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News Digest: July 11, 2012 报摘： 2012年7月11日

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The following press releases and media reports about Chinese companies were carried on July 11. To view a full article or story, click on the link next to the headline.
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  • Apple’s (Nasdaq: AAPL) New iPad Arrives in China on Friday, July 20 (Businesswire)
  • Tudou (Nasdaq: TUDO) Says COO Resigns, Youku (NYSE: YOKU) Merger Going Smoothly (English article)
  • Huawei Eyes Management Deals with Etisalat, Saudi Telecom (English article)
  • Trina Solar (NYSE: TSL) Expands into Canada (PRNewswire)
  • Ctrip (Nasdaq: CTRP) Chairman: Price Wars Will Speed Up Industry Reshuffle (Chinese article)

Solar: Trina Dumps Deloitte, LDK Shares Tank 光伏行业：天合光能解除与德勤审计关系 赛维LDK股价大跌

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New developments from Trina Solar (NYSE: TSL) and LDK Solar (NYSE: LDK) reflect the financial turmoil gripping the struggling solar sector, boding poorly not only for these 2 major players but also for the China arm of Deloitte, the controversial auditor that has just been dumped by Trina. The developments are all part of a bigger picture that has seen the solar sector gripped by its worst-ever downturn for more than a year now, sending all manufacturers into the red and possibly pressuring some to resort to creative accounting to mask the gravity of their situations.

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

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When someone says an industry is in need of consolidation, the assumption is usually that mergers and bankruptcies will reduce overheated competition and excess capacity to create a more efficient and profitable sector. But the concept seems to have a completely different meaning in China, where 2 of the nation’s top solar panel makers discussed the consolidation concept in their latest earnings reports even though we’ve yet to see any major companies close or merge among a money-losing group that now produces more than half the world’s solar cells. In announcing fresh major new losses for their latest reporting quarters, Suntech (NYSE: STP) and Trina Solar (NYSE: TSL) both used the “c” word, with the latter saying specifically it sees further signs of industry consolidation happening. (Suntech earnings; Trina earnings) Suntech was less direct, saying simply it was consolidating its own operations to close down some of its less efficient facilities. Obviously there could be M&A deals now being negotiated that are still secret, but to the best of my knowledge there has been little or no consolidation happening in this sector that has been suffering from overcapacity for a year now. Several US companies had to close last year, but they were mostly smaller players and those bankruptcies happened almost a year ago. Other than that, the only deal I’ve seen so far this year was a small acquisition in January of a small German manufacturer by LDK Solar (NYSE: LDK). (previous post) China watchers will know that consolidation of any industry in China — especially a strategic one like solar that Beijing wants very much to develop — is extremely difficult due to the government’s willingness to support money-losing companies indefinitely with loans from state-owned banks and other public funding sources. That means even the most money-losing companies may never close if the government doesn’t want them to. What’s more, mergers are also extremely difficult, as most big manufacturers get strong support from local governments that worry that any such mergers might result in the closure of manufacturing facilities that contribute to their local economies. So what consolidation does Trina see exactly? Perhaps the answer lies in Suntech’s comments. Rather than consolidation through combinations and closures, the industry may have to follow Suntech’s example and see individual manufacturers close down their less efficient facilities. That approach could work for relatively well for more efficient companies like Suntech, though a less efficient player like LDK — which already announced massive layoffs earlier this year (previous post) — might have to shutter the  majority of its operations to return to profitability. This kind of consolidation could be the most likely and practical, but will also mean we could expect to see some significant drops in capacity at Chinese solar companies as they self-consolidate on their march back to profitability.

Bottom line: Chinese solar cell makers, unable to consolidate through mergers and closures, are starting to close less efficient factories to reduce overcapacity and return the sector to health.

Related postings 相关文章:

◙ Sohu Disappoints Again, LDK Cuts Inspire 搜狐再次令人失望，江西赛维裁员鼓舞人心

◙ 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

◙ LDK Cuts, Suntech Waits As Solar Winter Nears End 太阳能行业冬季将结束：赛维裁员，尚德等待

Solar War Reignites With Big US Tariffs 美国拟对中国太阳能电池高征税

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Just when it looked like a trade war had been averted in the important solar energy sector earlier this year, the US Commerce Department has surprised everyone by recommending high punitive tariffs for China’s solar panel makers, casting a huge new cloud over this important industry. Chinese solar shares all tanked on the news, with industry leaders Suntech (NYSE: STP), Trina (NYSE: TSL) and Yingli (NYSE: YGE) all tumbling by 5 percent or more after the news came out, re-approaching all-time lows reached late last year at the height of the sector’s current downturn due a global supply glut. I have no doubt that this isn’t the end of this story, and we’re likely to soon hear an angry response from Beijing, which has taken some steps in recent months to try and show it is weaning its solar cell makers from the kinds of government-sponsored subsidies that were the source of the US complaint against a group that now supplies more than half of the world’s solar cells. In the latest development in this case, the US Commerce Department has announced that all China-produced solar cells will be subject to punitive tariffs ranging from 31 to 250 percent. (English article) That figure was sharply higher than an earlier indicator, which saw the Obama administration recommend relatively light tariffs of up to 4.7 percent after the Commerce Department first ruled earlier this year that Chinese panel makers did indeed receive unfair subsidies in the form of measures like low-interest loans from state-owned banks and export rebates. (previous post) Based on statements from Suntech and Trina it appears that these newest tariffs are both still preliminary and not final, and that most companies will be subject to the lower end of the range, or about 31 percent. But clearly this story is still not finished. It’s hard to say what is going on behind the scenes, as the earlier low tariffs and this latest round of much higher recommendations send clearly different signals. I suspect the earlier lower numbers were designed to send a signal to Beijing that a trade war could be averted if China took steps to reduce its government support for the sector. If that’s the case, then perhaps this latest round of recommendations is designed to show Beijing that it needs to move more quickly in weaning its solar companies from state support or risk seeing its companies subjected to these higher tariffs that could seriously hurt development of the global industry. Without access to more information it’s difficult to guess intelligently what’s really happening here. But having followed this conflict for nearly a year now since it first broke out, I still predict it will eventually be settled in a way that makes everyone somewhat happy, but also forces both sides to make sacrifices. In China’s case, the country needs to move more quickly with new high-profile steps to show it is ending its unfair subsidies. If it does that, I could still see the US imposing the previously discussed lower tariffs when it announces its final decision.

Bottom line: The latest twist in the US trade war with China over support for its solar panel makers may be a pressure tactic to make Beijing move more quickly to end unfair subsidies.

Related postings 相关文章:

◙ Suntech, Canadian Solar in Latest PR Moves 尚德电力和Canadian Solar就西方倾销顾虑作出回应

◙ Solar Tariffs: US Takes Middle Road 太阳能关税：美国采取折中路线

◙ New Solar Storm Brews in Europe 欧盟或发起反倾销调查 中国光伏业再蒙阴影

New Solar Storm Brews in Europe 欧盟或发起反倾销调查 中国光伏业再蒙阴影

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It seems the storm dumping rain on Chinese solar cell makers for most of the last year won’t end anytime soon, with Chinese media now citing gloomy industry watchers saying Europe is likely to soon launch an own anti-dumping investigation into the industry following a similar one in the US. (English article) I don’t want to rush to judgment here, but perhaps it’s time that Beijing and China’s solar firms themselves admit that perhaps they are unfairly subsidized by the Chinese government, and try to work with European and US government officials to find a new plan that would address everyone’s concerns. Of course that doesn’t seem likely to happen anytime soon, with China continuing to deny that it unfairly subsidizes its industry, which now produces more than half of the world’s solar cells, with things like export rebates, low-interest loans and other incentives like free or cheap land. According to a report on the front page of today’s China Daily business section, a Commerce Ministry official says the European Union has already accepted complaints from its own solar cell makers over anti-dumping allegations against their Chinese rivals, and is likely to soon launch an official investigation, which means punitive tariffs may be coming soon if the investigation results in a ruling against China. Such a ruling would be even more devastating to Chinese solar cell makers than a similar ruling likely to come soon from the US, as Europe now account for a hefty 80 percent of all of China’s solar-related exports, with shipments of solar panels to the market worth more than $30 billion in 2010. Battered shares of Chinese solar firms, struggling to recover from their industry’s worst-ever downturn for most of the last year, tumbled even more on Tuesday trade in New York as word of the possible EU investigation spread. Industry leader Suntech (NYSE: STP) dropped 6 percent to $2.85, once again approaching its all-time low after a February rally on hopes that the industry’s downturn had bottomed out and prices were starting to stabilize. Other solar firms saw similar results on Wall Street, with Yingli (NYSE: YGE), Trina (NYSE: TSL) and Canadian Solar (Nasdaq: CSIQ) all down between 3 and 4 percent. Recent signals coming from the sector in its latest quarterly results indicate that many executives are cautiously optimistic that a rebound is on the way, partly driven by an anticipated big jump in building of new solar power plants in their home China market as well as many other developing markets. Such a mini-boom may indeed be coming, but it will hardly be sufficient to offset the huge losses that all of these companies would suffer if they lose access to the US and EU markets that now account for most of their sales. If that happens, which looks very likely, don’t expect to see any of these companies return to profitability anytime soon.

Bottom line: An anti-dumping investigation against Chinese solar panel makers in Europe looks likely, dealing an even bigger blow to the sector than a similar ongoing US investigation.

Related postings 相关文章:

◙ Yingli Results: Rescue En Route From China? 英利财报：来自中国政府的营救？

◙ Suntech Cleans House As Rebound Nears 光伏行业或年中回

◙ Solar: New Tie-Ups as US Ruling Looms 光伏产品倾销裁决临近 中国企业忙于外联公关

Yingli Results: Rescue En Route From China? 英利财报：来自中国政府的营救？

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Despite the many clouds dampening prospects for China’s solar firms, Yingli Green Energy (NYSE: YGE) has just come out with a quarterly earnings reports that looks surprisingly optimistic about the year ahead, leading me to wonder if it has been told that China intends to announce some plans for major new solar power plants in 2012. The actual report looks the same as other companies that have already reported their fourth-quarter results, showing sharp drops in both revenue and profit as many firms took big write-offs related to the plunge in prices last year that has driven everyone into the red and forced a number of overseas players into bankruptcy. (results announcement) But what caught my attention was Yingli’s forecast for a hefty 50 percent sales increase this year, with the company expecting to ship 2.4 to 2.5 gigawatts worth of solar modules in 2012, up from last year’s 1.6 gigawatts. That forecast looks quite surprising since Yingli and its other Chinese rivals are facing big challenges in both the US and Germany, 2 of their biggest markets. Chinese solar cell makers are likely to face punitive tariffs in the US this year following an anti-dumping investigation, while Germany has taken recent steps to sharply cut back its incentives for new construction of solar power plants. So where does Yingli see such a jump in demand coming from? My suspicion is that Chinese officials may be quietly informing Yingli and China’s other major solar companies to expect major new orders at home this year, as the country starts to execute Beijing’s plans announced last year to embark on a multibillion-dollar campaign to build new solar plants. (previous post) In fact, Beijing sent a previous signal in the same direction last week when media reported that the government was urging solar companies to sharply boost their capacity (English article) despite the current downturn that has seen prices fall by 50 percent or more over the last year, driving share prices for many companies down to all-time lows. Yingli’s own shares now trade at $3.74, including a 4 percent drop after it announced its results, off their all-time lows from last fall but still at a third of where they traded a year ago. If and when the big orders from China start to come, look for Yingli and other top domestic players like Suntech (NYSE: STP) and Trina (NYSE: TSL) to be major beneficiaries, while smaller players will also get some new business but perhaps not as much. Whether the new China business will be enough to support Yingli’s ambitious 2012 target is still a big question. But at least for now I would be cautiously optimistic that a strong turnaround could be on the horizon for the battered sector by the end of the year.

Bottom line: Yingli’s forecast for a 50 percent rise in sales this year despite the solar sector’s current downturn indicates a China-fueled rebound could be on the horizon.

Related postings 相关文章:

◙ Beijing Boosts Solar In Latest Mixed Signal　中国扩张太阳能行业发展 解决与美争端立场混乱

◙ US Congress Turns Up Heat in China Solar Debate

◙ Suntech Cleans House As Rebound Nears 光伏行业或年中回

News Digest: February 24, 2012 报摘： 2012年2月24日

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The following press releases and media reports about Chinese companies were carried on February 24. To view a full article or story, click on the link next to the headline.

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◙ Apple (Nasdaq: AAPL) Prevails in Shanghai Court, Blocks Proview Bid to Halt IPad Sales (English article)

◙ China’s Minsheng Bank (HKEx: 1988) Gets Approval For H-share Issue (English article)

◙ Dangdang (NYSE: DANG) Announces Q4 and Full Year Results (PRNewswire)

◙ Trina Solar (NYSE: TSL) Announces Q4 and Full Year Results (PRNewswire)

◙ Baidu (Nasdaq: BIDU) Opens Singapore R&D Center to Explore SE Asia Opportunities (Chinese article)

◙ Latest calendar for Q1 earnings reports (Earnings calendar)

Suntech Cleans House As Rebound Nears 光伏行业或年中回

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Leading solar panel maker Suntech (NYSE: STP) has put out a broadly positive pre-earnings announcement, showing the struggling market may be nearing bottom in its current downcycle as the company also took major moves to control costs. Investors seemed to like what they saw, bidding up Suntech shares more than 8 percent in Friday trading after the news came out, even though shares are still at about a quarter of their levels from 2 years ago. In its earnings pre-announcement, Suntech said its shipments declined 10 percent in the fourth quarter from the third, a bit better than the 20 percent decline it originally expected. (company announcement) At the same time, its shipments for all of 2011 came in at 2.09 gigawatts, also a bit better than its previous forecast for 2 gigawatts. On the cost side, the company said it made major progress in reducing its debt and accounts receivable in the fourth quarter, both of which should help strengthen its balance sheet and make it more efficient. Investors seem to have focused on the better-than-expected revenue numbers that may reflect a broader industry rebound, with solar shares all logging sharp gains on Friday. Leading the pack was Canadian Solar (Nasdaq: CSIQ), which jumped 17 percent, while JA Solar (Nasdaq: JASO) was up 9 percent. Trina (NYSE: TSL) and Yingli (NYSE: YGE) also both logged nice gains of more than 5 percent. Of course, all of these stocks are still at a fraction of their level from 2 years ago, as the industry struggles with a big supply glut resulting from its rapid expansion over the last few years. In another positive sign for the industry, Trina has announced a new $100 million loan facility from Britain’s Standard Chartered (London: STAN) in what looks like a clear signal to the markets that private commercial banks are still confident enough to lend to these stronger solar companies even though most are now currently losing money. (previous post) By comparison, some of the weaker players like LDK Solar (NYSE: LDK) have had to resort to funding from Chinese banks and other local investors, which often provide funds for reasons that more political than commercial. Recent media reports indicate the sector is cautiously optimistic that demand will pick up later this year, with many companies hoping to restart idle capacity if prices rise above a certain level. Despite the upbeat signs, one of the big question marks in all this the current US anti-dumping investigation into Chinese solar panels, which could result in punitive tariffs in the near future. (previous post) But China has made recent signs that it is willing to discuss the issue and its broader subsidies for exporters in general, meaning the trade war might be short lived, perhaps being resolved after upcoming US presidential elections in November. If that happens and signs of stabilization continue, look for a rebound in both the sector and company share prices starting around the middle of the year.

Bottom line: The latest results from Suntech and broader industry comments point to a fledgling rebound for the solar battered sector starting around the middle of the year.

Related postings 相关文章:

◙ Solar: New Tie-Ups as US Ruling Looms 光伏产品倾销裁决临近 中国企业忙于外联公关

◙ Sany and Yingli Take Different German Tacks 三一重工和英利的德国交易或前景迥异

◙ LDK’s German Buy: Two Losers Combine 赛维LDK收购Sunways将使前者境况雪上加霜

More Turbulence For Alternate Energy

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The Year of the Dragon is off to a dubious start for China’s alternate energy sector, with solar panel makers facing stiff resistance in both the US and Germany, 2 of the world’s biggest markets, and now wind power equipment makers coming under similar fire. The solar story in the US is actually an old one by now, following the launch of an investigation into unfair subsidies by Beijing for its solar panel makers last summer. (previous post) But what’s new on that front is that the US body that rules on such matters is likely to make its final decision soon, which will likely result in punitive tariffs that will send a chill through the solar energy market. A US group that helped to bring the original complaint has just put out a new analysis saying Chinese companies have been rushing to import their panels to the US in anticipation of a ruling against them, with imports up more than 100 percent since last July when the probe first began. (English announcement) Usually I’m a little skeptical about this kind of industry announcement, but in this case I wouldn’t be surprised if the numbers are actually relatively accurate, as Chinese producers like Suntech (NYSE: STP), Trina (NYSE: TSL) and Yingli (NYSE: YGE) certainly have reason to stockpile panels in the US to weather a coming storm that could see punitive tariffs remain for a year or more until the US and China settle their differences. Meantime, the solar panel makers are also facing new uncertainty in Germany, one of their other major markets, as that country said it plans to phase out many incentives to boost the installation of new solar capacity by 2017 and is already starting to make changes. (English article) The loss of 2 such major markets won’t be good for the industry in the short term, though it should hasten the introduction of new technologies that could boost efficiency and help the industry finally achieve its real goal of making a product that can survive on its own based on real economics rather than government subsidies. Meantime, the wind industry could soon be coming under similar pressure, as the US is also launching an investigation into unfair subsidies for Chinese wind tower makers. (English article) This action could hit another promising group of companies, though it should be less damaging as it focuses on makers of lower-tech towers as opposed to the more critical wind turbines that actually produce electricity. Still, this kind of trade war won’t help the industry’s development as a whole, and all parties would be much better served finding a less combative way to address the issue of state subsidies.

Bottom line: Looming US punitive tariffs and a winding down of German subsidies bode poorly for the battered solar industry in 2012, with at least 2 more years of pain likely.

Related postings 相关文章:

◙ Solar Matures With Foxconn Entry

◙ India Turns Up Heat on Solar With New Probe

◙ Beijing Boosts Solar In Latest Mixed Signal　中国扩张太阳能行业发展 解决与美争端立场混乱

Solar Matures With Foxconn Entry

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You know your industry is starting to mature when a big player like Hon Hai (Taipei: 2317), the massive Taiwanese electronics maker of everything from PCs to iPhones, steps in to the picture, a move that should come as both a relief but also a worrisome development for the troubled solar cell sector. Foreign media are reporting that Hon Hai unit Foxconn Technology (Taipei: 2354) is building a massive new solar cell plant in China’s Jiangsu province, adding a major player to a sector already struggling with large overcapacity that has caused prices to tumble by more than 60 percent this year alone and driven nearly every company into the red as their stocks hover near all-time lows. (English article) This development is significant for 2 reasons, both of which should ultimately benefit the sector but will also cause some short term pain in the form of sorely needed consolidation. From a technological point of view, Hon Hai’s entry into the picture shows this sector has long term potential, as major companies like Hon Hai rarely make such investments without careful consideration of their profitability. But big players like Hon Hai are also famous for entering mature industries where margins are traditionally quite low and huge volume is necessary to make big profits, meaning the company believes that solar technology is starting to mature and profit margins will stabilize at low levels. This second factor is key, as it means that only companies with massive scale will be able to survive in the future, and that mid-sized and  smaller players will either have to merge or risk going out of business in this bold new solar world. Companies that now have the scale to drive this much needed consolidation include industry leaders like Suntech (NYSE: STP), Yingli (NYSE: YGE) and Trina (NYSE: TSL), while companies that would be well advised to start looking for partners include names like JA Solar (Nasdaq: JASO) and Renesola (NYSE: SOL). No matter how you look at it, this move by Hon Hai looks like a positive development, providing not only a vote of confidence in the struggling sector, but also sending an important message that anyone who wants to play at this game in the future will need massive scale to do so.

Bottom line: Hon Hai’s entry into solar module making shows the industry has long term potential at low profit margins, and should help to drive much-needed consolidation.

Related postings 相关文章:

◙ Beijing Boosts Solar In Latest Mixed Signal　中国扩张太阳能行业发展 解决与美争端立场混乱

◙ China Rescues LDK With New Financing 中国拯救赛维LDK举动与未提供不公补贴说法相左

◙ Buffett Brightens Solar Prospects 巴菲特进军太阳能 行业美好前景可期

Buffett Brightens Solar Prospects 巴菲特进军太阳能 行业美好前景可期

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The solar world is all abuzz this morning with news that billionaire Warren Buffett is taking a big bet on solar energy with his decision to buy a $2 billion solar power plant in California, a 550-megawatt project called Topaz, and what it might mean for the embattled sector. (English article) What it says is that under current conditions, which include healthy government incentives, this kind of investment will yield solid enough returns to satisfy someone like Buffett, who known to carefully analyze all of his investments before plunking down his shareholders’ dollars. That decision should prove encouraging to other potential investors in and builders of solar energy farms, and theoretically could provide huge new demand for solar panel makers who would supply those projects. The main problem, of course, is that this particular project is in the United States, where last week a trade panel made a preliminary ruling that China unfairly subsidies its solar panel makers — a decision that could result in big punitive tariffs for Chinese firms like Suntech (NYSE: STP), Trina (NYSE: TSL) and Yingli (NYSE: YGE), which collectively supply over half of the world’s solar panels. (English article) That uncertainty was apparent in shareholder reaction to Buffett’s move, with Trina shares unchanged in Wednesday trade, while Yingli was up slightly and Suntech gained a healthy 6 percent. Beijing has lobbied strongly against the punitive tariffs, and considering the importance both Beijing and Washington place on developing alternate energy, I’m fairly confident they will find a solution that will avert a prolonged solar trade war. That said, this latest Buffett investment looks like good news all around for solar cell makers in the longer term, though they could suffer in the shorter term when the US issues punitive tariffs, which looks almost inevitable.

Bottom line: Warren Buffett’s new investment in solar energy bodes well for panel makers in the long term, but they will still suffer short-term when the US issues punitive tariffs in a trade dispute with Beijing.

Related postings 相关文章:

◙ China Retaliates With Own US Solar Probe 中国启动对美可再生能源补贴调查

◙ Solar Slips Squarely Into the Red 太阳能行业陷入全线亏损

◙ Beijing, Yingli Send Mixed Solar Signals 英利和中国政府似乎“背道而驰”