Sunpower Group to buy boilers in industrial steam supply deal in China

MAINBOARD-LISTED Sunpower Group is buying four sets of boilers for 100 million yuan (S$20.5 million) from a Chinese textile company, the board said on Tuesday.

Under a steam supply right contract, its wholly-owned subsidiary will then become the exclusive steam supplier to vendor Hebei Sanli Group for 25 years, unless the subsidiary cannot provide the volume or quality needed.

On its part, Sanli - which reportedly has a high and stable demand for industrial steam - committed to maintaining the location and production levels of its operating sites in Hebei province's Gaoyang county for the duration of the agreement.

It also promised not to develop any business related to thermal power supply in the county over the same period.

The deal will consolidate wholly-owned subsidiary Hebei Changrun Environmental Technology Co's market position as the only professional coal-fired centralised provider of industrial steam in Gaoyang, Sunpower said.

The board added that the group will give an update on the potential financial effects of the deal when the transaction is completed.

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Still, it called the agreement "in line with the group's medium- to long-term strategy" for its green investment business.

"Barring unforeseen circumstances, the addition of new steam demand from Sanli with the 25-year exclusive supply rights present an additional source of recurring revenue and income for Sunpower, and can be expected to have a positive impact on the group's long-term performance," said the board.

Shares closed up by S$0.10, or 11.7 per cent, to S$0.955, before the news.