“For pig companies, it’s essentially collecting rent.” Zhang Renyuan told Southern Weekend reporters that one of the ways pig companies are venturing into photovoltaics is by partnering with solar energy companies. The latter invests in and builds the projects, while the pig companies rent out their land and pigsty roofs. Zhang, who used to work at Zhengbang and currently works for a private power company in Jiangxi engaged in photovoltaic business, explained this model.
This model implies that photovoltaic projects are not investment expenses for pig companies; instead, they become a source of income.
In response to inquiries from the Shenzhen Stock Exchange, Zhengbang stated that the company collects rent by leasing rooftops through its cooperation with State Power Investment Zhejiang Company. In the initial phase, the investment and construction are mainly carried out by State Power Investment Zhejiang Company, and Zhengbang is not involved in the outflow of funds.
Zhengbang disclosed that the company owns over 20 million square meters of rooftop area. According to information published by the National Energy Administration in February 2022, the rental quotation for a distributed photovoltaic project in Jiangxi, awarded to State Power Investment Group Zhejiang New Energy Co., Ltd., is 4 yuan/square meter/year. Assuming Zhengbang rents out the entire rooftop area, it can earn over 80 million yuan in income annually.
In the past, these incomes were not very attractive to pig companies. Zheng Chengzhi, the Director of Public Affairs in the Guangdong region for New Hope Group, told Southern Weekend reporters that after the African swine fever outbreak in 2018, pig prices remained high. At that time, major pig companies focused on epidemic prevention and control and pig farming. Building rooftop solar projects would increase the risk of infection due to the movement of personnel and materials.
However, the situation has changed as pig prices started to decline. With the normalization of African swine fever prevention and control measures and the gradual recovery of pig production capacity, pig prices fell from their peak in 2021, with a decline of nearly 75%. Many pig companies suffered significant losses. Zhengbang, which had aggressively expanded earlier, incurred a huge loss of nearly 20 billion yuan in 2021, wiping out all the profits it had accumulated over the 16 years since its listing.
In a difficult situation, Zhengbang expressed in its response to the Shenzhen Stock Exchange the reasons for developing the photovoltaic business: “We can collect rental income from this project and also expect to obtain photovoltaic revenue in the future, thereby expanding the company’s profit channels and gaining new sources of profit growth.”