Bottom line: The EU is likely to resolve its latest dispute with Chinese solar firms over implementation of a year-old pricing agreement, but the clash will undermine trust and hints at future conflict over the issue.
Canadian Solar denies violating EU agreement
After several months of relative quiet, Chinese solar panel makers are back in the headlines this week with another looming trade dispute in Europe. This particular story, and much of the industry’s woes over the last 2 years, stems from broader western allegations of unfair government support for Chinese panel makers. In this case China and the EU signed a deal a year ago to resolve their dispute, but now the EU is accusing several Chinese firms of violating the deal.
The EU had previously threatened to levy punitive tariffs on Chinese panel makers, saying they received unfair support through policies like cheap loans from state-run banks and low-cost land from local governments. Washington made similar claims and ultimately did impose punitive tariffs, but the EU took a more conciliatory approach and reached a settlement after the intervention of several top government leaders. Read Full Post…
The following press releases and media reports about Chinese companies were carried on March 11. To view a full article or story, click on the link next to the headline.
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EU Accuses 3 Chinese Firms Of Non-Compliance With Solar Panel Agreement (Chinese article)
P&G (NYSE: PG) Fined 6 Mln Yuan Over Crest’s Teeth-Whitening Ads (English article)
Sina (Nasdaq: SINA) Reports Q4 2014 Financial Results (PRNewswire)
Haier Says First HomeKit Air Con With Apple (Nasdaq: AAPL) To Debut In April (Chinese article)
Apple (Nasdaq: AAPL) Watch Not Yet Setting Chinese Pulses Racing (English article)
Bottom line: Complaints of problems from a major solar plant builder reflect the difficulty of new construction in China, and could wreak havoc on the sales and finances of panel makers and their construction partners.
Solar entrepreneur Shi complains of bureaucracy
Two solar energy news items are showing both the attraction and also the frustration that developers are feeling as they try to build new clean-energy power plants to help China wean itself from its dependence on fossil fuels. On the attraction side of the story, the industry has just won a major new backer in the form of insurance giant Ping An (HKEx: 2318; Shanghai: 601318), which is teaming up with panel maker Trina Solar (NYSE: TSL) in a new plant-building initiative.
But the frustrations that many plant builders are feeling were on prominent display in a separate report that cited another major developer complaining of the difficulties of new construction. Those kinds of complaints aren’t really new, and are being caused by provincial government interference and other local issues in the many remote locations where new plants are being built. Read Full Post…
Bottom line: Emerging details are giving more credibility to LeTV’s new electric car initiative, while solar shares look oversold on plunging oil prices and should rebound later this year.
LeTV soars on new EV details
Mixed signals are coming from China’s green energy sector, where a newly turbocharged LeTV (Shenzhen: 300104) is getting a lift on details about its new electric car initiative that includes ties to a technology supplier of US superstar Tesla (Nasdaq: TSLA). But solar panel makers are moving in the opposite direction, with shares of several reaching or approaching all-time lows over concerns that demand will plummet due to low oi prices. I seldom give direct stock buying advice, but in this case I honestly don’t understand the reasons for this sudden plunge and would strongly consider buying some of these shares that seem quite undervalued right now. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 7. To view a full article or story, click on the link next to the headline.
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US Solar Tariff Review Hints At Halved Chinese Cells Rate (English article)
TCL (Shenzhen: 000100) Invests $100 Mln In Wanda’s E-commerce JV (English article)
Kuaidi Taxi App May Raise $800 Mln In New Funding Round (Chinese article)
Drugmaker Sues Tencent (HKEx: 700) Over Rumors Circulating On WeChat (Chinese article)
NDRC Approves Private Investment Plan For Sinopec (HKEx: 386) Retail Unit
Bottom line: China and the west will continue to find common interests in fighting corruption, while Beijing’s state support for certain industries will remain an area of contention for the foreseeable future.
Obama press Xi on Qualcomm case
Sino-US business ties are on display in 3 separate headlines today, reflecting the increasingly complex relationship between these 2 economic superpowers that sometimes agree but often clash on different issues. One of the few things they agree on is the need to fight corruption, which is the theme in one headline that has the US fining health care products maker Avon (NYSE: AVP) for bribery at its China operation.
But the areas of disagreement are a bit more numerous, including US disapproval of Beijing’s strong state support for industries it wants to develop. That disagreement was at the center of another headline that saw the US finalize anti-dumping tariffs against Chinese solar panels, capping a 3-year-old clash on the issue. Heavy western ownership of globally used technologies is another sore spot, which was in the headlines as the US pressured China on a probe it is conducting into the licensing practices of mobile technology giant Qualcomm (Nasdaq: QCOM). Read Full Post…
Bottom line: China is likely to fall well short of its plan for 35 gigawatts of solar power capacity by the end of next year due to profit-seeking speculation and lack of experience among plant builders and operators.
China struggles to meet solar power targets
I’ve been quite skeptical for a while about China’s ambitious plans to rapidly build up its solar power capacity, arguing that many of the plants being built are more designed to please central planners in Beijing than of real practical use. Now it seems at least one researcher at a major government institute agrees with that view, prompting him to slash his forecasts for new construction this year. That certainly doesn’t look good for big domestic names like Yingli (NYSE: YGE) and Trina (NYSE: TSL), which are hoping to keep their recent positive momentum going with big new demand from plant developers in their home market. Read Full Post…
Bottom line: Solar consolidators like GCL-Poly and Shunfeng will suffer short-term pressure due to difficult acquisitions, but could be longer-term beneficiaries as they earn government goodwill for their actions.
Outlook turns cloudy for Poly-GCL
The latest deal involving an insolvent solar panel maker is seeing a group led by GCL-Poly Energy (HKEx: 3800) take control of bankrupt Chaori Solar, in a takeover that looks slightly ominous but also potentially interesting for investors. The ominous element comes from the fact that these bankruptcy proceedings are occurring Chinese courts, where local politics are often more important than forging deals that make commercial sense.
But the interesting element comes from the fact that many of these insolvent companies enjoy strong backing from their local governments. That means that once all the finances are cleaned up for these insolvent firms, they could actually become good longer-term assets for their new owners. Read Full Post…
Lofty targets contained in a new report show that China intends to push ahead with ambitious plans to build up its renewable energy sector. But perhaps the most interesting thing about this new report is word that Beijing finally intends to sharply reduce the inflated state-set fees now paid for solar and wind-produced power, in one of the sharpest indicators that it expects the industry to stop depending on government support and become commercially viable on its own. Such state support through a wide array of measures, which also include export credits and low-interest loans, have become a huge sticking point that has led to a series of trade wars between China and the west. Read Full Post…
The solar power sector has become a highly volatile place these days, with company stocks rallying one week on upbeat news, only to tumble days later on more downbeat signals. Much of the volatility owes to 2 factors that have created big uncertainty: protectionism and doubts about funding for many new power plants now being announced. Both of those factors are at play in a new string of downbeat news on industry lead Canadian Solar (Nasdaq: CSIQ), as well as struggling Chaori Solar (Shenzhen: 002506) and the now defunct former superstar Suntech. Read Full Post…
Investors were applauding a new announcement by Trina Solar (NYSE: TSL), after it announced a deal that would see it help to finance and build a massive solar power farm in southwest Yunnan province. The deal should indeed help Trina generate big sales for the near-term, as it involves construction of a farm with huge capacity of 300 megawatts of power. But I’m just a bit wary of this kind of development, which will also see Trina pay most of the bills to build the facility. Read Full Post…
