Investors dump Trony shares after poor results

PUBLISHED : Thursday, 23 February, 2012, 12:00am
UPDATED : Thursday, 23 February, 2012, 12:00am


Investors yesterday punished Trony Solar, after the country's largest producer of thin-film solar panel modules reported worse than expected interim results, pushing its share price down as much as 10 per cent.

The Shenzhen company reported a net loss of 596.5 million yuan (HK$734.5 million) for the six months to December, compared to a profit of 261.9 million yuan a year earlier. Sales sank 32 per cent to 610.2 million yuan.

Trony shares fell as low as HK$1.16 before closing with a loss of 4.7 per cent at HK$1.23 - 73 per cent lower than its initial public offering price of HK$4.50 in October 2010.

Trony attributed the first-half loss to 611 million yuan in impairment charges for property, plant and equipment.

Chief financial officer Eric Chan Wing-chung said the losses were booked to reflect the assets' lower market value after a sharp fall in product prices in the last five months of last year. The company's gross profit margin fell to 20.8 per cent from 43.9 per cent.

'Our products' prices fell precipitously from July to December, with prices at new lows in December that resulted in gross losses,' Chan said. 'Due to overly low prices, we rejected many orders which accounted for some 40 per cent of our production requests.' Trony's average selling price fell 11 per cent to 10.30 yuan per watt. Shipments dropped 20 per cent to 59.2 megawatts.

'Unlike our rivals that have tight cash flow and are hungry for business, we have chosen not to produce at loss-making margins,' Chan said.

The company had 983.5 million yuan in cash at the end of last year.

Chan expected prices to rebound 10 to 20 per cent this year, which would help lift output and plant use, which stood at just under 40 per cent at the end of last year.

Prices and utilisation had improved since then, he said without giving details.

He warned that plant use and profit margins might not recover to levels in the first half of last year for one or two years.

Chan said the company aimed to cut production costs by 10 per cent this year, after they rose 24 per cent to 8.30 yuan per watt last year as lower production volume resulted in higher fixed costs.

Trony plans to defer the addition of a third production line to next year.

Co-president Li Heihu said the company was pinning its hopes on Beijing to subsidise the domestic installation of solar power products. Trony's products are sold primarily to makers of consumer products and builders that incorporate solar panels in roof-tops and building facades.