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New Energy
Latest financial news about New enery in China.
Doug Young has lived and worked in China for 15 years, much of that as a journalist for Reuters specialized about Chinese companies
Bottom line: eLong and Ming Yang will complete their privatizations and de-list by the middle of the year, but more than half of the buyout offers for Chinese companies still waiting to exit New York will ultimately collapse.
eLong signs final buyout offer
Two longtime New York-listed Chinese companies are charging for the exit door on this last trading day in the Year of the Ram, with online travel site eLong (Nasdaq: LONG) and wind power equipment maker Ming Yang (NYSE: MY) both saying they’ve just signed final buyout agreements that will result in their privatization. Neither of these deals was ever in much doubt, since eLong’s was backed by Internet titan Tencent (HKEx: 700) and Ming Yang’s was relatively small, valued at less than $400 million, and was crafted by the company’s chief and dominant shareholder.
This pair are likely to ultimately complete their privatizations over the next 2-3 months and de-list by mid-year, following previous successful de-listings of names like online game operators Perfect World and China Mobile Games. But the big majority of previously announced buyout plans by around 40 US-listed Chinese companies are still pending, and I still believe that half or more of those could ultimately collapse due to failure to secure necessary funding. Read Full Post…
Bottom line: Yingli’s new bank loan will be followed by a major restructuring that will force big losses on bond and shareholders, while a new asset-backed bond program to help the broader panel sector raise money will meet with tepid reception.
Beijing throws new lifelines to Yingli, solar sector
China is throwing a couple of lifelines to its struggling solar panel sector, including a relatively large rescue package for Yingli (NYSE: YGE), the player in the most precarious position. That package will see a consortium of banks, led by the policy-driven China Development Bank, provide Yingli with 2 billion yuan ($300 million) in funds as the company tries to reorganize its financially strapped balance sheet.
Word of the rescue package comes as media are reporting separately that China is preparing a much bigger lifeline for the sector, by allowing solar panel makers to sell bonds backed by the growing number of solar farms they are self-developing. Such farms provide a steady source of income from the power they generate, and thus should theoretically be more attractive to investors than directly investing in the financially-challenged solar panel makers themselves. Read Full Post…
Bottom line: BYD’s EV sales are likely to see strong growth based on government-supported buying in China this year, but could slow sharply in 2017 if China’s economic slowdown accelerates.
Li Lu boosts BYD stake
Chinese electric vehicle (EV) maker BYD (HKEx: 1211; Shenzhen: 002594) shot into the headlines in 2008 when investment guru Warren Buffett bought 10 percent of the company. But it has struggled to find a mass audience for its cars since then, at times raising doubts about its future. That seems to be changing recently, as a nascent surge in its home China market has quietly begun to charge up the business, bringing some excitement back to the company.
Now one of BYD’s biggest backers, the man who first introduced the company to Buffett, is quietly building up his own stake in BYD, and disclosed that his LL Group recently bought more shares to boost its stake to 8.24 percent. (HKEx announcement) That’s up from 6.3 percent of BYD’s H-shares that LL Group, formerly known as Himalaya Capital, held at the middle of last year, and is a sign of growing confidence by LL Group founder Li Lu. Read Full Post…
Bottom line: Shanda Games’ privatization could de-rail again due to fraud allegations against the head of its buyout group, while scandal-plagued Hanergy could receive a management-led offer soon to de-list its shares from Hong Kong.
Shanda buyout team leader detained in fraud probe
The “Year of the Buyout” for US-listed Chinese companies is ending on a couple of interesting notes, led by the reported detention of the head of a group trying to privatize Shanda Games (Nasdaq: GAME), one of China’s oldest online game companies. Somewhat ironically, Shanda Games announced its plans to privatize nearly 2 years ago, well before the more recent flood of similar offers announced by around 3 dozen US-listed Chinese companies this year.
Meantime, controversial solar energy equipment maker Hanergy (HKEx: 566) is making its own new noises that hint of a potential privatization bid in the not-too-distant future. In this case the company has announced its founder plans to sell a sizable chunk of his shares for far below their last traded price. The shares have been suspended since May over suspicions of price manipulation, and it’s quite possible this new sale price could indicate a broader plan to take the company private at this new, significantly lower valuation. Read Full Post…
Bottom line: Sohu is likely to announce receipt of a formal buyout offer in the next few days, while the government in Yingli’s hometown of Baoding should seriously consider a similar buyout bid for the company.
Sohu gives mixed signals on buyout intentions
Amid the current privatization wave that is seeing dozens of Chinese companies launch plans to de-list their shares from New York, Internet industry stalwart Sohu (Nasdaq: SOHU) has announced its own offer that is leaving many people scratching their heads. After a day of looking for answers following Sohu’ss issue of its original announcement of plans for a $600 million investment, Chinese media are now reporting that the company has indeed received a privatization offer.
Meantime, fading solar panel maker Yingli (NYSE: YGE) is probably wishing it would receive its own privatization offer, as it piles up massive losses and its stock rapidly loses value. The company’s shares have been trading below the $1 level in New York since May, prompting the New York Stock Exchange to threaten de-listing for failing to meet its minimum price requirement. Now the company has just announced a reverse share split to bring its stock back above the $1 mark, sparking another sell-off in its shares. Read Full Post…
Bottom line: The large premium being offered in Trina Solar’s new buyout reflects a recent flood of private equity chasing privatization deals for US-listed Chinese firms, and could breathe new life into many previously announced bids that have become dormant.
Trina gets rich buyout offer
The homeward migration by US-listed Chinese firms has taken a turn into the new energy sector, with solar panel maker Trina (NYSE: TSL) becoming the first major player in the space to announce a management-led buyout offer. Throughout the current round of buyouts that has seen some 3 dozen US-listed Chinese companies announce privatization bids this year, few have come in the new energy sector that includes about a half dozen of China’s top solar panel makers listed in New York.
That’s not to say that New York has been a comfortable place for these companies. Most of the big names saw their shares soar in their first few years in New York, only to watch them tumble between 2011 and 2013 as panel prices plunged due to massive oversupply. That downturn saw the departure of 2 of the sector’s biggest names from Wall Street, though the exit of Suntech and LDK was prompted by bankruptcy rather than privatization. Read Full Post…
Bottom line: Upcoming IPOs by China Postal Bank in Hong Kong and Canadian Solar’s solar plant-building unit in New York should get strong receptions, though both may have to wait until after the Christmas holidays to launch.
Conservative Postal Bank draws big investors
An upcoming mega IPO in Hong Kong by the stodgy Postal Savings Bank of China is shaping up as one of this year’s hottest new offerings, with word that it’s added domestic heavyweights including China Life (HKEx: 2628; Shanghai: 601628; NYSE: LFC) and Tencent (HKEx: 700) to its impressive list of early investors. In other IPO news across the Pacific, solar panel maker Canadian Solar (Nasdaq: CSIQ) is also drumming up hype for a new offering by its solar plant-building unit, which has landed some modest new financing from big-name western commercial lenders.
Each of these IPO stories has a different subplot, but a common theme is that both could be relatively hot despite distinctly cool sentiment these last few months towards new offshore Chinese listings. It’s not yet clear if either offering will make it to market by the end of next week, which is probably the latest they could occur before the traditional Christmas break. But even if they have to wait until next year, both could do reasonably well. Read Full Post…
Bottom line: Major new financing for Recurrent Energy and Apple’s growing partnership with SunPower reflect technology advances that are making solar power plants increasingly competitive with traditional sources.
Recurrent wins financing for major new solar plant
Two solar power plant builders are in the headlines today, reflecting a shift that is seeing this new generation of companies take the spotlight from older solar panel makers that are desperately seeking new buyers for their products. The first headline has solar panel maker Canadian Solar (Nasdaq: CSIQ) announcing that its Recurrent Energy plant-building unit has secured financing for a major new US project, as Recurrent gets set for its own New York IPO as a separate company. The second story has US-based SunPower (Nasdaq: SPWR) emerging as the main partner for Apple’s(Nasdaq: AAPL) recent ambitious plans to build solar power plants in China.
The bigger picture behind both of these stories is that plant builders like Recurrent and SunPower could emerge as the next hot tickets in the solar energy sector. That’s because these companies are quickly gaining expertise in the field of solar plant construction and operation, and could benefit from a future boom when such plants should finally become commercially competitive with plants powered by traditional fossil fuels. Read Full Post…
Bottom line: Weak share reactions to upbeat news from Trina, ReneSola and Ming Yang reflect investor skepticism towards new energy stocks, as they face lingering issues of overcapacity and phasing out of government subsidies.
Investors pour rain on upbeat new energy news
A flurry of upbeat news is in the headlines today from 3 of China’s largest new energy equipment makers, led by a return to the profit column for solar panel maker ReneSola (NYSE: SOL) after a year in the red. At the same time, wind power equipment maker Ming Yang (NYSE: MY) also announced its latest quarterly results that were quite upbeat, and solar panel maker Trina (NYSE: TSL) said it obtained a modest new financing from some major global lenders.
But contrary to expectation, investors greeted the string of upbeat news by dumping shares of all 3 companies, reflecting a high degree of skepticism in the market. Ming Yang led the downward migration, with its shares slipping 3.7 percent after it announced its latest quarterly results. Its shares now trade more than 17 percent below the price for a previously announced buyout bid to take the company private. Read Full Post…
Bottom line: New York IPO plans by a Canadian Solar unit and Solar Power Inc could auger a new wave of similar listings by Chinese new energy power plant builders, offering investors a higher growth alternative to traditional utilities.
Solar Power Inc banks on solar plant construction
Just a day after solar panel maker Canadian Solar (Nasdaq: CSIQ) announced it has spun off its fast-growing solar power plant-building unit for a US listing, another China-based peer is discussing plans for a similar IPO. This time a company called Solar Power Inc is the one disclosing plans for a New York listing to raise up to $300 million, in an emerging trend that’s seeing the rise of a new generation of specialty solar energy plant builders and operators.
A secondary trend in this sudden spurt of new activity also looks encouraging for New York, which has become a pariah these days among Chinese companies that feel US investors are undervaluing their stocks. These 2 new listing plans by Canadian Solar and now Solar Power acknowledge that New York is still an attractive option for certain kinds of Chinese companies, which I’ll address towards the end of this post. Read Full Post…
Bottom line: Canadian Solar is likely to target at least $100 million in an IPO for its power plant-building unit before year end, which could be an attractive investment alternative for buyers of traditional utility stocks.
Canadian Solar IPO spotlights plant construction
Just days after announcing big new financing for its unit focused on solar power plant construction, Canadian Solar (Nasdaq: CSIQ) is taking a big new step by disclosing it is preparing an IPO to separately list that unit. The move marks the latest wrinkle in the evolving story for Chinese solar panel manufacturers, which are quickly becoming their own best customers by selling their products to solar plants that they build themselves.
Canadian Solar and some of its peers have actually engaged in this kind of plant construction for a while, though the pace has picked up in the last couple of years. But the latest trend marks a divergence from the past, since Canadian Solar and others are now becoming long-term owners of the plants they build and putting them into wholly-owned units that look like a solar equivalent of traditional power utilities. In the past, Canadian Solar and the others would simply build solar plants, and then sell them to independent long-term owners upon completion. Read Full Post…
