First Hanergy Now Goldin: Top Hong Kong Stocks Drop Like Stones
May 21, 2015
Hong Kong’s best-performing stocks this year are tumbling even faster than they rallied.
Goldin Financial Holdings Ltd. and Goldin Properties Holdings Ltd., controlled by billionaire Pan Sutong, plunged more than 60 percent in Hong Kong trading Thursday. There was no immediate explanation for the drop. Before the rout, the two stocks surged more than 300 percent in 2015 for the biggest gains on the Hang Seng Composite Index.The tumble follows the mysterious 47 percent plunge in 24 minutes by Hanergy Thin Film Power Group Ltd. on Wednesday, which erased $19 billion in market value before trading was suspended. The companies have other similarities. Hanergy is also controlled by single billionaire owner — Li Hejun. Almost no analysts tracked Goldin Financial or Hanergy even as their market values swelled to more than $30 billion, making them among Hong Kong’s biggest listed companies, while doubts over the sustainability of the rallies increased.
“It’s a contagion effect,” said Nick Cheng, chief derivatives trader at Liquid Capital Markets Ltd. in Hong Kong. Investors “are now rushing to take profit and everyone’s suddenly running for the exit,” he said. The volatility “will damage investor confidence with such a reputable stock exchange.”
Hong Kong Exchanges & Clearing Ltd. spokesman Scott Sapp declined to comment on any regulatory action or individual company’s stock moves. Ernest Kong, a spokesman for Hong Kong’s Securities and Futures Commission, didn’t immediately answer phone calls or reply to e-mailed questions.
Goldin Financial sank 58 percent to HK$13.10 at the midday break, heading for its biggest drop since the stock first traded in 1992. The decline erased $16 billion of market value. Goldin Properties dropped as much as 61 percent before paring losses to 46 percent, wiping out $5.1 billion. Trading in Hanergy shares remain suspended. The Hang Seng Composite Index slid 0.7 percent.
The gains by the Goldin companies this year enriched Pan by $20.4 billion, the biggest increase in wealth among members of the Bloomberg Billionaires Index. Pan and 19 other shareholders controlled 98.6 percent of Goldin Financial’s shares as of March 4, according to Hong Kong’s securities regulator, which warned other investors to exercise “extreme caution”.
The volatility in the Chinese companies in Hong Kong underscores the risks for global investors in the nation’s world-beating rally. Both Hanergy and Goldin Financial were added to FTSE’s Asia Ex-Japan large-cap index in March, while MSCI Inc. plans to include Goldin Properties on the MSCI China Index at the end of the month.
Before Wednesday’s tumble, Hanergy had jumped 162 percent this year for the biggest advance among more than 2,400 members on the MSCI All-Country World Index.
The two Goldin companies traded at more than 130 times reported earnings before the rout, while Hanergy had a multiple of 65. Hong Kong’s benchmark Hang Seng Index is valued at 11.7 times.
“Valuations are ridiculously high,” Castor Pang, the head of research at Core Pacific-Yamaichi in Hong Kong, said by phone. “The stocks surged too much and no one knows why.”
Goldin Financial had revenues of HK$236 million ($30 million) for the six months ended December. The company has a wine trading business, which includes vineyards in California and France, and also does factoring — buying the accounts receivables of other companies at a discount. More than 99 percent of its net income for the period came from an increase in fair value of a 27-story office tower being constructed in Hong Kong’s Kowloon Bay district, its sole property holding.
Goldin Properties is developing a $10 billion, 89-hectare (220-acre) parcel of land in Tianjin in northeastern China, including a 117-story office tower, luxury villas, and a polo field.
More than 60 percent of Hanergy’s sales come from Beijing-based parent Hanergy Holding Group, a solar panel and hydroelectric company. Hong Kong’s SFC has been probing market manipulation in Hanergy’s shares for several weeks, Reuters reported Wednesday, citing an unidentified person.
Billionaire Pan Sutong’s Goldin Companies Plunge in Hong Kong
May 21, 2015
Goldin Properties Holdings Ltd., the developer run by billionaire Pan Sutong, tumbled the most on record in Hong Kong. Sutong’s Goldin Financial Holdings Ltd. also plunged.
Goldin Properties sank as much as 52 percent to HK$11.56 as of 10:38 a.m. local time, while Goldin Financial lost 50 percent. The benchmark Hang Seng Index fell 0.2 percent. Goldin Properties doesn’t have an explanation for the stock decline, Chief Financial Officer Kenas Chan said.
Goldin Properties surged 383 percent this year through Wednesday, the steepest rally on the Hang Seng Composite Index. Goldin Financial soared 311 percent, the second-biggest advance, boosting the company’s market value to $27.8 billion.
A 24-Minute, $19 Billion Wipeout Threatens a Chinese Company’s Solar Dream
A disastrous day
May 21, 2015
Where’s Li Hejun?
That’s the question many were asking when the founder, chairman and principal owner of Hanergy Thin Film Power Group Ltd. failed to show up at his company’s annual meeting Wednesday — the same day the company’s stock price tanked 47 percent, wiping out $19 billion in market value in 24 minutes.
Li’s absence was all the more noteworthy because over the past year he has tirelessly championed his vision of a new era of mobile energy: thin, flexible solar cells. They would soon, he promised, be plastered on just about everything: cars, backpacks, phones, tents, satellites, flashlights, buildings, lamps, drones and clothing.
Under his stewardship, the company’s stock had surged more than sixfold in the past year, making it the world’s most valuable solar company worth more than HK$300 billion ($38.7 billion). That’s larger than Sony Corp. and seven times the size of First Solar Inc., the biggest U.S. solar manufacturer.
Then on Wednesday, trading was suspended after the shares spectacularly plunged amid speculation of market manipulation and questions about the viability of the company’s core technology.
“The bulk of Hanergy’s technology portfolio remains unproven,” said Jenny Chase, lead solar industry analyst at Bloomberg New Energy Finance.
Technology aside, for months analysts and investors have raised questions about the company’s revenue source: more than 60 percent of Hanergy Thin Film’s sales come from Beijing-based parent Hanergy Holding Group, a solar panel and hydroelectric company. And Hong Kong’s Securities and Futures Commission has been probing market manipulation in Hanergy’s shares for several weeks, Reuters reported Wednesday, citing an unidentified person. Ernest Kong, a spokesman for the regulator declined to comment to Bloomberg.
“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, an analyst in China for Northeast Securities Co.
An even more fundamental investor concern, though, is whether the company’s technology actually works and how big the market for it will be.
Li has big plans. Among them, Hanergy Thin Film has said it will begin commercially producing by October automobiles that will be totally powered by the sun. The vehicles would be able to drive 80 kilometers to 100 kilometers (50 miles to 62 miles) on a four-hour charge from six square meters of thin film. Yet the industry is full of examples of companies that have developed the kind of thin-film solar cells Hanergy is banking on, yet have ended up in bankruptcy.
A Hanergy spokesperson declined to comment other than to say Li was at a clean energy center in Beijing at the time of the company’s annual meeting. In an interview in March, Li called the company’s investments cautious and said the earlier run-up in the stock was validation of the solar-maker’s focus on a new era of mobile energy.
No one would argue that the technology lacks promise. Because its thin-film cells can be flexible, they’ve found their way into applications such as the solar panels for satellites developed by NASA, backpacks and windows. Solar calculators were some of the first devices to use them. Mass production, however, has proven costly. One early flop: Solyndra LLC went bankrupt in 2011 after getting $528 million from the U.S. government.
Hanergy said in April it will build a factory to make the world’s most efficient solar cells, using gallium arsenide that captures more energy from the sun. But experts caution that technology is years away from gaining mass appeal for the only solar market that really counts today: rooftop and utility-scale installations, an established $24 billion market.
“It will take many years, decades maybe, for gallium arsenide to go head to head against crystalline silicon for rooftop solar,” said Sarah Kurtz, a research fellow at the National Renewable Energy Laboratory in Golden, Colorado. “The best Hanergy can do is carve a niche in consumer products.”
That leaves the company’s fortunes entirely dependent on an as yet unproven technology which it has acquired piecemeal through acquisitions. Hanergy entered thin film through a buying spree. The first purchase was Solibro GmbH, a subsidiary of Germany’s Q-Cells SE. That was followed by MiaSole, a California-based manufacturer, Global Solar Energy Inc. based in Tucson, Arizona, and Alta Devices Inc.
It was the Alta purchase, completed in August 2014, that gave Hanergy a toehold in gallium arsenide. Hanergy vowed to use Alta’s products in a broad range of consumer products such as mobile phones and in automobiles.
“The advantage is going to be where things have to be flexible and light,” said Isik Kizilyalli, a former Alta senior scientist. “I think that’s where the value of what Alta will end up being until they can bring the price down,” said Kizilyalli, who is the founder and chief technology officer at Avogy Inc., an energy-efficiency electronics company.
In April, Hanergy’s Li unveiled partnerships to develop catering trucks and recreational vehicles that would draw on the solar-maker’s panels for energy.
The catering vehicles would generate 6 kilowatt-hours of electricity in normal sunlight for electronics such as light and refrigeration. The touring vehicle would use six 75-watt panels from MiaSole to generate 2 kilowatt-hours a day of electricity in normal light.
BNEF’s Chase wrote in a March report that she’s “skeptical that any thin-film technology unproven in bulk production will revolutionize the solar industry.
‘‘While technological black swans can never be ruled out, the history of thin film has largely been one of losses and disappointments,’’ she wrote.
Goldin Financial Follows Hanergy Downward; Provider of short-term corporate financing suffers 50% share-price drop after meteoric rise
May 20, 2015 11:47 p.m. ET
A day after the stock of a high-profile solar-panel maker crashed 47% in Hong Kong, two other Chinese companies ended similarly meteoric rallies with similar sharp plunges.
Goldin Financial, a broker that provides short-term corporate financing, fell 50% Thursday, wiping $13.8 billion off its market value. A smaller company with the same owner, property developer Goldin Properties, fell by 51%. Their fate was similar to that of Chinese solar maker Hanergy Thin Film Power, which had made rapid gains until it collapsed Wednesday. Trading in Hanergy remains suspended in Hong Kong for a second day.
Hanergy, whose rise—like that of Goldin Financial—had troubled industry watchers, issued a filing to the Hong Kong market Wednesday saying it will make an announcement containing “inside information.” A spokeswoman said Thursday the announcement should come within “these two days.”
Much of the market attention remains focused on Hanergy because the gains had briefly made its owner, Li Hejun, the richest man in China, at least on paper. After the share-price collapse he is now the fourth-wealthiest, according to Forbes.
Hanergy had become a top holding for many funds invested in the new-energy sector.Guggenheim
Solar ETF, whose portfolio was 12% Hanergy before the crash, sank 7.8% in New York Wednesday. Market Vectors Solar Energy ETF, which was 8.2% Hanergy at the end of April, dropped 7%.
May 21, 2015 6:09 am
Goldin Group losses wipe $25bn off market cap
Patrick McGee in Hong Kong
©Thomson Reuters data
A day after Hanergy Thin Film shares plunged 47 per cent and were suspended, the two listed units of Goldin Group, the Hong Kong real estate, horse-breeding and electronics conglomerate, have suffered their biggest losses on record.
A steep sell-off continued on Thursday afternoon in Hong Kong for Goldin’s two units, having collectively lost more than $25bn from their market capitalisations in fewer than two days.
Since the Hong Kong market’s opening on Wednesday, Goldin Properties’ market capitalisation declined from $12.7bn to as low as $5.2bn, while Goldin Financial slid from $29.9bn to $11.3bn.
Each stock fell as much as 60 per cent on Thursday alone, and trading continues. As of 1pm in Hong Kong, Goldin Properties shares were down 45 per cent, whilst Goldin Financial stock was 57 lower on the day.
The listed subsidiaries each issued “unusual price and trading volume” announcements to the Hong Kong stock exchange, but did not offer a reason for the losses.
Pan Sutong, chairman and chief executive of Goldin Group
“The board confirms that it is not aware of any reasons for these movements or of any information that must be announced to avoid a false market in the company’s securities or of any inside information that needs to be disclosed,” both Goldin subsidiaries said.
The Securities and Futures Commission warned in mid-March that Goldin Financial shares “could fluctuate substantially” given the high concentration of ownership.
Just 20 shareholders owned almost 99 per cent of the company’s shares, as of March 4, including Pan Sutong, chairman, who held a 70.3 per cent stake.
The SFC inquiry into Goldin Financial’s ownership was prompted by massive share gains. Before today, Goldin Financial was up 926 per cent over the past 12 months and Goldin Properties was up 606 per cent.
The SFC said shareholders should “exercise extreme caution” when trading the shares.
The subsidiaries’ parent, Goldin Group, is run by Mr Sutong. The group is an international conglomerate operating in Hong Kong, China, the US and Europe. It operates in consumer electronics, real estate development, polo, wine and financial services, according to its website.
Among its more eclectic interests are “factoring” — raising cash by purchasing receivables from a company at a discount, then collecting them — along with horse-breeding and wine storage.