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SFCE Media Scan for May 22, 2015
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Burned again
May 23, 2015 | The Economist (Print Edition)
THE history of the development of the human society is a history of discovering and exploiting energy.” With those grand words did Li Hejun (pictured), one of China’s wealthiest billionaires, inaugurate a giant exhibition centre devoted to clean energy near Beijing’s Olympic Forest Park on May 20th. -
Yingli’s steady recovery fades against the industry’s brightest stars
May 21, 2015 | PV Tech
By John Parnell
The phrases “serious doubt about our ability to continue as a going concern” and “we may have to liquidate our assets” sound pretty dramatic in any context. -
United PV mulls ways to assist Yingli in debt repayment - report
May 21, 2015 | See News Renewables
By Militsa Mancheva
United Photovoltaics Group Ltd (HKG:0686) is considering different strategies to help troubled sector player Yingli Green Energy Holding Co Ltd (NYSE:YGE) avoid a debt repayment crisis, Bloomberg said Thursday. -
United PV considering Yingli debt assistance
May 22, 2015 | PV Magazine
By Ian Clover
Hong Kong-based solar company United PV has revealed in an interview to Bloomberg that it is exploring the possibility of offering a lifeline to fellow state-run Chinese solar firm Yingli Green Energy, which revealed this week hefty debt burdens that wiped one-third of its value from the stock market. -
Hanergy Plunge: The Man Who Lost $14 Billion in One Day
May 21, 2015 | The Wall Street Journal
By Jacky Wong and Wayne Ma
On the day Li Hejun saw the value of his company holdings sink roughly $14 billion, he was skipping the firm’s annual meeting to attend what it said was a clean-energy exhibition in Beijing. -
GSR, Temasek Exit LED Lighting Firm Lattice Power
May 22, 2015 | China Money Network
Hong Kong-listed Shunfeng International Clean Energy Limited has agreed to acquire 59% of Chinese LED lighting producer Lattice Power, backed by several venture and private equity investors, for over HK$2.04 billion (US$263 million), according to a securities filing.
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SFCE News
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May 23, 2015 | The Economist (Print Edition)
“THE history of the development of the human society is a history of discovering and exploiting energy.” With those grand words did Li Hejun (pictured), one of China’s wealthiest billionaires, inaugurate a giant exhibition centre devoted to clean energy near Beijing’s Olympic Forest Park on May 20th. At the event his firm showed off fancy kit that it says it is developing, including solar technologies for the cars of the future.
As Mr Li was waxing lyrical in the Chinese capital, something astonishing was happening in Hong Kong to Hanergy Thin Film Power Group, the listed subsidiary of his privately-held Hanergy Group. Possibly spooked by Mr Li’s failure to attend the company’s annual shareholder meeting, investors dumped its shares. The company, which the previous day had been worth about $40 billion, had lost almost half its value before regulators stepped in and halted trading. On one estimate, Mr Li saw about $14 billion of his personal fortune vanish in a few hours.
Hanergy is but the latest Chinese Icarus to fly too close to the sun. Suntech, a Chinese solar-energy pioneer, rose to become the biggest clean-energy firm in the world. Its boss, Shi Zhengrong, became the richest man in the China. But thanks to a global downturn in the industry and alleged financial improprieties at the firm, it went spectacularly bust in 2013.
Then, Hanergy shot from obscurity to capture the title of world’s biggest clean-energy firm (Mr Li at one point was also reckoned to be China’s richest man). From last September up until their collapse on Wednesday, its shares rose fivefold. Its market valuation eclipsed those of Tesla and Twitter. Mr Li became a celebrity in China, and political functionaries, including Xi Jinping before he became China’s president, visited his firm’s facilities.
On May 21st Hanergy issued a brief statement insisting the firm and its management had done nothing wrong, saying that the firm was operating normally and promising that it remained “full of confidence”. The same day, shares in two units of Goldin, a Hong Kong finance and property group, fell by almost half. Hanergy recently appointed one of the Goldin units as a financial adviser, though the relevance of this link, if any, was unclear as we went to press. Making money in the fiercely competitive and fast-moving solar-panel business is hard, though that hardly explains the extent of Hanergy’s share-price collapse. But a number of awkward questions have been raised about the firm; it was reported this week that regulators in Hong Kong have started studying it.
For one thing, the listed firm’s murky relationship with its unlisted parent group has long raised eyebrows. The listed firm supplies manufacturing equipment used to make solar cells. It also acquires such cells and uses them in solar farms it promotes as a project developer. Most of these transactions, however, have been with its parent. Jenny Chase of Bloomberg New Energy Finance, a research outfit, estimates that nearly all of the listed firm’s revenues from 2011 up to the first half of 2014—some $1.9 billion—came from its parent company, at profit margins topping 45%. In March the firm claimed that only about 60% of its revenues now came from its parent company, but questions have been raised about whether the sources of some of the remaining revenues are independent entities or if they are also related parties. The firm insists its actions have not breached any rules for related-party transactions.
An analysis by the Financial Times in March found that much of the daily increase in the listed firm’s share-price rise was due to unusual activity during the final minutes of each day’s trading in Hong Kong. This is of particular concern given that the free float in the firm’s shares is quite small (since Mr Li controls nearly three-quarters of it).
Hanergy’s future as a public entity is clearly in doubt. If regulatory action does not prove the death knell for the firm, then investor sentiment—short-sellers have had it in their sights for months—might do the trick. Mr Li’s absence from his own annual meeting was explained away by one insider as the boss choosing instead to attend the event in Beijing as part of his firm’s “corporate social responsibility” activities. Investors will surely be wondering who, if anyone, has been looking after the management’s fiduciary responsibilities.
http://www.economist.com/news/china/21651740-after-share-price-crash-hanergy-looks-latest-chinese-solar-firm-burn-out-burned-again
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Yingli’s steady recovery fades against the industry’s brightest stars
May 21, 2015 | PV Tech
By John Parnell
The phrases “serious doubt about our ability to continue as a going concern” and “we may have to liquidate our assets” sound pretty dramatic in any context. Both expressions have a qualifier. But the threat that any company “may” have to sell off assets and any “doubt” that a listed company could struggle to continue trading is bound to impact its share price.
From time to time, the myriad rules of a stock exchange will insist that certain, uncomfortable, disclosures may have to be made by a company. These admissions are the results of auditing, measuring calculated risks and the weighing up of probabilities. Think of it as corporate soul-searching.
Yingli’s annual report was obligated to raise concerns and while these warnings are not necessarily prophetic, they remain notable.
Yingli called on Wednesday morning. They were keen to put the record straight. Around the same time they released a statement announcing a conference call for investors later that afternoon, a statement that pointed the finger at the media for the dent these unfortunate admissions had made in their share price.
“In line with the prudent analysis of its independent auditors, the Company stated in the 2014 Annual Report that there is substantial doubt as to the Company's ability to continue as a going concern. However, this statement has been taken and interpreted out of context in some media coverages [sic],” the statement said.
When talking to PV Tech, Yingli CFO YiYu Wang was not so keen to lay the blame on the fourth estate.
“I'm not talking about the media,” he said. “Journalists have the right to interpret what they read. We only clarify when we see that the market reaction is too much. I can't influence what people read, my job is to tell people what we do want to say.”
Perhaps he was being polite. The fact is that the media universally reported the statements in the annual report in a negative light. While imminent collapse was of course an exaggeration, Wang’s insistence that all is well also feels a little uncomfortable. Being told that they will not default because they didn’t default the previous two years when times were relatively harder, is far from comforting.
He told PV Tech that the company would “gradually reduce” its debt and interest repayments would fall as a result. Add to this the cashflows from its 1.6GW pipeline of projects, and you can appreciate how its profitability to could improve. As for its debt liabilities in October, a second windfall from a recent land sale plus its ongoing efforts to find “strategic investment” and future cashflows have left Wang confident that the payment will be met.
The conference call later in the day, with Wang and the chairman and CEO Liansheng Miao, followed the same tack. (Though they blamed the media again, not investors.)
The problem for Yingli, if you discount the (slowly reducing) debt, is the rate of progress by its rivals.
In the US, SunEdison has become the largest renewable energy project developer in the world. SunPower is reaping the rewards of earlier technology investments and First Solar taking has shown that its success with thin-film technology is not a veneer.
The company has already lost its slot at the top of the module supply tree, and with rivals growing aggressively it will hope to be able to spend less time and money servicing debts and more on servicing growing global PV demand.
http://www.pv-tech.org/editors_blog/yinglis_steady_recovery_fades_against_the_industrys_brightest_stars
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United PV mulls ways to assist Yingli in debt repayment - report
May 21, 2015 | See News Renewables
By Militsa Mancheva
United Photovoltaics Group Ltd (HKG:0686) is considering different strategies to help troubled sector player Yingli Green Energy Holding Co Ltd (NYSE:YGE) avoid a debt repayment crisis, Bloomberg said Thursday.
To that end, Hong Kong-based United PV, part of investor and plant operator China Merchants New Energy Group (CMNE), may team up with some of its local peers or other state-controlled firms from different business segments in order to back Yingli, CEO Alan Li was quoted as saying by the news agency today.
Just recently, Chinese solar module supplier Yingli warned that it might not be able to meet payment obligations under its debt instruments and said there is “substantial doubt” as to its ability to continue as a going concern late last week.
In the meantime, Yingli is also taking certain measures to deal with the situation, one of which is the recent repayment of CNY 1.2 billion (USD 194m/EUR 174m) worth of mid-term notes, which matured on May 3. It is also looking for partners that can buy more shares and, at the same time, for a strategic investor, chief financial officer Wang Yiyu told Bloomberg previously.
In April last year, United PV agreed to purchase stakes in 300 MW of photovoltaic (PV) capacity under development by Yingli.
http://renewables.seenews.com/news/united-pv-mulls-ways-to-assist-yingli-in-debt-repayment-report-477462
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United PV considering Yingli debt assistance
May 22, 2015 | PV Magazine
By Ian Clover
Hong Kong-based solar company United PV has revealed in an interview to Bloomberg that it is exploring the possibility of offering a lifeline to fellow state-run Chinese solar firm Yingli Green Energy, which revealed this week hefty debt burdens that wiped one-third of its value from the stock market.
United Photovoltaics Group’s CEO Alan Li remarked that the company may be willing to cooperate with other state-backed firms or solar companies to help Yingli "pull through" after a chastening week.
In 2014 the two companies collaborated on a 300 MW deal that will see Yingli develop solar plants across China between now and 2016. Having revealed in a SEC Filing the true extent of its short-term debts over the weekend, Yingli lost more than 40% of its value in New York trading on Monday and Tuesday, before a slight recovery on Wednesday.
Analysts had debated whether Yingli was in fact not "too big to fail" after all, but United PV’s interest in lending a hand would appear that it is in the vested interests of most of China’s big solar players to see the company pull through.
Yingli is currently on the search for investors in order to stave off insolvency, and despite posting consecutive losses ever since Q2 2011, the world’s second-largest solar panel maker remains a viable proposition.
Trina Solar, the world’s largest provider of solar panels, appears to have pulled clear of the recent PV slump, posting positive figures this week, and serves as proof that China’s Tier 1 heavyweights can recover from the downward pricing trend that has seen panel prices fall 67% on 2010 levels.
"Manufacturers don’t have excessive profits as before," United PV’s Li told Bloomberg. Despite the Chinese government announcing a solar installation target of 17.8 GW this year, their support of the solar industry has proven intermittent so far in 2015, with President Xi Jinping urging authorities to eliminate outdated capacity and pushing for more restructuring and mergers throughout an industry that has become a little bloated.
United PV on the offensive
Having recently secured a 930 MW investment framework deal from Hareon Solar, United PV has pledged to invest a further $1.5 billion in solar PV over the remainder of the year, and is seeking to acquire 1 GW of solar projects. The company will also build its own solar PV plants in China before the year is out, and aims to build 30% of its future PV portfolio from here on in.At the end of 2014, United PV had 572 MW of solar PV under its belt, and is also considering purchasing further large-scale solar projects in Europe and the U.S., the CEO confirmed.
http://www.pv-magazine.com/news/details/beitrag/united-pv-considering-yingli-debt-assistance_100019550/#ixzz3arWee5Q0
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Hanergy Plunge: The Man Who Lost $14 Billion in One Day
May 21, 2015 | The Wall Street Journal
By Jacky Wong and Wayne Ma
On the day Li Hejun saw the value of his company holdings sink roughly $14 billion, he was skipping the firm’s annual meeting to attend what it said was a clean-energy exhibition in Beijing.
That company, Hanergy Thin Film Power Group Ltd., which Mr. Li controls, saw its shares plunge nearly 50% on Wednesday before trading was halted on the Hong Kong Stock Exchange. Mr. Li, who at one time was considered China’s richest man based on the value of his majority stake in the Chinese solar company, saw his holdings suffer accordingly.
The Wednesday decline was followed on Thursday by a similarly steep fall in Goldin Financial Holdings Ltd., a broker that provides short-term corporate financing to firms and had been an adviser to Hanergy Thin Film. Goldin fell 43%, wiping $12 billion off its market value. A smaller company with the same owner, property developer Goldin Properties Holdings Ltd., fell 41%, reducing its market capitalization by $4.6 billion. Both are listed in Hong Kong.
Early Friday, Goldin shares rebounded, while Hanergy shares remained suspended. Goldin Financial was up 7% to HK$18.72, while Goldin Properties rose 11% to HK$15.98.
When Hanergy does resume trading, it will face more selling pressure. MAC Global Solar Energy Stock Index, which manages the index that includes Hanergy, said it will drop the company the day it resumes trading. Guggenheim Solar ETF, which held 12% of its portfolio in Hanergy stock before the crash, follows that index.Advertisement
The sharp ups and downs in once-unnoticed Chinese stocks come at a time of uncertainty for Hong Kong. Long a portal between global investors and the mainland, the market has even tighter ties now with China thanks to a new link between Hong Kong and Shanghai that allows investors in one market greater ability to invest in the other. Hanergy’s share price has risen 4.5 times since the trading link opened on Nov. 17, making it the best-performing and most widely held stock in the program, known as Shanghai-Hong Kong Stock Connect.
With that flow comes greater potential for rapid swings, as the Chinese market is notorious for big run-ups followed by painful selloffs.
Both Goldin Financial and Goldin Properties issued filings Thursday, saying they aren’t “aware of any reasons” for the movement of the stocks. The companies didn’t respond to requests for comment.
The pain from these steep declines is stinging investors, especially those in exchange-traded funds focused on China’s energy sector.
All three companies had made meteoric rises over the past year with industry watchers troubled by their sudden rallies.
“These companies are bubbles,” said David Webb, a Hong Kong corporate-governance activist. “They still have a long way to fall before they can reflect their fundamental values.”
Beijing-based Hanergy Holding Co., which controls Hanergy Thin Film, has denied that it was behind Wednesday’s selloff in its Hong Kong-listed subsidiary. “Our group [is] currently operating normally, all the business operations are running well and the capital situation is fine,” Hanergy Holding said. Hanergy Thin Film’s shares remained suspended on Thursday.
Before Wednesday’s plunge, Hanergy Thin Film was one of the Hong Kong market’s best performers. Even after the slump, Hanergy’s shares as of Wednesday’s halt were up more than 42% since the beginning of the year and are more than triple their level of one year ago. Analysts have widely said the shares were overvalued.
Hanergy previously had a lower profile. Until the recent run-up, it traded mostly below two Hong Kong dollars (26 U.S. cents) a share and was viewed as a relatively minor appendage of its parent.
The company’s major product is known as solar thin-film technology, which features thin, flexible panels that could be attached to walls or gadgets or even worn on clothing. Thin-film panels are cheaper to produce but less efficient in converting sunlight to energy. As a result, they make up less than 10% of the overall market, which is dominated by solar panels based on crystalline silicon.
Filings with the Hong Kong exchange show Hanergy and Goldin Financial have previously worked together, although it was unclear whether the relationship contributed to Goldin’s fall. Hanergy said in a February disclosure that it had appointed Goldin as an independent adviser for a supply agreement under which Hanergy Thin Film would sell solar panels to its parent company.
The Securities and Futures Commission, Hong Kong’s market regulator, warned investors in March to exercise “extreme caution” with Goldin Financial, noting that just 20 shareholders, including its chairman who owns a 70% stake, held nearly 99% of the company. The company said at the time that there was little it could do because the regulator didn’t disclose who those shareholders were.
Mr. Li, 47 years old and a member of China’s Hakka ethnic group, was born in China’s southern Guangdong province. He initially began building and acquiring small dams in his home region, according to a biography on Hanergy’s website. Later, the company built the Jinanqiao Dam in southwestern Yunnan province, which helped give Hanergy the financial foundation it needed to expand.
Since then, Mr. Li has focused on solar, which is at the center of what he touts as a coming clean-energy revolution. Mr. Li added to his bet on solar during Hanergy Thin Film’s run-up. Employees and others within Hanergy exercised about 93 million options from December to April, with many cashing in on options redeemable for about 17 and 25 Hong Kong cents. But Mr. Li in the fourth quarter of last year acquired more than 190 million shares, according to data provider FactSet. In the past two months, he added another 62.2 million Hanergy Thin Film shares to his holdings, according to Hong Kong Stock Exchange filings, giving him about 30 billion shares. He now owns four-fifths of the company’s shares.
In a book he released last year called “China’s New Energy Revolution,” Mr. Li predicted that clean energy would make up half of primary energy usage in the world by 2035. That is an aggressive prediction compared with others. BP PLC, which compiles energy data that the industry relies upon, predicts nonfossil fuels, including nuclear and hydropower, will account for 38% by then, compared with 32% in 2013.
Mr. Li is a member of the Chinese People’s Political Consultative Conference, an advisory body that meets annually along with the National People’s Congress, China’s legislature. At the most recent meeting, he urged China to embrace what he called mobile energy, a new generation of gadgets powered with lightweight solar material like Hanergy’s thin-film technology.
“The country should attach importance” to the industry, he said, according to an official account by the Chinese People’s Political Consultative Conference. He urged officials to “treat it as a competitive Chinese industry as it has with high-speed railway or the water and electricity industries.”
WSJ: http://www.wsj.com/articles/hanergy-plunge-the-man-who-lost-14-billion-in-one-day-1432206736
Reuters: http://www.reuters.com/article/2015/05/22/hanergy-tfp-funds-idUSL3N0YC2Z620150522
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GSR, Temasek Exit LED Lighting Firm Lattice Power
May 22, 2015 | China Money Network
Hong Kong-listed Shunfeng International Clean Energy Limited has agreed to acquire 59% of Chinese LED lighting producer Lattice Power, backed by several venture and private equity investors, for over HK$2.04 billion (US$263 million), according to a securities filing.
The sellers include an entity affiliated with Crescent HydePark, GO Scale Capital, which is an investment fund sponsored by GSR Ventures and U.S. private equity firm Oak Investment Partners, as well as GSR Ventures, Mayfield Fund, and Singapore's Temasek Holdings.
A number of individual investors are also part of the sellers' group.
Shunfeng International will issue 392 million newly issued shares at HK$5.20 per share to the sellers. The new shares represents approximately 12.73% of the existing share capital of the company, and 11.29% of the enlarged share capital.
The filing did not provide details on how much a stake of Nanchang, Jiangxi province-based Lattice Power each investor is selling.
In July 2014, Lattice Power received US$80 million in series D financing led by Asia Pacific Resources Development Investment.
Founded in 2006, Lattice Power received US$10 million series A financing from GSR Ventures, Mayfield Fund, and AsiaVest Partners in that year.
In 2007, it received US$40 million series B financing from AsiaVest Partners, Mayfield Fund, KPCB China Management and Singapore's sovereign wealth fund Temasek.
In 2010, GSR Ventures, the International Finance Corporation, HydePark and AJIA Partners participated in the company’s US$55 million series C financing.
http://www.chinamoneynetwork.com/2015/05/22/gsr-temasek-exit-led-lighting-firm-lattice-power
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