Gigasun Ab · OMXSTO:GIGA
Gigasun Ab — Advanced Soltech Sweden — Debt Investor Presentation (January 2020)
77 slides from Gigasun Ab's debt investor presentation, Jan 13, 2020
Slide 1: Senior Secured Green Bond Investor Presentation
Senior Secured Green Bond Investor Presentation 13 January 2020
Slide 2: Disclaimer
Disclaimer This presentation material (the “Presentation”) has been prepared by Advanced SolTech Sweden AB (publ.), Reg. No. 559056-8878 (the “Company”) with assistance from DNB Markets, a part of DNB Bank ASA, Sweden Branch and Nordea Bank Abp, filial i Sverige (together the “Joint Bookrunners”), s
Slide 3: Agenda
Agenda 1 Transaction summary 2 Introduction to Advanced Soltech 3 Business model 4 Project portfolio 5 Market overview 6 Financials 7 Risk factors 8 Appendix
Slide 4: Transaction overview
Transaction overview Background Simplified transaction structure • Advanced Soltech Sweden AB (“ASAB”) is a Swedish company which owns and operates rooftop solar power plants on commercial real estate properties in SolTech Energy Advanced Solar Power Sweden AB (publ.) (Hangzhou) Inc. China and sells
Slide 5: ASAB is a green electricity producing utility company
“ASAB is a green electricity producing utility company, we invest in and own rooftop solar power plants in China” Strictly private and confidential
Slide 6: Agenda
Agenda 1 Transaction summary 2 Introduction to Advanced Soltech 3 Business model 4 Project portfolio 5 Market overview 6 Financials 7 Risk factors 8 Appendix
Slide 7: Advanced Soltech at a glance
Advanced Soltech at a glance Overview Solar as a service value chain Geographical presence • Advanced Soltech Sweden AB (“ASAB”) is a ASAB sells electricity to end customers at a ASAB operates across several provinces in China ~10-15% discount to the grid price with any Swedish company founded in 20
Slide 8: ASAB was founded in 2016 and is planned to be listed on Nasdaq First North
ASAB was founded in 2016 and is planned to be listed on Nasdaq First North by H1 2020 End of period installed capacity ASAB is founded SolTech Energy and ASP 150 MW of framework Three retail bond build the first mutually owned agreements are signed. issues placed – Cicero 38 MW under construction pr
Slide 9: An illustrative overview of a solar PV setup
An illustrative overview of a solar PV setup 3 Solar PV panels and racking systems 2 • Typical lifespan of +25 years 1 1 Inverter and cabling • Converts direct current (DC) into alternating 2 current (AC) • Lifespan of 15-20 years CUSTOMER EXAMPLE: Meter • Measures generated electricity in kWh 3 2 M
Slide 10: Examples of projects owned by ASAB
Examples of projects owned by ASAB Fenghua Xuri Hongyu Co., Ltd. Ebara Great Pumps Co. Ltd. Ningbo Sente Auto Parts Co. Ltd. Capacity: 1.7 MW Capacity: 3.1 MW Capacity: 0.5 MW Location: Ningbo, Zhejiang Location: Wenzhou, Zhejiang Location: Ningbo, Zhejiang Advanced Solar Power Hangzhou’s Factory Sh
Slide 11: What we do and why we do it – green electricity producer
What we do and why we do it – green electricity producer ASAB operates in the world’s largest ASAB invests in new, high-yielding Green electricity producer to a well- electricity market; China1 rooftop solar power plants established, diversified customer base Case study: Sohbi Craft 1.3 MW solar pow
Slide 12: ASAB enables customers to buy electricity at a discount
ASAB enables customers to buy electricity at a discount For illustrative purposes ASAB owns the solar PV power plants 1 Electricity produced by ASAB’s solar PV plant Avg. 0.70 – 0.852 RMB/kWh times ~10-15% discount Factory owner Coal plant 2 ASAB sells to the grid Grid Co1 Avg. ~0.40 RMB/kWh Coal pl
Slide 13: ASAB is well-positioned in a large, stable, and untapped market
ASAB is well-positioned in a large, stable, and untapped market with a structural shift towards solar PV China is the world’s largest electricity market Rising electricity demand will be met with an Regulated electricity prices reduce with a need to generate more than increased share of renewable en
Slide 14: Investments in solar power in China yields ~58x the carbon impact compared to Sweden
Investments in solar power in China yields ~58x the carbon impact compared to Sweden Regional electricity generation by fuel 20161 Estimated CO2 emission intensity from electricity generation by country3 100% Solar PV Geothermal 80% g CO2/kWh Wind 60% Bioenergy Δ=643 Hydro 40% Nuclear 691 58x4 20% G
Slide 15: ASAB's business model in practice – customer case study
ASAB’s business model in practice – customer case study SEKm ACCUMULATED PROJECT CASH FLOW Sohbi Craft 1.3 MW solar power plant in Jiangsu installed in September 2019 Key project figures: General assumptions: • 1,305 kW installed capacity • 95% of the electricity is sold to the • 1.06 KWh/W and year
Slide 16: Strong historical financial performance
Strong historical financial performance Revenue OpEx EBITDA Strong revenue development despite …has led to ASAB reporting an EBITDA of decreasing subsidies attributable to …combined with decreasing OpEx2 SEK 85m (83% margin) in LTM Q3 2019 which successful execution of 1021 projects, which thanks to
Slide 17: A well-diversified customer base with low sector risk
A well-diversified customer base with low sector risk Customer split by size Customer split by industry Customer split by types Installed capacity by customers ~FTEs Installed capacity by customer industry Installed capacity by customer type 2% 6% 2% 6% 22.6% 7% 22% 26% 39% 77.4% 12% 22.1% 19% 13% U
Slide 18: Revenue and EBITDA capacity given high-yielding asset base
Revenue and EBITDA capacity given high-yielding asset base EBITDA capacity given recently installed capacity ASAB has between 30 September and 31 December 2019 installed 35 MW of additional solar power which, together with existing projects, totals 139 MW installed and are expected to generate SEK +
Slide 19: Key credit highlights
Key credit highlights 1 Large untapped growth market driven by secular shift towards renewable energy sources 2 Outsized positive environmental impact from solar power investments in China 3 Attractive, low-risk service offering to a stable, well-established customer base 4 Scalable business model w
Slide 20: Agenda
Agenda 1 Transaction summary 2 Introduction to Advanced Soltech 3 Business model 4 Project portfolio 5 Market overview 6 Financials 7 Risk factors 8 Appendix
Slide 21: ASAB is a key player in the solar as a service value chain
ASAB is a key player in the solar as a service value chain Product manufacturer EPC1 contractor Power producer End-customer • Includes manufacturers of • Assigned contractor for • Owns and manages • Enters into a PPA2 with the solar panels, racking installations installations power producer systems
Slide 22: ASAB is powered by a resilient business model with long-term contracts
ASAB is powered by a resilient business model with an attractive customer offering and long-term contracts Overview of distributed solar PV Attractive customer offering With no grid fees and no need for additional land, distributed solar ASAB generates stable revenue on a recurring basis by providin
Slide 23: ASAB's estimated vs. actual annual electricity generation for select projects
ASAB’s estimated vs. actual annual electricity generation for a few select projects Kaifeng University Jinma Packing Material Co., Ltd. % of estimated production % of estimated production • Installed in February 2016 • Installed in December 2016 • Capacity of 0.3 MW • Capacity of 1.0 MW • Estimated
Slide 24: An overview of ASAB's value chain from start to finish
An overview of ASAB’s value chain from start to finish Independency and a low-risk business model enables ASAB to focus on high margin electricity generation = Main responsible party for each step = ASAB’s focus for each stage Sales EPC2 study Construction Generation ~3 months1 ~1-4 weeks ~1.5-2 mon
Slide 25: Secured process for handling and installation of solar power plants
Secured process for handling and installation of solar power plants At this stage, the installation is Secured asset ownership and control of rooftop solar power plants connected to the grid and ready to be used 5% 5% 20% Low counterparty risk through a well- established Chinese partnership and 50%
Slide 26: Key contracts – an overview of rooftop and framework agreements
Key contracts – an overview of rooftop and framework agreements Rooftop agreements regulate all terms and conditions Framework agreements provide exclusivity • The rooftop agreement is the contract between the customer and • Framework agreements are typically entered into with a ASAB and specifies p
Slide 27: Key benefits of ASAB's business model
Key benefits of ASAB’s business model No captive technology ASAB is not bound to use any particular solar panel technology Low construction risk EPC contractors assume responsibility for construction related risks Low overgeneration risk Grid connectivity provides protection against overgeneration,
Slide 28: Agenda
Agenda 1 Transaction summary 2 Introduction to Advanced Soltech 3 Business model 4 Project portfolio 5 Market overview 6 Financials 7 Risk factors 8 Appendix
Slide 29: Rapid development of installed capacity in several areas
Rapid development of installed capacity in several areas with the capacity to sign further large contracts Fast growing installed capacity Regional overview 28.1 139 The company reached 139 MW of installed MW Current portfolio MW capacity by 31 December 2019 Under construction and ASAB completed its
Slide 30: A well-diversified customer base with low sector risk
A well-diversified customer base with low sector risk Customer split by size Customer split by industry Customer split by types Installed capacity by customers ~FTEs Installed capacity by customer industry Installed capacity by customer type 2% 6% 2% 6% 22.6% 7% 22% 26% 39% 77.4% 12% 22.1% 19% 13% U
Slide 31: Agenda
Agenda 1 Transaction summary 2 Introduction to Advanced Soltech 3 Business model 4 Project portfolio 5 Market overview 6 Financials 7 Risk factors 8 Appendix
Slide 32: ASAB operates in the world's largest energy market
ASAB operates in the world’s largest energy market Primary energy consumption by geography 2018 Primary energy consumption per capita 2018 GJ per capita2 China is between OECD and non-OECD countries in terms of energy consumption per capita EU 1.9x RoW 12% 24% 183 175 Asia Pacific 19% World primary
Slide 33: China needs to add the equivalent of today's EU electricity generation by 2040
To meet rising demand, China needs to add the equivalent of today’s EU electricity generation system to its infrastructure by 2040 Electricity generation, 2018 vs. 2040 Chinese electricity: installed capacity by technology TWh GW 35% 46% 50% 56% 57% % Renewables Africa 854 1,215 3,347 Growth Middle
Slide 34: China is ramping up focus on solar PV
China is ramping up focus on solar PV with a significant uptick in installed and planned capacity Installed solar PV capacity by geography Change in installed solar PV capacity by geography GW GW 500 100 In recent years, China has accounted for about half of global solar PV additions, easily 400 80
Slide 35: Distributed solar PV is growing faster than centralised solar PV
Distributed solar PV is growing faster than centralised solar PV Comments China: installed capacity and electricity generation from solar PV • Between 2014 and 2018, installed Installed capacity (GW) capacity of solar PV in China increased from 28 to 175 GW, corresponding to a Electricity generation
Slide 36: Regulated electricity prices reduces uncertainty for ASAB
Regulated electricity prices reduces uncertainty for ASAB Energy source split 2018 (China) 1.2% 2.5% 0.6% Since 2004, the policy price of electricity in The actual prices are determined by local grid 2.0% China is centrally guided by the National companies, and prices can thus vary across 8.3% 20.0%
Slide 37: Reduced cost of solar energy increases demand and eliminates reliance on subsidies
Reduced cost of solar energy increases demand and eliminates earlier reliance on subsidies Historical LCOE of solar PV Comments generation in China1 Overview of subsidies • In recent years, China has become not just a large Government panel producer but also a major market for solar • Valid for 20 y
Slide 38: Installation costs and subsidies have fallen together
Installation costs and subsidies have fallen together for ASAB’s greenfield projects Historical installation costs and expected subsidies for ASAB’s greenfield projects by quarter 1 1,000 12 900 10.3 10.3 10.3 10.3 10 800 9.4 9.3 9.2 9.2 9.2 9.0 8.9 8.6 8.6 700 689.1 689.1 689.1 689.1 664.2 8 7.8 7.
Slide 39: Chinese electricity prices for industrial consumers
Chinese electricity prices for industrial consumers Regional electricity prices for industrial consumers1 Geographical presence Cost per unit (RMB/kWh) Region <1kv 10kv 35kv Anhui 0.69 0.67 0.66 Beijing 0.82 0.81 0.79 Chongqing 0.71 0.69 0.67 Beijing Fuijan 0.66 0.64 0.62 Jiangsu Gansu 0.69 0.68 0.6
Slide 40: Selected competitors in the Chinese market
Selected competitors in the Chinese market – backed by a reputed investor base Selected competitors 1 Private investors Total is a major energy player that Asia Clean Capital Ltd. (“ACC”) is a produces and markets fuels, natural leading clean energy solutions developer gas, and low-carbon electricit
Slide 41: Agenda
Agenda 1 Transaction summary 2 Introduction to Advanced Soltech 3 Business model 4 Project portfolio 5 Market overview 6 Financials 7 Risk factors 8 Appendix
Slide 42: Revenue development
Revenue development Revenue development Comments • The share of revenues related to SEKm subsidies depends on several factors 29 91 104 104 including: (i) subsidy rates on existing 49% 47% 33% 31% Subsidies, installed capacity, (ii) subsidy rates on % of total Installed new installed capacity, (iii)
Slide 43: Operating expenses overview
Operating expenses overview Comments Panel maintenance makes up the largest part of OpEx • In China the panels have to be SEKm cleaned 1-3 times a year due to high 29 91 104 104 particle content in the air 591 204 183 138 • The cleaning cost is the majority of Installed the OpEx and is ~2.5% on an S
Slide 44: EBITDA development
EBITDA development Comments Operational leverage as new installations are managed by a streamlined organisation • ASAB has a very low fixed SEKm operational cost base mainly 29 91 104 104 consisting of administrative personnel 367 624 871 773 and management Installed • There is room for further auto
Slide 45: D&A and capital expenditure
D&A and capital expenditure Comments Depreciation • Solar PV assets depreciation is a SEKm linear 4% per annum over 25 years 29 91 104 104 economic lifetime Installed capacity (MW) • All installation costs, including panels, labour costs, and other materials are capitalised 27 28% 27% 22 26% 14 25%
Slide 46: Operating profit continuously improving
Operating profit continuously improving Comments EBIT development • The EBIT margin improves with a SEKm larger asset base 29 91 104 104 97 397 594 545 • This is due to a streamlined organisation with a low fixed cost Installed base capacity (MW) EBIT per avg. installed MW (SEKt) • Lower constructio
Slide 47: Key credit metrics
Key credit metrics Equity ratio Interest coverage ratio 33% 28% 1.7x 18% 1.4x 1.4x 0.9x 191 208 85 75 120 37 8 2017 2018 Q3 2019 2017 2018 LTM Q3 2019 Q1-Q3 2019 Equity (SEKm) Equity ratio (%) EBITDA (SEKm) ICR (x) Net debt to total fixed assets Capital structure2 18% 71% 59% 29% Senior unsecured bo
Slide 48: Income statement
Income statement SEK '000s 2017 2018 LTM Q3 2019 Q1-Q3 2019 Revenue 10,751 26,511 69,275 61,121 Other operating income 10,266 23,198 33,256 27,758 Total revenue 21,017 49,709 102,801 88,879 Personnel (1,853) (4,040) (4,046) (3,141) Other operating expenses (154) (416) (5,750) (4,318) Other external
Slide 49: Balance sheet
Balance sheet SEK '000s 2017 2018 Q3 2019 SEK ‘000s 2017 2018 Q3 2019 ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY Fixed assets Liabilities Property, plant and equipment Long-term liabilities Solar power plants 238,141 512,360 826,655 Borrowings 63,583 329,785 713,5222 Solar power plants under constr
Slide 50: Cash flow statement
Cash flow statement SEK '000s 2017 2018 Q1-Q3 2019 Cash flows from operating activities Operating profit 2,139 23,826 53,137 Depreciation 5,914 13,627 22,255 Other non-cash items 185 1,381 - Interest received 65 425 107 Interest paid (5,121) (13,311) (66,995) Income tax paid (104) 402 (2,358) Change
Slide 51: Agenda
Agenda 1 Transaction summary 2 Introduction to Advanced Soltech 3 Business model 4 Project portfolio 5 Market overview 6 Financials 7 Risk factors 8 Appendix
Slide 52: Risk factors (I/X)
Risk factors (I/X) This section sets out the risk factors and the circumstances deemed material for Advanced SolTech Sweden AB (publ) ("ASAB")'s, Advanced Solar Renewable Energy Co., Ltd. ("ASRE")'s and Longrui Solar Power Co., Ltd. ("LSE")'s and their respective subsidiaries's, collectively the ("G
Slide 53: Risk factors (II/X)
Risk factors (II/X) Political decisions relating to renewable energy As the Group acts within areas which take greater consideration to the environment in production of electricity, there are several types of political instruments favouring investments in renewable energy. These may consist of diffe
Slide 54: Risk factors (III/X)
Risk factors (III/X) Risks related to projects acquired Some companies which ASRE or LSE may acquire or have acquired ("Target Companies") may have long term receivables. There is a risk that these receivables may not be collected in the end since the counterparties may not be able to fulfil their f
Slide 55: Risk factors (IV/X)
Risk factors (IV/X) Executive management, staff and operational risks ASRE and LSE rely on consultants for certain services. Advanced Solar Power (Hangzhou) Inc. ("ASP") is ASRE's former shareholder and currently an affiliated company of ASRE and LSE. To a large extent, ASRE and LSE use ASP's networ
Slide 56: Risk factors (V/X)
Risk factors (V/X) Weather conditions and environmental influences Incoming solar radiation will vary from year to year, meaning that different yield factors (electricity generation per installed watt and year) will be generated for ASRE's and LSE's PV panel installations. Incoming solar radiation m
Slide 57: Risk factors (VI/X)
Risk factors (VI/X) Financial risks Currency risk RMB is not freely convertible into other currencies. All activities relating to payments and receipts of foreign exchange and the conversion of foreign exchange into RMB and vice-versa are regulated. All foreign exchange transactions are in some form
Slide 58: Risk factors (VI/X)
Risk factors (VI/X) Risks related to the Notes Risk relating to the admission of the Notes to trading In the event that ASAB fails to list the Notes on the sustainable bond list of Nasdaq Stockholm (or another regulated market) within 12 months from (and excluding) the day following the first issue
Slide 59: Risk factors (VII/X)
Risk factors (VII/X) No actions against ASAB and Noteholders' representation In accordance with the terms and conditions of the Notes, the Noteholders' agent will represent all Noteholders in all matters relating to the Notes and the Noteholders are prevented from taking actions on their own against
Slide 60: Risk factors (VIII/X)
Risk factors (VIII/X) Risks relating to the clearing and settlement in Euroclear Sweden AB's book-entry system The Notes are affiliated to Euroclear Sweden AB's account-based system, and no physical notes have been or will be issued. Clearing and settlement relating to the Notes, as well as payment
Slide 61: Risk factors (IX/X)
Risk factors (IX/X) Risks relating to the restructuring of the Group and the implementation of the transaction structure In connection with the issuance of the Notes, the Group will be restructured such that MidCo will assume ownership of ASRE and LSE and, indirectly, the other subsidiaries and asse
Slide 62: Risk factors (X/X)
Risk factors (X/X) Risks related to enforcing the Loan Pledges in the PRC The Group's obligations toward the Noteholders are already secured by existing pledges over the existing intra-company loans provided from ASAB to ASRE and LSE ("Loan Pledges"). Pursuant to PRC Law, a secured creditor can enfo
Slide 63: Agenda
Agenda 1 Transaction summary 2 Introduction to Advanced Soltech 3 Business model 4 Project portfolio 5 Market overview 6 Financials 7 Risk factors 8 Appendix
Slide 64: ASAB's Green Bond Framework
ASAB’s Green Bond Framework • Eligible Projects and Assets target climate mitigation. Meaning a project or asset funded in whole or in part, by ASAB that promotes the transaction to a low-carbon society • ASAB defines new projects and assets as Eligible Projects and Assets where final payment for su
Slide 65: Advanced Solar Power Hangzhou (ASP)
Advanced Solar Power Hangzhou (ASP) ASP in brief ASP and ASAB – a mutually beneficial relationship • ASP is a prominent thin film solar cell producer based in China. ASP owns 49% of ASAB • The company’s CdTe based thin film solar cells have been distributed to customers in offers more than 38 countr
Slide 66: A broad sales network with over 30 resellers
A broad sales network with over 30 resellers Structured sales process Key parties involved Third party sales network Sales EPC study Construction Generation ASP’s third party sales network of 30 resellers1 screens for and initiates dialogues with potential customers Internal sales team ASAB’s sales
Slide 67: Rigorous inspection and evaluation process
Rigorous inspection and evaluation process ensuring quality and reliability of customer Diligent customer inspection process Key parties involved ASP engineers Sales EPC study Construction Generation Engineers from ASP are responsible for the on-site EPC-study under an EPC contract ASAB ASAB is resp
Slide 68: Outsourced construction process eliminating construction risk
Outsourced construction process eliminating construction risk Construction phase structured as a turn-key arrangement Key parties involved Sales EPC study Construction Generation ASAB Appoints EPC contractor (typically ASP) EPC contractor (ASP) Design, procurement, and management of full project • E
Slide 69: Once installed, ASAB generates electricity for high-quality customers
Once installed, ASAB generates electricity for high-quality customers with contracts spanning over ~20 years with a low fixed cost model Electricity generation is ASAB’s main responsibility Key parties involved Sales EPC study Construction Generation ASAB ASAB is responsible for the power generation
Slide 70: Customer case study - Jindun Fire Control Equipment (I/II)
Customer case study - Jindun Fire Control Equipment (I/II) CUSTOMER CASE STUDY Jindun Fire Control Equipment 4 MW solar power plant in Zhejiang Sales meeting Initial screening Facility inspection Internal evaluation Agreement Construction The customer is ~1-4 weeks later, the A thorough inspection o
Slide 71: Customer case study - Jindun Fire Control Equipment (II/II)
Customer case study - Jindun Fire Control Equipment (II/II) ASAB has a significant positive environmental impact due to scale and dirty alternative grid electricity 3,916 = 1,566 MWh per year Apartments4 3,996 3,916 Generated electricity Powered per year kW MWh per year1 Installed capacity Generated
Slide 72: Portfolio deep-dive – Zhejiang
Portfolio deep-dive – Zhejiang Regional breakdown Regional project portfolio Hangzhou Ningbo Shaoxing Total capacity: Number of Projects: Inhabitants 9.8m Inhabitants 8.2m Inhabitants 4.9m Size 16,596 km² Size 9,816 km² Size 8,279 km² 71.7 MW 70 • ASP headquarters is • Suitable weather for • Famous
Slide 73: Portfolio deep-dive – Jiangsu
Portfolio deep-dive – Jiangsu Regional breakdown Regional project portfolio Cities with potential for expansion Total capacity: Number of projects: Nanjing Suzhou 28.4 MW 11 Inhabitants 11.7m Inhabitants 10.7m Size 1,399 km² Size 8,488 km² Wuxi 13,183 Inhabitants 6.5m Size 4,628 km² Jiangsu project
Slide 74: Portfolio deep-dive – The rest of China
Portfolio deep-dive – The rest of China Regional breakdown Regional project portfolio Examples of provinces with potential for expansion • Guangdong Total capacity (MW) Number of projects • Fujian Guangdong 2.2 Guangdong 1 • Shandong • Hebei Henan 0.9 Henan 7 • Hubei Beijing 0.6 Beijing 1 Shanghai 0
Slide 75: Strong, dedicated management team…
Strong, dedicated management team… Frederic Telander Max Metelius Lars Vilhelmson CEO CFO/COO Controller [Photo] [Photo] [Photo] Frederic was CEO of SolTech Energy between 2009 Max is the CFO/COO of ASAB Lars is ASAB’s Controller and 2018 and is one of the founders He has previously worked a
Slide 76: … backed by a seasoned board of directors
… backed by a seasoned board of directors Stefan Ölander Frederic Telander Ben Wu Chairman Board member Board member [Photo] [Photo] [Photo] Stefan has been involved in SolTech Energy since Frederic was CEO of SolTech Energy between 2009 Ben is a co-founder of the ASP Group and CEO of 2011, in
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Advanced Soltech Sweden — Debt Investor Presentation (January 2020) on 6ix