Oriental New Energy | Old shell filled with new wine, can it be reborn?

Ask AI · How does acquiring mature power plants affect a company’s profit outlook?

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Author / Avocado Under the Starry Sky

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Since March 4, the new-energy up-and-comer #Dongfang New Energy (002310) has entered its second spring in its stock price. Roughly speaking, the increase has nearly doubled so far.

Source: Eastmoney.com official site - Dongfang New Energy

The direct trigger behind the stock price growth is the company’s announcement of a major asset acquisition. According to the announcement, the company will acquire two new-energy companies: Haicheng Ruihai (wind power) and Dian Tou Ruixiang (photovoltaic + wind power). Public information shows that both of these are grid-connected mature power plants, which can generate revenue once the assets are in hand; with such a major positive development, the secondary market naturally turns bullish.

Source: Company announcement

As a newcomer in 2024 that just finished cleaning up its old businesses and has newly pivoted into the new-energy track, this acquisition of mature assets shows the company’s determination and boldness to go all in on new energy.

1. Flaws in the model: old businesses leave the company trapped

The predecessor of Dongfang New Energy was Dongfang Garden. It only officially changed its name in January 2026. The company’s predecessor businesses were landscaping and environmental protection, operating under a PPP model (i.e., government–social capital cooperation). In plain terms, project funding mainly comes from social capital; the government achieves the purpose of enabling social capital to get paid back through franchise operations or purchasing services. For Dongfang New Energy, the landscaping and environmental protection businesses have neither ticket revenue nor operating revenue, and their repayments mainly come from government payments.

This kind of model has the following inherent flaws.

First, the company front-loads the funds to build, then waits for the government to settle in installments. Full pre-financing, with high leverage in operations. Based on historical data, the company’s asset-liability ratio has long remained at a level of 60% or above.

Source: Tonghuashun iFinD - Asset-liability ratio

Second, pure reliance on government payments means there is no operating cash flow, and the company is entirely dependent on local governments’ fiscal payments.

These characteristics put very high demands on the company’s ability to refinance, and also tightly “bind” the company’s business to fiscal capacity.

However, starting in 2017, financial deleveraging made refinancing increasingly difficult. In addition, in order to strictly control the government’s implicit debt, the government’s payment capacity dropped sharply; project settlements began to be delayed, and Dongfang’s asset-liability ratio started rising year by year. In 2023, it surged to 97%. In 2024, due to losses for consecutive years and liabilities exceeding assets, the company was forced to take the path of restructuring.

2. Clean up the old businesses and transition through acquisitions

The restructuring process was fairly standard. The company converted capital surplus into bonus shares totaling 3.3 billion shares. Among them, restructuring investors bought 1.1 billion shares for 790 million yuan; 1.514 billion shares were used to repay debts through debt-to-equity conversion; and the remaining 700 million shares were reserved. For other debts, a special trust was used to purchase and provide a backstop. By this point, the company’s total debt of as much as 34 billion yuan was fully cleared, and the restructuring was completed in full.

One reason the restructuring could be completed quickly is that the company’s long-term plan is to transition to new energy. After the restructuring in 2024, the company formally sounded the horn for its new-energy transition, and the transition method is mergers and acquisitions.

According to the company’s 2025 performance preannouncement: in 2025, the company has completed the acquisition and consolidation of 433MW of distributed photovoltaic assets. According to the interim report, in the first half of 2025, photovoltaic power generation contributed 72.69% of the company’s revenue, becoming a core source of revenue. Based on expectations, in 2025 the company’s total revenue scale will reach 350–410 million yuan.

In addition, because its business scale is still relatively small, it is still making losses for now; however, according to the performance preannouncement, the loss in 2025 is about 55–75 million yuan, with losses narrowing significantly.

Source: Dongfang New Energy’s 2025 performance preannouncement

Moreover, combined with the company’s latest disclosure of two acquisition plans, after the acquisitions are completed, the company’s total installed capacity will jump from 433MW to 1.25GW (an additional 815.85MW of attributable capacity, including 41MW of grid-connected distributed wind power and 774MW of centralized wind power + distributed photovoltaics), placing it among domestic mid-sized new-energy operators.

Source: Major Asset Purchase Report (Draft)

3. Promising for the new business—but also with hidden pressure

With the rapid addition of mature assets, the market does see new opportunities for Dongfang. But for everything, there are two sides.

First, the acquisition approach really accelerates the transition, but whether the acquired assets can deliver performance is a highly uncertain matter. Looking at many cases in the capital markets, acquisitions can be easy to make money from, but hard to turn into real profit.

Also, according to the company’s disclosed asset purchase documents, the performance of the new target—Haicheng Ruihai—is also not stable. In recent years, net profit has swung between profit and loss, and from January to October 2025 it has still been in a loss-making state.

Source: Major Asset Purchase Report (Draft) - Haicheng Ruihai financial data

Second, even if the new assets generate revenue smoothly and the company successfully steps into the ranks of mid-sized players, the industry competition is fierce. The entire track is packed with state-owned enterprise giants, so the difficulty for smaller players to break through should not be underestimated.

In addition, the power industry is a “policy bowl.” Although power demand grows alongside developments like AI, electricity prices are decided by the government. If electricity price regulation is lowered, or green power subsidies are reduced, it will directly affect the company’s core revenue.

With such big moves, Dongfang’s business is indeed an old shell filled with new wine. But whether it truly achieves a rebirth depends on seeing it both ways.

Note: This article does not constitute any investment advice. The stock market involves risks; enter the market cautiously. Without buying and selling, there is no harm.