Hanergy shares suspended in Hong Kong after plunging 46 per cent, Losing Nearly $19 Billion in 24 Minutes


Mystery Chinese Solar Maker Plunges, Losing Nearly $19 Billion in 24 Minutes

byBilly Chan

May 20, 2015

Hanergy Thin Film Power Group Ltd., the Chinese solar equipment maker controlled by Li Hejun, suspended trading in Hong Kong after the stock plummeted 47 percent in morning trading.

The stock fell to HK$3.91 before the suspension at 10:40 a.m., shaving HK$144.3 billion ($18.6 billion) off its market value, on the day of its annual general meeting in Hong Kong. Chairman Li didn’t attend the AGM, T.L. Chow, the company’s external spokesman, said by phone.

Before today’s decline, the stock had surged more than six-fold in the past year despite questions from analysts and investors about the company’s revenue sources. About 61 percent of Hanergy Thin Film’s sales derive from Beijing-based parent Hanergy Holding Group, the listed company said in March.“All directors of listed companies take part in setting the dates of their shareholder meetings, and they should attend,” said David Webb, shareholder activist and founder of Webb-site.com. “If a chairman of a mainland company did not show up in Hong Kong for the AGM, then it raises questions.”

The company’s first statement Wednesday didn’t give a reason for the suspension. A subsequent statement from Hanergy said the stock has been suspended pending “an announcement containing inside information.”

Market Value

Hanergy uses a niche technology in the photovoltaic industry, where more than three quarters of all panels are based on solar-grade silicon. Thin film cells are more flexible but less efficient than crystalline silicon-based panels.

Prior to Wednesday’s plunge, Hanergy Thin Film’s market value had at one point risen to more then HK$300 billion. That’s larger than Japan’s Sony Corp. and almost seven times the size of First Solar Inc., the biggest U.S. solar company.

The run-up in Hanergy’s shares hasn’t been without questions.

“It’s an adjustment that the market has been waiting to happen, as Hanergy’s earnings and business performance didn’t support such a high stock price or valuation,” said Gong Siwen, Shanghai-based analyst at Northeast Securities Co.

The Chinese solar company was the subject in January of an investigation by the Financial Times newspaper, which questioned its “unconventional” accounting practices.

A Feb. 27 report from analysts Charles Yonts and Johnny Lau at CLSA Asia-Pacific Markets in Hong Kong raised more skepticism, saying the stock was wildly inflated.

Technology Questions

The stock “is a disaster waiting to happen,” Geo Securities Chief Executive Officer Francis Lun said today by phone.

Bloomberg New Energy Finance released a report in March saying Hanergy is working with “unproven” technology and has disclosed few details about the work that underpins its valuation.

In a six-page examination of the Hong Kong manufacturer’s operations, the London-based researcher said it’s been unable to find a detailed list of solar-power projects that would help explain why the company’s shares surged in the past year.

Hanergy Thin Film, which isn’t included in Hong Kong’s benchmark Hang Seng Index, is covered by only two analysts, according to data compiled by Bloomberg.

Outside solar, Hanergy has more than 6 gigawatts of hydropower projects and 131 megawatts of wind power, according to the company’s website.

Li, Hanergy’s chairman, owns more than half of Hanergy Thin Film. Li has been outspoken in defending the company, saying critics fail to understand his strategy and the potential of the thin-film market.

“Hanergy is very cautious in thin-film investment,” Li said earlier this year during a brief interview in Beijing. “Outsiders said Hanergy’s investment is a bet, but I am absolutely not gambling.”

First Solar, based in Tempe, Arizona, and Japan’s Solar Frontier K.K. are the other main companies working in thin film.

Hanergy shares suspended in Hong Kong after plunging 46 per cent [1]

Submitted by rene.pastor@****** on May 20th 2015, 11:28am

BusinessCompanies MARKETS

Benjamin RobertsonBenjamin.robertson@scmp.com

Shares in Hanergy Thin Film Power plunged more than 46 per cent in early trading on Wednesday before trading was suspended in the Hong Kong equities market. The stock fell from HK$7.35 to HK$3.91, a fall of 46.95 per cent, within an hour of the exchange opening even as senior executives gathered in Hong Kong for the firm’s annual general meeting.Shares in the solar panel manufacturer had soared 249.1 per cent over the past 12 month, prior to Wednesday’s fall, hitting HK$9.07 as recently as March 5. The company has been a popular play for mainland investors trading via the Shanghai-Hong Kong connect scheme, and Hanergy founder Li Hejun was briefly touted as China’s richest man. However, Li’s business model has attracted scrutiny as Hanergy appears to have only one major buyer for its solar panels: its parent company.

Formerly Hot Hanergy Plunges 47% in Hong Kong

Solar-power company’s share price had nearly tripled in 2015 after nearly quadrupling the year before


Updated May 20, 2015 12:10 a.m. ET

One of the year’s hottest stocks on the Hong Kong market, Hanergy Thin Film Power Group Ltd., plunged nearly 50% in morning trading—wiping US$18.6 billion from its market value.

The Chinese solar-power company’s share price had nearly tripled this year—after nearly quadrupling in 2014—at one point making its chairman, Li Hejun, China’s richest man on paper.

But on Wednesday the stock opened lower and then took a sharp downturn on heavy volume. Trading in the stock was halted about an hour after the market opened, with the price down 47% at 3.91 Hong Kong dollars (50 U.S. cents).

No cause for the heavy selloff was immediately apparent, but it followed the overnight implosion of another Chinese solar company, Yingli Green Energy, whose share price fell 37% in Tuesday trading in New York. Yingli had said in a filing to the U.S. Securities and Exchange Commission on Friday that “there is substantial doubt as to our ability to continue as a going concern.”

Nathan VardiForbes Staff

INVESTING 5/19/2015 @ 11:40PM 339 views

Hanergy Thin Film Shares Suspended After Crashing By 47%

The seemingly inexplicable rise of shares of Hanergy Thin Film Power Group that has been going on for several months came to a stunning halt on Wednesday morning as trading of the shares of the Hong-Kong listed solar company were suspended after they crashed by 47%.

The plunge of Hanergy Thin Film shares is, at least initially, as mysterious as their previous increase, but the company was hosting its annual meeting in Hong Kong on Wednesday morning.

Hanergy Thin Film Power Group’s stock had surged from HK$1.50 in October to as high as HK$9.07 even though it’s a solar company that produces a technology that currently makes up a small portion of the overall solar power industry and sells most of what it manufactures to its parent company. Shares on Hanergy last traded hands for HK$3.91. That means the stock is still up by nearly 250% in the last year.

The rise in Hanergy’s stock made it bigger than Tesla, meaning it was both the biggest solar company in the world and the world’s biggest clean energy company. It also made its founder, Li Hejun, China’s richest man by virtue of his controlling ownership in Hanergy Thin Film Power Group, the publicly-listed and thinly traded unit of Hanergy Group.

But Hanergy baffled some analysts and hedge funds, which shorted the stock heavily. The company was the subject of several critical media reports that questioned its revenue and technology. The Financial Times demonstrated that the stock’s gain consistently came in the last 10 minutes before the close of trading each day in Hong Kong. Hanergy Thin Film said it was not responsible for the way its stock traded, but it will be interesting to piece together what caused Wednesday’s morning crash.

May 20, 2015 7:01 am

Hanergy shares suspended after 47% plunge

Jennifer Hughes in Hong Kong and Lucy Hornby in Beijing

Hanergy packageShares in Hanergy Thin Film Power plunged 47 per cent and were suspended in Hong Kong as the Chinese solar equipment supplier’s chairman missed the company’s annual meeting, .

HTF’s shares were halted on Wednesday at HK$3.91, having opened at HK$7.32. The suspension was requested by the company pending an announcement. No other information was given.

Hanergy’s public relations firm confirmed that Li Hejun, chairman and majority shareholder, did not attend Wednesday’s annual meeting in Hong Kong, although other senior executives, including Frank Dai Mingfang, chief executive, and Eddie Lam, finance director, did attend.

“Chairman Li did not attend the AGM,” said T.L. Chow, an external spokesman for Hanergy. “He had something to do.”

Mr Chow did not say where Mr Li might be, and Mr Li did not respond to request for comment.

David Webb, a corporate governance activist in Hong Kong, said it was unusual, but not unknown, for chairmen to miss AGMs “Its a positive thing if a chairman does attend given he probably has the deciding vote on the date of the AGM in the first place,” he said.

HTF’s previously soaring shares had made Mr Li one of the richest men in China on paper. As recently as last month he was buying more shares, taking his holdings to almost the 75 per cent limit allowed in Hong Kong.

Before Wednesday’s collapse, HTF’s shares had gained 315 per cent in the past six months.

That had given HTF a market capitalisation of $40bn, a valuation more than six times higher than its largest competitor — US-listed First Solar — and more than the rest of the Chinese solar sector combined.

An FT investigation in March found that the price gains in Hanergy stock consistently occurred during the final ten minutes of trade.

In addition to its sharp stock market gains and an unusual pattern of price movements, HTF’s considerable reliance on its parent company for sales had been questioned by analysts. HTF’s parent — Mr Li’s privately held Hanergy Group — had also waited for long periods of time before settling the sales booked by its subsidiary.

The share rally had left the company trading on 95 times its earnings of the past 12 months, according to S&P Capital IQ data, and had puzzled analysts. No single explanation for the gains had been put forward, but the shares might have been unwittingly boosted by short sellers, according to bankers.

Short sellers — who aim to profit when stocks fall — borrow stock from long-term investors and sell it in the expectation they will be able to buy the shares back more cheaply before they have to return them.

While short selling usually weighs on a share price, the difficulty of finding Hanergy stock to meet short seller demand could instead have helped push up the price for its shares, bankers and hedge funds said.

A number of short sellers who had put their bets on months ago, when the shares were cheaper, were reported to have accepted losses and closed their positions earlier this week, according to people familiar with the trades.


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