expand biomass heating in rural areas.

In order to obtain a broader market space, Luen Mei Quantum relies on more than 4 billion yuan of cash assets in hand and advanced independent research and development technology to continue to replicate its business across the country in the field of clean heating, and it may lay out more high-quality projects in the future, including clean heating and industrial steam.

The report of SWS Research mentioned that Luen Mei Quantum as a private leader in the clean heating industry, its technology and development direction are in line with the energy development direction of China’s clean coal utilization. In the future, the demand for non-traditional heating areas in the south is huge. With abundant cash flow and good expansion capacity, performance, the company’s growth in the future is within expectation.

Expanding the business with the favorable policy, Luen Mei Quantum’ performance growth trend of “high profit, rapid growth, and high cash flow” is expected to continue.

（source：Chinanews.com）