Executive Summary

Smart Powerr Corp. (f/k/a China Recycling Energy) delivered a weak Q1 2019: operating income fell 74% YoY and net loss widened to $(1.94) million, driven by higher financing costs and losses on asset disposals .
Revenue mix shifted: contingent rental income dropped 56% YoY due to Erdos operations volume, and interest income on sales-type leases fell 89% after Shenqiu transfers and suspended Pucheng accruals .
Non-operating items were a major drag: interest expense on the HYREF entrusted loan was $1.93 million, plus losses on note conversion ($0.89M) and system disposals ($1.26M) — a negative surprise versus typical quarters .
Liquidity improved: cash rose to $57.10 million, but accounts receivable ballooned to $49.40 million (driven by project transfers and Zhongtai receivable), elevating working capital risk .
No guidance or Street estimates available; subsequent capital raises (April 2019 $1.89M RD) help near-term liquidity but do not alter operating headwinds .

What Went Well and What Went Wrong

What Went Well

Cash increased $3.88M QoQ to $57.10M, aided by financing inflows and FX effects; management highlighted improved operating cash dynamics YoY in FY18 context .
Gross margin remained 100% given no cost of sales on contingent rentals (structure of revenue), sustaining margin quality despite lower volume .
Management reaffirmed strategic pivot to energy storage integrated solutions (industrial/commercial complexes, PV/wind, smart cities), aiming for new growth vectors beyond legacy BOT projects .

What Went Wrong

Revenues deteriorated: contingent rental income fell to $0.62M (from $1.42M) and interest income on sales-type leases to $0.17M (from $1.61M), reflecting Erdos volume weakness and removal/suspension of certain lease accruals (Shenqiu transfers, Pucheng suspension) .
Financing burden and one-time losses: interest expense of $1.93M on entrusted loans, plus loss on note conversion ($0.89M) and losses on disposal/transfer of systems ($1.26M), drove non-operating expenses to $(3.69)M .
Receivables risk escalated: accounts receivable surged to $49.40M, including $36.69M from project transfers pending equity delivery, $11.88M from Zhongtai sale, and $4.39M Erdos electricity receivable, with substantial allowances noted .

Financial Results

Metric	Q1 2018	Q1 2019
Contingent Rental Income ($USD)	$1,422,831	$621,174
Interest Income on Sales-Type Leases ($USD)	$1,606,615	$174,235
Total Operating Income ($USD)	$3,029,446	$795,409
Total Operating Expenses ($USD)	$1,506,231	$1,442,820
Income (Loss) from Operations ($USD)	$1,523,215	$(647,411)
Interest Expense ($USD)	$(1,424,628)	$(1,932,105)
Interest Income ($USD)	$37,204	$41,112
Loss on Note Conversion ($USD)	—	$(893,958)
Loss on Disposal of Systems ($USD)	—	$(1,257,170)
Total Non-Operating Expenses ($USD)	$(1,389,165)	$(3,685,754)
Income Tax Expense (Benefit) ($USD)	$339,545	$(2,390,871)
Net Loss Attributable to CREG ($USD)	$(114,237)	$(1,942,294)
Basic/Diluted EPS ($USD)	$(0.01)	$(0.16)
Weighted Avg. Shares (Basic/Diluted)	8,310,198	12,065,716

Selected Balance Sheet and Liquidity

Metric	Dec 31, 2018	Mar 31, 2019
Cash and Equivalents ($USD)	$53,223,142	$57,099,604
Accounts Receivable, Net ($USD)	$11,755,251	$49,395,722
Interest Receivable on Sales-Type Leases ($USD)	$9,336,140	$5,434,301
Total Assets ($USD)	$171,436,932	$178,001,170
Total Liabilities ($USD)	$88,257,663	$91,721,411
Total Equity ($USD)	$83,179,269	$86,279,759
Interest Payable on Entrusted Loans ($USD)	$17,473,492	$19,714,466
Current Portion of Entrusted Loan ($USD)	$48,373,936	$49,305,710
Working Capital ($USD)	—	$31,305,687

Cash Flow KPIs (Three Months Ended)

Metric	Q1 2018	Q1 2019
Net Cash Provided by (Used in) Operating Activities ($USD)	$1,258,619	$(772,594)
Net Cash Provided by Investing Activities ($USD)	—	$5,188
Net Cash Provided by Financing Activities ($USD)	—	$3,620,800
FX Effect on Cash ($USD)	$2,119,524	$1,023,068
Net Increase in Cash ($USD)	$3,378,143	$3,876,462

Segment/KPI Breakdown (Revenue Components)

KPI	Q1 2018	Q1 2019
Contingent Rental Income ($USD)	$1,422,831	$621,174
Interest Income on Sales-Type Leases ($USD)	$1,606,615	$174,235
Gross Margin (%)	100%	100%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Company guidance	Q1 2019 and FY19	None provided	None provided	Maintained (no guidance)

Management did not issue quantitative revenue, margin, OpEx, tax, or segment guidance in Q1 2019 filings. Subsequent financing events disclosed (April 15, 2019 registered direct offering) but no operational guidance ranges were provided .

Earnings Call Themes & Trends

No earnings call transcript was found for Q1 2019; themes are drawn from MD&A and filings.

Topic	Previous Mentions (Q3 2018)	Previous Mentions (FY 2018/Q4)	Current Period (Q1 2019)	Trend
Energy storage strategy	Announced transformation to energy storage solutions	Reiterated expansion into user-side storage, smart cities, PV/wind integration	Continued focus on energy storage integrated solutions	Consistent strategic pivot
Environmental policy impact on projects	Erdos volume declined; stricter policies affected operations; Pucheng interest accrual stopped	Continued constraints; multiple projects delayed/renegotiated	Lower contingent rental income; Shenqiu transfers completed Feb 2019	Ongoing headwind
Asset transfers/disposals	—	Agreements to transfer Chengli and Shenqiu; Zhongtai receivable outstanding	Losses on disposal of systems; Shenqiu Phase I & II transfer completed Feb 15, 2019	Execution with near-term P&L impact
Financing/liquidity	Convertible notes in 2018; HYREF loan extension attempts	Entrusted loan large; interest and penalties accrued	High interest expense; April 2019 RD offering $1.89M	Financing inflows, cost burden persists
Receivables/credit risk	Rising receivables; allowances increased	Zhongtai receivable ~$11.66M; allowances	AR surged to $49.40M; detailed composition and allowance	Elevated collection risk

Management Commentary

“Despite this improvement, we had increased net loss of $66.0 million for 2018, which included $32.21 million in non-cash charges of bad debt expense and $28.43 million in non-cash charges of assets impairment loss… We remain confident in our market positioning and new energy storage portfolio.” — Guohua Ku, Chairman & CEO .
Strategy: “The Company is in the process of transforming and expanding into an energy storage integrated solution provider… opportunities in industrial/commercial complexes, large scale PV/wind, remote islands, smart energy cities” .

Q&A Highlights

No Q1 2019 earnings call transcript available; no analyst Q&A found in filings [ListDocuments returned none for earnings-call-transcript].

Estimates Context

Wall Street consensus estimates (S&P Global) for Q1 2019 EPS and revenue were unavailable due to data access limits; as a result, estimate comparisons cannot be provided (tool error: daily request limit exceeded).
Given the absence of consensus data, we do not present beats/misses versus Street.

Key Takeaways for Investors

Revenue pressure from operational volumes and lease portfolio changes: contingent rental income down 56% YoY; interest income down 89% YoY post Shenqiu transfers and Pucheng accrual suspension .
Non-operating drag is the dominant earnings driver: interest expense ($1.93M), loss on note conversion ($0.89M), and system disposal losses ($1.26M) — monitor deleveraging and financing costs near term .
Liquidity looks adequate (cash $57.10M), but quality of current assets weakened: AR spiked to $49.40M, largely tied to project transfers and Zhongtai receivable; collection milestones are a key catalyst/risk .
Balance sheet leverage concentrated in entrusted loan; repayments scheduled in 2019 with significant interest payable — any restructuring/refinancing could materially alter interest burden .
Strategic pivot to energy storage remains intact — watch for concrete project wins, capex commitments, and margin architecture in storage to offset legacy volatility .
Near-term trading: sensitivity to updates on receivable collections (Zhongtai, equity transfers via Xi’an Hanneng), HYREF loan developments, and incremental financing actions (e.g., RD offerings) .
Medium-term thesis: successful execution in energy storage plus stabilization of legacy assets/receivables could re-rate operating income quality; failure to collect or continued one-off losses would keep earnings volatile .

Smart Powerr Corp. (CREG)·Q1 2019 Earnings Summary