CN Energy Signs Operation & Management Agreement; Enters Multi-Billion Dollar Pharmaceutical Excipients Market

Rhea-AI Summary

CN Energy Group announced a new operation and management agreement with HuaiNan JiaHe New Materials Co., Ltd. and its subsidiary NingGuo ZheWanZhenHua Activated Carbon Industry. This engagement will enable CN Energy to oversee ZhenHua's operations, production, and sales, generating a quarterly management fee. ZhenHua, established in 1985, specializes in activated carbon for pharmaceuticals and food additives. The pharmaceutical excipients market is expected to grow to $10.6 billion by 2026. This agreement marks a strategic entry for CN Energy into a high-potential market, enhancing revenue prospects and shareholder value.

Positive

• The agreement allows CN Energy to enter the $10.6 billion pharmaceutical excipients market, anticipated to grow at a CAGR of 5.8%.
• CN Energy will receive a quarterly management fee, establishing a new revenue stream.
• ZhenHua's rare qualifications in producing pharmaceutical excipients and food additives enhance CN Energy's product offerings.

Negative

• None.

LISHUI, China, Jan. 18, 2022 /PRNewswire/ -- CN Energy Group. Inc. (the "Company") today announced that its subsidiary Hangzhou Forasen Technology Co., Ltd. signed an operation and management ("O&M") agreement (the "Agreement") with HuaiNan JiaHe New Materials Co., Ltd. ("JiaHe") and JiaHe's activated carbon subsidiary, NingGuo ZheWanZhenHua Activated Carbon Industry Co., LTD. ("ZhenHua"). Under the Agreement, the Company will be fully responsible for the operation, production, sales and management of ZhenHua and receive a quarterly management fee.

Founded in 1985, ZhenHua is focused on R&D and production, processing, marketing of activated carbon specially used as pharmaceutical excipients and food additives. The company has two very scarce qualifications in this industry to manufacture pharmaceutical excipients and food additives. The company currently employs more than 90 professionals on its 18,000 square meter campus.

The Agreement marks the Company's successful entrance into the pharmaceutical excipients and food additives activated carbon market, and is expected to bring higher revenues to the Company and greater benefits to its shareholders. This is the Company's first O&M agreement and represents the latest development in its ongoing business diversification and growth, following its announced entrance into the multi-billion-dollar water purification market in November 2021.

The pharmaceutical excipients market is projected to reach US$10.6 billion by 2026 from US$7.9 billion in 2021, at a CAGR of 5.8% during the forecast period. Growth in this market is majorly driven by the growing pharmaceutical industry coupled with the increasing R&D activities taking place in this field. Also, the growing generics market, the rapidly growing biopharmaceuticals sector and the rising adoption of orphan drugs are supporting the growth of the market (Source: MarketsanMarkets.com).

Mr. Kangbin Zheng, the Company's Chairman and CEO, said, "This is an excellent opportunity for us to leverage our expertise, while also establishing an entirely new revenue stream in the O&M business. The Agreement underscores ZhenHua's confidence in our team. ZhenHua is uniquely positioned in the industry because of its qualification to produce food additives and pharmaceutical excipients. This is an important and a rare qualification in China, and it will immediately broaden the range of activated carbon products in our group, while also enhancing our core competitiveness and accelerating our growth outlook."

About CN Energy Group. Inc.

CN Energy Group. Inc. (NASDAQ: CNEY) is a manufacturer and supplier of high-quality wood-based activated carbon and biomass electricity. The Company also provides activated carbon-related technical services used by food and beverage producers, industrial manufacturers, pharmaceutical manufacturers, and environmental protection enterprises. The Company's current facility is located in Tahe County, Heilongjiang Province, near the Greater Khingan Range, in close proximity to its suppliers. For more information, please visit the Company's website at www.cneny.com.

Forward-Looking Statements

Certain statements, other than statements of historical fact, made in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties, including the further spread of the COVID-19 virus or new variants thereof, or the occurrence of another wave of cases and the impact it may have on the Company's operations and the demand for the Company's products, and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy, and financial needs. Investors can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to refer to its filings with SEC, including without limitation, Company's registration statements and other filings with the SEC that set forth certain risks and uncertainties that may have an impact on future results and direction of the Company.

View original content:https://www.prnewswire.com/news-releases/cn-energy-signs-operation--management-agreement-enters-multi-billion-dollar-pharmaceutical-excipients-market-301462666.html

SOURCE CN Energy Group. Inc.

FAQ

What agreement did CN Energy Group sign on January 18, 2022?

CN Energy Group signed an operation and management agreement with HuaiNan JiaHe New Materials Co., Ltd. for its subsidiary ZhenHua.

How will the operation and management agreement impact CN Energy's revenue?

The agreement is expected to generate a quarterly management fee for CN Energy, contributing to new revenue streams.

What is the significance of ZhenHua's qualifications in the deal with CN Energy?

ZhenHua holds rare qualifications to manufacture activated carbon for pharmaceuticals and food additives, enhancing CN Energy's competitiveness.

What is the projected growth of the pharmaceutical excipients market?

The pharmaceutical excipients market is projected to grow from $7.9 billion in 2021 to $10.6 billion by 2026.

What industry is CN Energy Group entering with the new agreement?

CN Energy Group is entering the pharmaceutical excipients and food additives market through its agreement with ZhenHua.