A huge thin film solar company in China, once valued at more than HK$300 billion (US$38.7 billion), lost US$18.6 billion in share value in 24 minutes last week, amid questions about how it had become so big in the first place.
“The decline of Hanergy Thin Film Solar Group Ltd. was as spectacular and inexplicable as its ascent,” Bloomberg reports. Before losing 47% of its value, “the stock had surged more than six-fold in the past year despite questions from analysts and investors about the company’s revenue sources.”
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“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 Shanghai-based analyst Gong Siwen of Northeast Securities Co.
The Hong Kong Securities and Futures Commission had been investigating market manipulation of the company’s stock, according to Reuters. The company’s chair and largest shareholder, Li Hejun, raised eyebrows earlier this month by failing to attend the company’s annual meeting.
A Financial Times investigation alleged “unconventional” accounting practices at the company in January, and a late February report by two Hong Kong analysts concluded its stock was wildly inflated. In March, Bloomberg New Energy Finance Hanergy reported the company was working with unproven technology and “has disclosed few details about the work that underpins its valuation,” Chan writes.
In other industry news from China, Renewable Energy World reports that Yingli Solar continues to struggle with an overwhelming debt load.
“The most recent signal comes in a new filing with the U.S. securities regulator, in which Yingli says its big debt could threaten its ability to survive, potentially making it the latest casualty in a clean-up of China’s bloated solar panel sector,” writes correspondent Doug Young. “Such an outcome would see Yingli follow in the footsteps of former high-flyers Suntech and LDK, and would raise the question of whether others may soon follow down a similar path.”
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