Strategy Note /

CN Energy Group looks solid amid global industry shifts

  • CN Energy Group listed its shares on NASDAQ on 5 February 2021

  • 97% of the company's revenue was contributed by activated carbon sales, with positive growth over the past three years

  • Establishing a wider industry chain coverage is a potential growth engine for its future

CN Energy Group looks solid amid global industry shifts
Fuller Wang
14 April 2021
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CN Energy Group faces fierce competition, but the activated carbon manufacturer shows potential and investment value.

On February 5, 2021, CN Energy Group (CNEY), a developing activated carbon manufacturer, was listed on NASDAQ with an opening price of USD 4 per share. The company issued 5 million ordinary shares, raising USD 20 million. The stock closed up 43.5% at USD 5.74 by the end of its first trading day. The company said that it would use 80% of the IPO proceeds to build a manufacturing plant in Manzhouli while the rest will be used for expansive production research. Network 1 Financial Securities took the underwriter's role during the offering.

Despite CNEY's solid market position and nifty business model, the investors' attention to the company has been so far limited. In this article, we will examine its performance to explore an additional investment opportunity.


Founded in 2018, the company has carried out the production of wood-based activated carbon in China through its subsidiary, Khingan Forasen Energy. Its activated carbon is mainly used in pharmaceutical, industrial manufacturing, water purification, environmental protection, and food beverage production. Dr. Kangbin Zheng, the CEO of the company, has worked for nearly 30 years at global financial institutions such as the World Bank and the Asian Development Bank. He has designed and led more than ten renewable energy projects, including those in the fields of hydropower, wind power, solar energy, biomass energy, geothermal energy, and garbage power generation. Also, he is one of the directors of the World Bank Agricultural Department with a rather strong business and technical background.


As mentioned in the diagram above, in the activated carbon market, the upstream suppliers primarily provide raw materials, including forestry residues, small fuelwood, and wood wastes. The downstream belongs to consumers from different industries engaging with the depuration processes. CNEY is in the midstream, responsible for activated carbon production.

According to the prospectus, Global Clean Energy (GCEI: OTC-PINK), a southern California-based renewable energy manufacturer focusing on biofuels, biomass, and renewable chemical areas, held CNEY's 35.8% shares before the IPO, being its largest strategic institutional investor. In addition, Elk International Capital is the largest financial investor, holding 15.02% shares before the IPO. Also, according to the SEC filings from Nasdaq, after the IPO, the public investors are expected to hold 32.26% shares of the company.



From the fiscal year of 2018 to 2020, CNEY generated revenues of USD 8.09 million, USD 10.89 million, and USD 12.48 million, respectively (a 24% CAGR). Its net profit figures reached USD 1.56 million, USD 1.67 million, and USD 2.34 million respectively. The company has stable profitability, with an increased net interest of 18.75%, the same as 2018's closing level. From 2020, the company's operating cost reached USD 9.12 million, up 15.1% year-over-year, which is mainly caused by the decline of activated carbon delivery (increasing fixed cost per unit).

To read the full article for free, please click here.