Hanergy TFP posts strong profits, says parent failed to deliver ordered solar panels
Parent's inability to supply solar panels adds to concerns about sustainability of profit increase
Hanergy Holding, the hydro-to-solar power investment flagship of the mainland's richest person Li Hejun, failed to deliver solar panels its listed unit Hanergy Thin Film Power ordered in 2013 and was forced to refund HK$1.26 billion of prepayments.
Together with the fact that only 5 per cent of panels ordered by the listed unit last year were delivered, the situation deepened concerns about the mysterious privately held parent's capability to deliver, despite having bought US$2 billion worth of panel production lines from the listed unit.
The figures were disclosed in Hanergy TFP's annual results filing to Hong Kong's stock exchange yesterday. The firm posted big profit increases in the past three years on the back of production line sales to the parent.
Its share price rocketed 370 per cent in the past six months with hefty trading turnover, but management failed to address concerns about the sustainability of its profit and doubts about the parent's panel production volume. Some commentators called it a stock bubble waiting to burst.
"This problem has been in existence for a while, the fact that more of the 2013 panel procurement couldn't be delivered raises more alarm bells of the parent's capability to deliver," said an analyst who has previously covered the stock.
In the company's interim results announcement last August, it said it had signed contracts to buy 677.9 megawatts (MW) of panels from its parent in 2013, and paid half the contract amounts. Only 60.8 MWs were delivered by June 30 last year.