Recently, China Tianying Co., Ltd. (hereinafter referred to as “China Tianying”, 000035. SZ) announced that it plans to spin off its subsidiary Jiangsu Tianying urban environmental services Co., Ltd. (hereinafter referred to as “Jiangsu chenghuan”) to be listed on the gem of Shenzhen Stock Exchange after deliberation and approval by the board of directors. < / P > < p > Jiangsu chenghuan was established in 2017 with a registered capital of 100 million yuan. Its main business includes environmental sanitation and garbage sorting, and China Tianying holds 100% of its shares. Regarding the listing of the spin off subsidiary, a person from China Tianying Securities Department told China Business Daily: “the spin off of the subsidiary is based on the needs of the company’s operation and strategy.” < p > < p > China Tianying said that with the deepening of the company’s urban environmental service layout, it hopes to form a number of independent and mature industrial platforms, and plans to further expand the smart sanitation and classified business platform with the help of the capital market. < / P > < p > it is reported that after the spin off, China Tianying will still maintain its control over Jiangsu chenghuan, and whether the spin off can be implemented smoothly remains uncertain, and the corresponding procedures stipulated by the exchange and the CSRC still need to be implemented. According to wind data, from 2014 to 2018, China Tianying’s revenue mainly came from garbage power generation and environmental protection engineering, and the proportion of sanitation related business began to rise rapidly after 2018. In 2018, the revenue of China Tianying sanitation business was 360 million yuan, accounting for nearly 20% of the total revenue of that year; in 2019, it increased to 9.06 billion yuan, accounting for nearly half of the revenue of that year. < / P > < p > these changes originated from a large-scale overseas M & A of China Tianying in 2018. In that year, China Tianying acquired urbaser s.a.u. (hereinafter referred to as urbaser) which is a global leader in solid waste and headquartered in Spain with 8.88 billion yuan. This has become one of the largest overseas mergers and acquisitions of domestic environmental protection enterprises in recent years, and also brought about changes in the revenue structure and volume leap for China Tianying. < / P > < p > with the consolidation of urbaser’s tables, from 2018 to 2019, the revenue of Tianying in China increased 10 times from 1.85 billion yuan to 18.6 billion yuan, and the net profit attributable to the parent increased from 220 million yuan to 710 million yuan. < / P > < p > however, along with the synchronous “inflation” of performance, there is also debt. In 2018, China Tianying’s debt was 5.5 billion yuan, and in 2019, it will be 35.6 billion yuan, an increase of more than six times. From 2018 to the end of the third quarter of 2020, the debt ratio of China Tianying is 63%, 75% and 76% respectively, and the interest expense during the period is 130 million yuan, 480 million yuan and 620 million yuan respectively. < / P > < p > the above-mentioned person from China Tianying Securities Department told reporters: “the company’s high debt is caused by the high debt ratio of ur baser, and the debt level of ur baser is very normal overseas.” < p > < p > according to the third quarter report of 2020, the total liabilities of China Tianying are 38.2 billion yuan, of which the current liabilities are 14 billion yuan, and the current ratio and quick ratio reflecting the solvency are 0.89 and 0.85 respectively. < / P > < p > in addition, the financial report after auditing in 2019 shows that in the total assets of China Tianying of 47.3 billion yuan in the current period, the accounts receivable is 5.8 billion yuan, the construction in progress is 4.8 billion yuan, the intangible assets is 10.7 billion yuan, and the goodwill is 5.2 billion yuan. The ratio of the above four items to the total assets is more than 50%, and the ratio to the net assets is more than 220%. < / P > < p > during the period from 2017 to the end of the third quarter of 2020, the cash flow inflows of China Tianying’s operation, investment and financing activities are 4.7 billion yuan, – 8.3 billion yuan and 6.1 billion yuan respectively, and the cash flow of investment outflow is mainly balanced by financing. In November 2019, China Tianying announced that it plans to issue 1.2 billion yuan of convertible bonds to raise funds for domestic waste incineration power generation projects in Hanoi, Vietnam, Jiangdu District, Yangzhou City, Pucheng County, Weinan City, and Pingyi County, Shandong Province, and to supplement working capital. However, in December of that year, China Tianying said that in order to smoothly promote the issuance of convertible bonds, it decided to adjust the issuance scale of bonds from 1.2 billion yuan to 600 million yuan. < / P > < p > for the specific reasons for the reduction of the issuance scale, China Tianying once responded to our reporter: “we just don’t need to raise so much money.” < p > < p > as for the reasons, China Tianying said: “considering the overall environment of the capital market, the financing of this convertible bond project has been in place, the project construction has been implemented on schedule and other factors such as the company’s actual construction and operation situation, development planning and capital arrangement, and after communicating with the sponsor, China Tianying decided to terminate the issuance of convertible bonds.” < / P > < p > the above-mentioned person from China Tianying Securities Department told reporters: “the issuance of convertible bonds is voluntarily withdrawn by us, because the interest rate of financing related projects abroad is lower, it is more convenient, and it is more in line with the needs of the company.” According to the 2020 semi annual report, China Tianying has 5.9 billion yuan of fixed assets and 7.6 billion yuan of intangible assets located abroad. In the near future, China Tianying also plans to introduce strategic investors by transferring minority equity of urbaser and increasing capital and shares to urbaser, so as to jointly expand business and optimize capital structure. < / P > < p > as for how to raise funds to promote domestic and foreign construction projects with a balance of 6.6 billion yuan, the above-mentioned person from China Tianying Securities Department said: “at present, the main financing channel of the company still comes from bank loans.” < / P > < p > Disclaimer: the purpose of this article reprinted by CNFC is to convey more information, and it does not represent the opinions and positions of CNFC. The content of this article is for reference only, and does not constitute an investment proposal. Investors operate on this basis at their own risk. < p > < p > Chinanet is a state key news website under the leadership of the Information Office of the State Council and the management of China foreign language publishing and Distribution Bureau. Through 11 versions in 10 languages, the website publishes information 24 hours a day. It is an important window for China to carry out international communication and information exchange.