Power firm targetsbreezy 1b yuan IPO
Nanjing Guanya Power Equipment, which manufactures inverters for alternative-energy power stations, plans to raise one billion yuan (HK$1.22 billion) through a mainland initial public offering in the second half of this year.
The company is seeking a bigger slice of the lucrative five billion yuan market for photovoltaic (PV) inverters, a key component of solar and wind-power stations.
Sun Bangwu, an executive director of Guanya, told the South China Morning Post that Beijing's curbs on investment in solar and wind power would have no impact on the inverter producer. 'Our business is growing on a healthy track,' he said. 'We hope to raise about one billion yuan to support expansion.'
PV inverters convert the direct current output of solar panels into a mains-frequency alternating current that can be fed into commercial electrical grids.
Guanya's listing plan comes after Premier Wen Jiabao said in a work report to the National People's Congress this month that Beijing would 'prevent' excessive investment in solar PV and wind power.
Since July, as prices of silicon wafer and polysilicon fell sharply, a number of small and medium-sized manufacturers have suspended production due to excess inventory. Wen said blind expansion of equipment manufacturing for solar and wind power should be controlled to ensure the healthy growth of these sectors.
'We want to focus on our own businesses and will assess the market conditions in the second half before finalising the listing plan,' Sun said.
According to the 21st Century Business Herald, the term 'prohibit' was used in the draft government work report, but was changed to 'prevent' amid proposals from government and industry officials.
Qian Zhimin, deputy director of the National Energy Administration, was quoted by state-owned China Securities Journal as saying that Wen was referring to low-level manufacturing businesses being curbed while Beijing still sees great potential in developing alternative energy sources.
'The competition in the inverter market is getting fiercer as quite a few players are vying for a bigger share,' said Xiangcai Securities analyst Hou Wentao. 'The annualised growth of the business is estimated at about 30 per cent in the coming years.'
Analysts predict a market size of five billion yuan in the next few years.
Guanya was established in 2001, one of the earliest makers of PV inverters on the mainland. It now owns 18 national patents and produces 39 types of PV inverters. The company is backed by a clutch of private-equity funds, including ZTE Capital and Milestone Capital.
According to the mainland's securities regulator, 515 companies have IPO applications filed. It remains to be seen whether Beijing will continue to fast-track IPO approvals to help cash-hungry businesses.
After a sharp drop in the market in recent years there are signs of a turnaround, with the Shanghai Composite Index up 9.3 per cent this year.