(Yicai) Sept. 9 -- SinoHytec will tread a tight growth path, cutting research and development costs, slimming its headcount and structure, and prioritizing cash flow and cost controls after dropping its planned acquisition of Risun Hydrogen Energy, according to the firm’s chairman.

The Beijing-based hydrogen fuel cells producer also plans to seek more applications for its products and try to lower per-unit cost so as to enhance its profitability, Zhang Guoqiang said at an investor briefing yesterday.

The company pulled the plug on its plan to acquire Risun Hydrogen, a new energy products supplier, after they failed to reach a final agreement, SinoHytec announced on Sept. 5.

It proposed buying Risun Hydrogen from China Risun Group in March through a share issuance while raising supporting funds in a bid to improve its upstream and downstream layout in the hydrogen energy supply chain, help its fuel cells business, cover the entire hydrogen supply chain, and enhance its sustainable operations.

Zhang said SinoHytec’s new growth strategy has three pillars. First, because vehicle fuel cell systems remain at an early stage of industrialization, R&D spending will be prudently controlled and R&D resources focused on core projects. Second, the company is streamlining personnel and adjusting organizational structure to raise operational efficiency and trim daily operating costs. And third, it will speed up cash flow recovery to alleviate capital strains while controlling expenditure.

SinoHytec's R&D costs plunged by two-thirds to CNY17.2 million (USD2.4 million) in the six months ended June 30 from a year earlier, while its research headcount was more than halved to 128 from 300.

But SinoHytec remains optimistic about the sector's long-term outlook, with Zhang saying that thanks to the continuous advancement of national industrial policies, infrastructure is expected to gradually improve, leading to the rapid growth of the hydrogen production market and lower usage costs. The firm will continue focusing on vehicle fuel cell systems and stationary power generation while expanding into diversified applications, he added.

Shares of SinoHytec [SHA: 688339], China's first hydrogen energy stock, closed 1.2 percent lower at CNY24.55 (USD3.45) apiece in Shanghai today. The stock peaked at almost CNY350 (USD49.09) less than a year after going public in August 2020, but the company has since accumulated a net loss of over CNY1.2 billion (USD168 million).

Editor: Martin Kadiev