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China’s Solar Plan: Get Ready for Big New Spending

By newsdoug on August 2, 2011

China tries to rev up solar sector with new tariffs After months of talk, China has finally come out with some concrete details of how it plans to support its struggling solar panel makers, rolling out a new set of state-set electricity rates designed to make solar power generation economically attractive. Under the new rates announced earlier this week, solar power producers will be able to charge 1.15 yuan per kilowatt hour for their electricity, according to Chinese media reports. (Chinese article) Shares of major names like Trina Solar (NYSE: TSL), Suntech (NYSE: STP) and Yingli (NYSE: YGE) briefly surged on the news, but then gave back most of their gains after investors and industry watchers did some number crunching and realized the new rates were far from ground-breaking. One industry source told me that under the new rates, a relatively well-planned and managed power producer might expect to earn an annual return of 2-3 percent — not very exciting when other options are available at much lower risk levels. In order for this plan to work, local governments will have to step in and offer their own incentives for building new solar power plants — something that will probably happen on a much more piecemeal basis. Following the central government’s announcement, I would expect to see a string of announcements of new projects in the months ahead as local governments and big state-controlled power producers like Huaneng (HKEx: 902) fall into step with the central government’s policies. Industry leaders with strong government connections, such as Hong Kong-listed GCL Poly Energy (HKEx: 3800), could be some of the biggest beneficiaries of a new round of China construction that could see the nation install as much as 10 gigawatts of new capacity by 2015 and 50 gigawatts by 2020. (previous post) The new policy should also receive general public support because of its green nature, making it less prone to potential cuts under a likely new wave of cutbacks in major new government programs sparked by Beijing’s desire to cool the economy.

Bottom line: Beijing’s announcement of new tariffs for solar power projects presages a series of new solar power projects in the coming months to support the struggling solar panel sector.

Sharks Come Out in China Stock Crisis 信任危机冲击在美上市中资股

By newsdoug on July 26, 2011

The accounting confidence crisis continues to take its toll on New York-listed China firms, with some mixed signs coming from the struggling solar sector and a very “shark-like” announcement from a US law firm looking to take advantage of the situation. The China Daily reports the crisis has already claimed Longtop Financial, ShengdaTech and China MediaExpress as victims, all of which have been delisted (English article), and last week two larger firms, AutoChina International (Nasdaq: AUTC) and CDC Software (Nasdaq: CDCS), said they were out of compliance with listing rules for failing to file annual reports on time — a first step toward potential de-listing. Now a US law firm named Blank Rome has stepped in by generously offering to provide services to some of the more troubled firms, many of which are likely to face shareholder lawsuits due to plunging share prices on investor concerns about shady accounting. (company announcement) Of course, many of the upcoming lawsuits will probably go nowhere, as the firms will quietly de-list and retreat to China where they will be out of reach of the US legal system. Meantiime, there’s another potentially troubling sign from the struggling solar sector, which may be set for its own accounting crisis due to questionable sales, with Canadian Solar’s (Nasdaq: CSIQ) announcement that it’s replacing its CFO. (company announcement) That announcement follows recent resignations of audit committee chairs at LDK Solar (NYSE: LDK) and Trina Solar (NYSE: TSL), (previous post) though one of my sources tells me Canadian Solar’s resignation may be unrelated to accounting issues. Lastly, there’s a small piece of good news in the alternate energy sector from Ming Yang, which says it’s joined a group developing a relatively sizable 48-megawatt wind power project in south China’s Guangdong province. (company announcement) While announcements like this are encouraging and show China is stepping up to help its struggling alternate energy equipment makers, it could end up being too little too late if the sector’s rapid downward spiral doesn’t end soon.

Bottom line: The accounting confidence crisis for US-listed Chinese stocks is still playing out, and will claim more victims, potentially including some alternate energy firms, before the clean-up ends.

会计操作信任危机继续冲击在美国上市的中资股，而近期走势挣扎的太阳能板块释放出好坏参半的讯号。《中国日报》报导称，融通金融、盛大科技和中国高速频道，已沦为这场信任危机的牺牲品，均已遭摘牌或停牌。此外就在上周，汽车中国国际<AUTC.O>和中华网软件<CDCS.O>称违反了上市公司规章，未及时申报年度报告，而这或许成为走向摘牌的第一步。现在，有家名为Blank Rome的美国律所提出向一些陷入窘境的中资企业提供服务，这其中许多中资企业因会计操作疑虑导致股价重挫，可能遭股东起诉。当然，许多的官司可能最後无果而终，相关公司将悄然摘牌，退回到中国，美国司法制度可能也就鞭长莫及了。与此同时，太阳能板块传递出一些令人忧心的讯号，该领域或许也迎来一场会计信任危机。Canadian Solar<CSIQ.O>财务长近日辞职，而此前赛维太阳能<LDK.N>、天合光能<TSL.N>审计委员会主席也已辞职。不过有消息人士告诉我，Canadian Solar财务长辞职可能与会计操作无关。不过替代能源行业也有一些好消息，譬如明阳风电加入了广东一48百万瓦风电项目。虽然这类消息令人兴奋，表明中国正加大扶持替代能源设备制造商，但如果该领域快速下行的趋势不赶快结束，政府扶持可能也收效不大。

一句话：美国上市中资股面临的会计操作信任危机仍在继续，可能会有更多的中国企业中招，其中可能包括一些替代能源企业。

Latest Solar Audit Resignation Hints at Major Issues Ahead 中国太阳能行业再现审计人员辞职：昭示问题还在前方

By newsdoug on July 19, 2011

A new solar sector storm cloud with LDK resignation The latest resignation of a top audit committee member in the solar sector, this time at LDK Solar (NYSE: LDK), hints that major new storm clouds could be on the horizon for an industry already struggling with its worst ever downturn. LDK announced late on Monday in the US that Louis Hsieh, one of its independent directors who also happened to chair its audit committee and was a member of its corporate governance committee, has resigned for unspecified reasons after several years on the board. (company announcement) LDK’s announcement comes less than a week after an eerily similar one from another major player, Trina Solar (previous post), whose audit committee chairman, an independent director as well, also abruptly resigned without any further explanation. (company announcement) These two similar resignations so close together look very ominous, especially in light of the industry’s current woes, which have seen solar panel prices drop steadily for most of this year due to oversupply. One of my industry sources tells me word on the street is that many of these firms may have recorded sales to phantom customers during the industry’s brief boom in 2009 and 2010, hoping to earn a profit by selling that product at higher prices later when panel prices were still rising. If that were true, the current downturn may have left many of these companies with piles of inventory that have already officially been “sold” on their accounting books for much higher prices than current market rates. Whatever the case, I sense even more turbulence ahead for this already-reeling industry, which perhaps now faces the potential for its own set of accounting scandals.

Bottom line: The resignation of LDK Solar’s audit committee chairman, following a similar departure at a rival last week, points to a potential industry-wide accounting scandal in the struggling solar sector.

中国太阳能行业又有审计人员辞职了，这次是江西赛维LDK太阳能公司<LDK.N>。此事暗示整个行业新的乌云可能已不远。LDK周一晚在美国宣布，公司独立董事、公司治理委员会成员、审计委员会主席Louis Hsieh辞职，原因不详。无独有偶，天合光能<TSL.N>几天前刚刚宣布独立董事兼审计委员会主席突然离职，公司对辞职原因亦没有给出解释。两起辞职事件如此相似，时间如此接近，给人一种不祥的预感，尤其考虑到当前整个行业的困局。我的一名业内消息源向我透露坊间传闻，称2009和2010年行业向好时期，很多太阳能企业可能把一些对挂名客户（phantom customers）的销售记录在帐，希望随後价格上升时以更高的价格卖出产品。如果事实确实如此，那麽目前颓势可能让很多企业滞留大量库存，而在帐面显示上已是以很高的价格“卖出”了。无论到底是什麽情况，我认为太阳能行业将会有更多地震，眼下来看有爆发审计丑闻的可能。

一句话：继上周天合光能审计委员会主席辞职後，江西赛维LDK太阳能也宣布其审计委员会主席辞职，两件事双双指向同一种可能：挣扎不一的太阳能行业可能爆发会计丑闻。

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