GCL Poly Energy, the world's largest maker of raw materials for solar panels - polysilicon and solar wafers - saw its share price plunge 8.2 per cent after it warned of a net loss in the year's first half, blaming weak demand because of Europe's sovereign debt crisis.
Analysts said the Jiangsu-based producer would struggle to return to the black in the second half.
The company said on Thursday that it expected to post a net loss of about HK$330 million for the first six months of the year.
Given a deteriorating market outlook and GCL's higher-than-expected first-half loss, 'it will be a challenge for the company' to make a profit in the second half, despite efforts to reduce its polysilicon production costs, cut material waste and make its solar wafer more efficient, KGI Securities analyst Jennifer Liang wrote in a research note.
Global producers of solar panel materials had indicated that demand from Europe, the world's largest solar panel market, had been lacklustre, while the ramp-up of demand in China had been slower than expected, Liang said.
The adoption rate of solar power around the world hinges on government subsidies. Despite rapidly falling equipment costs, solar energy is still more expensive than traditional sources of electricity, such as coal-generated and hydro power.