News Digest: May 30, 2012 报摘： 2012年5月30日

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The following press releases and media reports about Chinese companies were carried on May 30. To view a full article or story, click on the link next to the headline.

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◙ E-Commerce Value Reached 6 Trillion Yuan in 2011 – Commerce Ministry (Chinese article)

◙ China’s State Grid to Buy Brazil Assets From Spain’s ACS (Madrid: ACS) (English article)

◙ 360buy, Vancl Apply for Nationwide Courier Service Licenses (English article)

◙ Shui On Land (HKEx: 272) Plans IPO for Xintiandi Redevelopment Unit (English article)

◙ Perfect World (Nasdaq: PWRD) Announces Q1 Unaudited Financial Results (PRNewswire)

Shui On Prepares Ground for China Unit IPO 瑞安准备分拆新天地上市

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Investors rapidly losing interest in the tired old group of Chinese real estate developers, many of them fading rapidly as China tries to cool the overheated property market, might want to take a look at an interesting news bit coming from Hong Kong, where local developer Shui On (HKEx: 272) is preparing what could be a new trend-setting IPO for one of its China units. The deal would see Shui On spin off its Xintiandi unit, operator of the hugely successful Shanghai complex of restaurants and shops by the same name, into a separate company for a listing in Hong Kong. (English article) In my view this offering looks extremely attractive and interesting for a number of reasons, both from the individual company and broader industry perspective. From the company perspective, Xintiandi offers an attractive play into the China real estate space with a highly unusual product, namely commercial-use properties created by the rehabilitation of older buildings into modern recreational complexes of shops and restaurants. As a resident of Shanghai, I can personally attest to the huge popularity of Xintiandi’s original project here in the city, though I should also note that the complex counts foreign expats and tourists as some of its biggest patrons — a feat that could be difficult to replicate in other cities without such big foreign populations. Despite that potential drawback, Xintiandi presents an interesting growth story for investors, with the unit planning to try to replicate its Shanghai success in other major Chinese cities including Chongqing and Wuhan. I like this concept, as it will be hard for other companies to replicate such developments and clearly there are plenty of Chinese cities with older buildings that could be similarly rehabilitated, probably with strong local government support. This kind of company is also attractive because of its commercial real estate focus, which means it will be much more resistant to downturns in the highly cyclical real estate market that tend to see residential developers suffer the most. From the broader perspective, this kind of deal could perhaps signal the beginning of a movement by Hong Kong and other Asian real estate firms that have invested heavily in China to spin off their Chinese assets into separate publicly listed companies to give investors an alternative to tired old choices like Vanke (Shenzhen: 000002) and Soho China (HKEx: 410), which are good at building big numbers of new homes but tend to lack excitement. Right now many Hong Kong companies have heavy investments in China, but they have even bigger investments in their home markets, making their stocks an odd hybrid with heavy exposure to both places. Moves like this one with Shui On and Xintiandi will provide a nice new investment option for people looking for exposure to commercial real estate in China, and we might expect to see 1 or 2 similar moves by other Asian developers in the next year or 2.

Bottom line: Shui On’s plan to spin off its Xintiandi China unit into a separately listed company could mark the start of an interesting new option for China real estate investors.

Related postings 相关文章:

◙ Real Estate: Soaring Growth to Stall on Market Pause

◙ E-House: Don’t Sell the House Just Yet 易居：不要马上卖掉这栋楼

◙ Energy: Good for Builders, Bad for Sellers 中国电力行业：电价管制转变外资投资方向

BYD Set For Charge From New Incentives 中国刺激新举措或有助比亚迪

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As China’s auto world buzzes with excitement this week on news that Beijing will soon take steps to boost the struggling sector, my attention has turned to an element of the reports that could bode especially well for struggling BYD (HKEx: 1211; Shenzhen: 002594), which has placed a major bet on the difficult new energy vehicle space. At the same time, BYD, which is 10 percent owned by US billionaire investor Warren Buffett, has issued an unrelated announcement that could be cause for concern about an accident involving one of its electric vehicles, reflecting just one of the many uncertainties for this newly emerging technology. Let’s look at the bigger car story first, which has Beijing saying it will roll out new incentives later this year to boost car sales that have fallen from strong double-digit growth rates in 2009 and 2010 to very slow or no growth at present as China’s economy slows. The reports say that new incentives will target more energy efficient cars, as part of a broader national drive to cut back on China’s soaring energy consumption. (English article) But the detail in the reports that caught my attention was one buried in the middle of the China Daily’s story, saying one of the plan’s first steps will be to promote the purchase of new energy buses in large and medium-sized cities. The article says rental companies will also receive strong incentives to purchase big fleets of alternate energy cars. (English article) Both of those moves are smart because they target big vehicle owners that have the money to spend on necessary charging and maintenance infrastructure needed to make new energy vehicles attractive. That’s an important distinction with many of the previous incentives that have been targeted at ordinary consumers who are more reluctant to buy new energy cars due to worries about lack of such infrastructure. BYD’s home city of Shenzhen has already invested heavily in such programs, including rolling out experimental fleets of electric and hybrid buses and taxis. The mandate for more cities to buy new energy buses should mean lots of new business for BYD, as local governments are usually some of the biggest supporters of directives from Beijing, since local politicians want to please officials in Beijing. It’s less clear if rental car companies will embrace alternate energy vehicles under these new incentives, but many may at least buy small experimental fleets to see how they work. Meantime, BYD has also put out an interesting announcement detailing a high-speed accident in which one of its electric taxis in Shenzhen caught fire after being hit by another car and crashing. (company announcement) The fact that it issued the announcement means there’s clearly concern about this case, as obviously fire is one of the biggest dangers with this new technology that involves power generation through massive batteries. BYD does its best in the announcement to try to ease those concerns, and its points do look reasonable. Still, this kind of accident will do little to ease public concerns about new energy vehicles, making it that much more difficult for them to gain broader acceptance.

Bottom line: Beijing’s latest efforts to encourage new energy vehicle buying could benefit BYD by prompting more cities to buy the company’s new energy buses.

Related postings 相关文章:

◙ BYD Sputters Back to Life 比亚迪新车型助其重整旗鼓

◙ Car Sales: Domestics Down, But Not Out 汽车销量：国产车下降，接近拐点

◙ BYD’s New EV Plan: Hook Them With Investment 比亚迪拉美电动车之路堪忧

State Grid Powers Into Brazil 中国国家电网伸向巴西

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We’ve seen lots of Chinese resource companies snapping up overseas assets this past year at low prices, and now there’s an interesting new wrinkle to this global bargain hunting spree with word that State Grid, China’s largest power grid operator, will buy some assets in Brazil. At the very macro level, this deal is quite interesting because State Grid’s purchase of Brazilian power transmission assets from Spain’s ACS (Madrid: ACS) looks like a sign of things to come in terms of cross-border M&A. That trend would see more and more cash-rich Chinese firms from the infrastructure space looking for global bargains from debt-laden US and especially European firms seeking to raise cash amid economic slowdowns in their home markets. From a company-specific perspective, the crisis could also provide a nice opportunity for the Chinese acquirers, which may be able to finally purchase some decent global assets in this upcoming round of global M&A. That’s an important distinction from previous M&A, which has often seen Chinese firms buy global bargains with major operational problems, often leading to big losses for the Chinese acquirers. Let’s look quickly at this individual deal, which will have State Grid purchasing Brazilian assets of Actividades de Construcción y Servicios SA (ACS) for $531 million and the assumption of $411 million in debt. (English article) This deal looks like the largest in a recent series of global acquisitions for State Grid, which has purchased or 3 other assets in Portugal, the Philippines and Brazil. The main driver for ACS is probably a need to raise cash as Spain’s economy takes one of the biggest hits in the ongoing Eurozone debt crisis. The move looks like a smart one for State Grid, as Brazil, one of the world’s 5 BRICS economies, is unlikely to see the same kind of sluggish growth now being faced by the US and much of Europe, and thus these newly purchased assets should yield decent returns. This deal could also become a template for other Chinese companies, who could look to buy up other non-core assets in developing markets from their debt-heavy US and European owners. Sectors that look especially suitable for this kind of M&A include not only resources and power generation, but also other big infrastructure areas like telecoms. Companies like Spain’s Telefonica (Mardid: TEF) own extensive assets in developing markets, which they may start looking to sell to comanaies like China Mobile (HKEx: 941; NYSE: CHL) or China Telecom (HKEx: 728; NYSE: CHA), which have made recent hints of plans for more aggressive global expansion. We could also see other power companies enter the mix, such as Huaneng (HKEx: 902; Shanghai: 600011) and Datang (HKEx: 991; Shanghai: 601991), again seeking to leverage their expertise in developing markets to expand abroad. Look for a growing number of these deals in the next year, including some interesting ones in the $1 billion-plus range.

Bottom line: State Grid’s purchase of power assets in Brazil marks the latest deal in a new trend that will see Chinese infrastructure firms looking for bargains from debt-heavy Western peers.

Related postings 相关文章:

◙ Int’l Miners Dig For China Dollars 外资希望搭载中国矿企全球并购的顺风车

◙ China’s Resource Binge: Bubble Building 中国资源并购潮：酝酿泡沫

◙ Powerless AES Looks to Bow From China 爱依斯出售中国发电业务 凸显行业严酷形势

UPS, FedEx Drive Into Domestic Deliveries UPS和联邦快递或推动中国快递业洗牌

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There’s quite a bit of noise in the fast-growing package delivery space these last few days as companies large and small clamor for position in China’s booming e-commerce market, setting the stage for yet another bubble similar to the one now infecting the e-commerce space itself. Less than a month after the parcel delivery arm of China’s postal service announced plans for a domestic IPO to raise up to $1.6 billion (previous post), media are reporting that multinational giants UPS (NYSE: UPS) and FedEx (NYSE: FDX) are both set to receive the nod from Beijing to start offering domestic delivery services, adding 2 major new competitors to the already crowded market. (Chinese article) Both UPS and FedEx have been limited up until now to delivering packages to China from overseas, and each has been lobbying for years for rights to deliver packages domestically — an area that has seen explosive growth in the last 5 years with the rapid rise of e-commerce in China. It’s interesting that Beijing now may be finally preparing to allow them to operate domestically, just as China Postal Express gets set to make an IPO to fund its own expansion. I suspicion that Beijing wants to bring some order to the parcel delivery space, which has become quite unruly with the e-commerce boom. New reports about bombs, weapons and other illicit materials being delivered through smaller, unscrupulous courier services now appear regularly in the Chinese media, which looks like Beijing’s way of saying the sector needs to consolidate around a much smaller group of perhaps a dozen players who can run more efficient operations and controls to prevent such illegal activities. Bringing experienced veterans like UPS and FedEx into the picture could quickly help to clean up the industry, driving many of the smallest players either out of business or into mergers with larger rivals, creating a handful of large-scale, more efficient domestic players. Meantime, Alibaba’s TMall, China’s e-commerce leader, is also making its own moves in the package delivery space, with Chinese media reporting the company has partnered with 9 major courier services to improve delivery of goods sold on its platform. (Chinese article) While unrelated to the UPS and FedEx news, this step by Alibaba also looks directed at trying to improve efficiency in the package delivery space by focusing on a handful of the biggest services to improve customer satisfaction and cut down on less efficient and even illegal activity by some of the smaller players. From a broader industry perspective, look for more of these kinds of moves to occur in the next year, with other major e-commerce players forging their own similar ties with the bigger, stronger delivery services. That should bode well for both UPS and FedEx if they get domestic licenses, as well as China Postal Express, as all are big, experienced companies that can quickly offer quality and reliable services for most major Chinese cities. The losers in the equation will be the smaller delivery companies, though some of the better run operations could benefit as they will be become attractive acquisition targets for big names looking to quickly expand their coverage networks.

Bottom line: The arrival of UPS and FedEx to China’s domestic parcel delivery market reflects Beijing’s desire to clean up the unruly sector, which has boomed with the rapid rise of e-commerce.

Related postings 相关文章:

◙ Post Office Delivers Attractive IPO 中邮速递推进IPO 或将受热捧

◙ E-Commerce: 360Buy Awaits IPO Window, Amazon Expands 京东IPO融资心切 亚马逊物流扩张加剧竞争

◙ Retail: Tesco Goes Online, Perry Ellis in New JV 零售：乐购推出网购，派瑞•艾力斯成立合资企业

IPOs: BMW Distributor Crashes, PICC Revs Up 永达汽车搁置IPO计划 中国新股持续遇冷

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Just a week after a top Chinese auto rental firm scrapped its plans for a New York IPO, another auto specialist, Yongda Automobile Services has also junked plans for a listing in Hong Kong, reflecting not only cooling overseas demand for Chinese IPOs but also the chill that is settling over the country’s auto sector. But the true test for offshore Chinese IPOs could still be coming, as insurance major PICC gets set for a mega-IPO in Shanghai and Hong Kong to raise up to $6 billion. Let’s look at the Yongda news first, which has seen the operator of China’s largest distributor of cars from luxury German automaker BMW (Frankfurt: BMWG) cancel its plans for a Hong Kong plan to raise up to $430 million due to anemic demand. (English article) The decision comes just a week after auto rental specialist China Auto also formally scrapped its plans for a New York IPO after originally filing for the offering back in January. (previous post) The failure of both of these IPOs reflects not only weak sentiment for new offerings in general, but also the anemic state of car sales in China, which passed the US in 2010 to become the world’s largest auto market but has seen growth slow dramatically over the last year as China’s economy slows. While the failure of China Auto’s IPO isn’t too surprising, the withdrawal of the Yongda listing was a bit more unexpected because sales of luxury cars like BMW seemed to be more immune to the slowdown in China. Thus this lack of investor interest seems to indicate that markets expect an imminent slowdown as well for the luxury segment, which is still seeing growth in the 30-40 percent range even as broader market gains have fallen into the low single digits. Meantime, People’s Insurance Company of China (PICC), one of China’s top insurers, is hoping to avoid a similar fate to Yongda by bringing more major investment banks into its dual listing plans. (English article) Foreign media are reporting the company has added 14 investment banks, including powerhouses like Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS), to the group underwriting the Hong Kong portion of its IPO aiming to raise around $3 billion from foreign investors. The addition of so many major foreign investment banks, combined with PICC’s strong state backing, means that this offering is very likely to go forward despite weak sentiment in the broader market, though I wouldn’t expect it to price very strongly and the final amount of funds raised in Hong Kong could be closer to $2 billion. One of the few Chinese companies to successfully make a major Hong Kong IPO in recent months was another insurance company, New China Life (HKEx: 1336), which raised $1.3 billion in the Hong Kong portion of a dual listing late last year. The company’s shares initially surged, but have since given back most of the gains and are now just slightly ahead of their offering price — roughly in line with the broader market. Given recent uncertainty in the broader insurance market, I wouldn’t expect too much excitement from this PICC offer though it should indeed go forward. When that happens, look for the stock to trade sideways or sink lower after its trading debut.

Bottom line: The scrapping of an IPO by China’s top BMW distributor and addition of major banks to a planned IPO for major insurer PICC reflect continued weak demand for new China offerings.

Related postings 相关文章:

◙ China Auto IPO Crashes 神州租车的IPO之梦告吹

◙ Ping An Returns to Market With Second Big Fund Request 中国平安拟发大规模可转债

◙ Year End Brings Problematic New IPO Wave 中国新一波IPO潮或无法达预期效果

West Launches New Attack on Huawei, ZTE 西方对华为和中兴通讯发起新攻击

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The bad news never seems to end for embattled telecoms equipment makers Huawei and ZTE (HKEx: 763; Shenzhen: 000063), which have become magnets for attacks from global rivals seeking to curb their gains into the lucrative US and European markets. The latest move has seen the European Union launch an anti-dumping probe against the Chinese pair over allegations that they receive unfair subsidies from Beijing, according to foreign media reports. (English article; Chinese article) It’s not surprising that this investigation is coming in Europe, since most of Huawei’s and ZTE’s biggest global rivals are based there, including Ericsson (Stockholm: ERICb), Nokia Siemens Networks and Alcatel Lucent (Paris: ALUA). All those companies have complained for years that Huawei and ZTE can offer lower prices partly due to strong support from Beijing, which indirectly subsidizes them through policies like export rebates. From my perspective, the fact that the EU has launched this investigation is not surprising at all. What is more interesting is the timing of the move, as well as the broader implications of the probe for a recent major push by Huawei and ZTE into the faster-growing and less controversial smartphone sector. In terms of timing, this anti-dumping investigation is the latest in a recent series of government probes in the US and Europe against not only Huawei and ZTE but also a growing number of other Chinese firms in up-and-coming sectors. Both companies have been largely locked out of the US network-building market to date over concerns their equipment could be used for spying by Beijing. ZTE received a major setback on that front early last year when Sprint (NYSE: S), one of the top 4 US wireless carriers, rejected its bid to help build a new 4G telecoms network (previous post); Huawei received a similar setback months later when it was blocked from bidding for US government contracts to upgrade some of the nation’s emergency telecoms networks. (previous post) Even top Chinese mobile carrier China Mobile (HKEx: 941; NYSE: CHL) has gotten caught up in the fray, with US regulators earlier this month citing security concerns as a reason for potentially vetoing the carrier’s application to offer service between China and the US. (previous post) This latest EU move is unrelated to security concerns, but is rather based on accusations of unfair subsidies from Beijing, which has become another popular tool for Western firms to slow down the advance of aggressive Chinese rivals into their markets. Both the EU and US regularly launch anti-dumping investigations against Chinese sectors, though most of those have usually targeted low-end manufacturing areas like construction materials and auto parts. But the unfair trade attacks moved into the high-tech space last year when the US has launched a high-profile investigation against China’s solar panel industry, which could soon result in big punitive tariffs. (previous post) This new series of attacks against such higher tech companies could quickly become a major obstacle for China as it tries to move away from its traditional strength as a low-end manufacturing powerhouse to higher-tech products that command bigger profit margins and rely less heavily on the cheap labor. From the perspective of Huawei and ZTE, equally worrisome is the prospect that the US and Europe could soon turn their attention to the companies’ smartphone units, which they are aggressively building up as a less controversial alternative to their traditional networking equipment businesses. If the EU believes the 2 companies’ networking equipment business is unfairly subsidized, it should logically believe the same is true for their cellphones. At the end of the day, I suspect there is some truth to the anti-dumping and possibly even the security concerns, which Chinese companies will need to address if they really want to become global players. At the same time, however, I do believe that much of this activity also represents foreign rivals’ attempts to stop encroachment into their home markets by Chinese firms — a reality that Huawei, ZTE and other aspiring Chinese high-tech firms will have to learn to deal with more effectively if they really want to become top global players.

Bottom line: An EU anti-dumping probe against Huawei and ZTE is the latest move by their global rivals to try and keep them out of lucrative Western markets.

Related postings 相关文章:

◙ ICBC, Huawei: It’s Cold Out There 工商银行、华为：国外市场冷清

◙ Huawei Goes on the Offensive 华为发起攻势

◙ Solar Storm Heats Up in US, China 中美太阳能产品征税之争升温

News Digest: May 29, 2012 报摘： 2012年5月29日

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The following press releases and media reports about Chinese companies were carried on May 29. To view a full article or story, click on the link next to the headline.

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◙ China’s Huawei, ZTE (HKEx: 763) Face EU Action on Telecom Subsidies-FT (English article)

◙ China Poised to Revive Cash-for-Clunkers Program, Official Says (English article)

◙ China Yongda Scraps Hong Kong IPO Amid Weak Demand (English article)

◙ UPS (NYSE: UPS), FedEx (NYSE: FDX) to Receive Domestic Delivery Licenses – Source (Chinese article)

◙ China’s PICC Adds 14 Banks to $6 Billion Dual IPO: IFR (English article)

Nokia Siemens Accuses Huawei 诺基亚西门子指责华为抄袭其宣传材料

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I commended telecoms equipment leader Huawei for breaking with its history of maintaining a defensive posture on the global stage by finally making an offensive move after it filed an anti-monopoly complaint in Europe against a Western firm that was refusing to sell it 3G technology; but the latest accusations being leveled at the company by rival Nokia Siemens Networks look much more mundane and typical of what many foreigners traditionally expect from Chinese firms. This latest tussle is decidedly lower tech than the action Huawei took last week against a company called InterDigital (Nasdaq: IDCC) (previous post), with Nokia Siemens accusing the Chinese firm of the petty crime of copying the wording in some of its promotional materials. (Chinese article) Officials from Nokia Siemens pointed to a number of places in their materials where the wording Huawei’s materials contained similar wording. There was no comment from Huawei in the Chinese article on the allegations, so obviously the report is a bit one-sided. But if it’s true, it certainly wouldn’t surprise me, as copying by Chinese companies is by no means limited to technology and DVDs. If it really is true, I would indeed find it a bit ironic since Huawei is clearly quite a wealthy company and creating promotional materials isn’t nearly as expensive as developing new products, which would mean Huawei was simply being too lazy to go out and properly create its own marketing materials. But this kind of copying, regardless of whether it’s true in this instance, is probably more reflective of the endemic lack of respect for intellectual property and copyrights in general among Chinese firms. Huawei itself was the subject of much more serious copying allegations nearly a decade ago, when US rival Cisco Systems (Nasdaq: CSCO) sued it for intellectual property theft, in a case that was ultimately settled for undisclosed terms. I’m unaware of any additional copycat claims against Huawei since then, which indicates the company probably made a serious effort to clean up its act as part of its drive to become a major global player. That makes this latest accusation by Nokia Siemens all the more ludicrous, as clearly this kind of copying, if it’s true, is something that could have been completely avoided at little or no extra cost to Huawei. But then again, the old English proverb probably applies here as well, namely that it’s difficult to get a leopard to change its spots.

Bottom line: Nokia Siemens’ accusations that Huawei copied some of its promotional materials, if true, reflect the difficulties Chinese companies face in trying to wean themselves from copying.

Related postings 相关文章:

◙ Huawei Goes on the Offensive 华为发起攻势

◙ Huawei Follows ZTE to Lower Profits 继中兴之后华为利润也降低

◙ ICBC, Huawei: It’s Cold Out There 工商银行、华为：国外市场冷清

China Opening Telecoms With Cloud Centers 云计算或成为中国开放电信服务市场的突破口

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China’s telecoms companies have all rushed to set up new cloud computing centers, the massive data and software warehouses that allow computer users to do all their computing remotely from relatively simple desktop and laptop PCs. But now it appears that Beijing wants to develop this area so much that it’s also opening up the sector to foreign companies, with Microsoft (Nasdaq: MSFT) the latest to detail its plans for the cloud computing space in China. Media are quoting a top Microsoft global executive saying the company is applying for permission to build cloud centers in China (English article), after Microsoft said late last year it was studying such a plan for the interior city of Chongqing. (previous post) Microsoft’s entry to the space would come months after IBM (NYSE: IBM) announced in January it would help to build a massive campus near Beijing that would become China’s largest cloud computing center. (English article) From an investors perspective, these 2 developments look very interesting not only for their money-earning potential, but also because they seem to show that Beijing may finally be starting to allow foreign firms to make major investments in the lucrative Chinese telecoms services market, after years of locking them out despite agreeing to open the space under its commitments when it entered the World Trade Organization 10 years ago. This kind of opening would be consistent with recent remarks from the telecoms regulator, which said in March that the government has officially made boosting private investment in telecoms infrastructure part of its new policy. (previous post) Cloud computing would be a relatively easy area to open up to foreign investment, since right now the industry is at a very low stage of development and clearly the arrival of foreign technology and expertise from big names like Microsoft and IBM could quickly build the sector into a world-class player. Another opening of China’s telecoms services market could also come in the next year or 2 if one of China’s 3 telcos signs a mobile virtual network operator (MVNO) agreement with a major foreign telco. Such agreements have yet to come to China but are popular in other markets, and usually see a foreign telco offer its own branded service overseas using an existing carrier’s network. China Telecom (HKEx: 728) last week launched the first MVNO for a Chinese company with a partner in Britain, and I predicted that move could ultimately see the Chinese telco reciprocate by signing an MVNO that would allow a foreign telco to offer service in China. (previous post) This latest cloud development, along with the potential for a foreign MVNO in China, does seem to show that China may finally be serious about opening up its telecoms services market. Earning profits, meanwhile, could be a more difficult challenge in a market this is already quite competitive in many areas.

Bottom line: Microsoft’s plan to build cloud centers in China is the latest sign of Beijing’s intent to open its telecoms services market to foreign investment.

Related postings 相关文章:

◙ Telecoms Infrastructure Prepares to Open 中国电信基建市场或更开放

◙ China Telecom Opens Door for Foreign Telcos 中国电信在英国推出MVNO业务 或为外国电信企业进入中国铺路

◙ Microsoft Looks for Place in China Cloud 微软投身中国云计算大潮

Solar Shares: De-listings Ahead? 太阳能股票：未来会退市？

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Shares of solar panel makers took a beating last week, as brokerages downgraded a few amid flare-ups in the trade war between the US and China for an industry already suffering through its worst-ever downturn that has pushed most companies into the red. But while the war of words continues between Washington and Beijing, an even more interesting and potentially devastating low-key war is going on with the solar companies’ shares, which could soon face the very really threat of de-listing from the New York and Nasdaq stock exchanges. JA Solar (Nasdaq: JASO) crossed a quiet but critical threshold on May 18, when its shares closed below the critical $1 mark for the first time, ending that day at 89 cents. Since then they have gone 6 consecutive trading days without rising back above the $1 mark, closing last Friday at 92 cents. Stock market followers will know that rules dictate that US listed companies must maintain their share prices above $1 as a rule to remain listed on the big boards, and that trading below that mark for more than 30 days is grounds for potential delisting. JA Solar, whose market capitalization now stands at $186 million, is the first major player to fall below the $1 mark, but others could soon follow. Suntech (NYSE: STP), which calls itself the market leader even though its market cap is smaller than several of its rivals, saw its shares tumble 8 percent to $1.78 on Friday, near an all-time low, after HSBC reduced its price target for the company. (English article) HSBC cut its Suntech price target to $1 from a previous $1.27, and 13 of the 18 analysts who have updated their ratings on the company since last week now recommend a “sell”. Others who are hovering dangerously close to the de-listing range include Renesola (NYSE: SOL), now trading at $1.33, and Yingli (NYSE: YGE), whose shares now trade at $2.62. It’s unclear what would happen to JA Solar or any of the others if their shares really did trade below $1 for 30 days, as they could technically do a reverse stock split to bring their shares back above the $1 mark. But perhaps more importantly, falling below the psychologically critical $1 mark may finally be the wake-up call that many of these companies need to tell them they should seriously consider merging with some of their rivals to consolidate the crowded sector, or risk being de-listed or worse.

Bottom line: Several of China’s struggling solar shares are in danger de-listing, which could finally push some to consider mergers with rivals to save themselves.

Related postings 相关文章:

◙ Solar Storm Heats Up in US, China 中美太阳能产品征税之争升温

◙ Solar Comments: Consolidation Chinese Style? 太阳能行业：中国式整合

◙ Passive Beijing Blasts New US Solar Tariffs 中国炮轰美高关税不实用 解决太阳能产品纷争需更主动