Chinese solar panel maker Irico’s shares surge as it forecasts big rise in profit

The company says ‘breakthroughs’ in output and cost cutting will help profit rise in the six months to June

PUBLISHED : Friday, 13 July, 2018, 12:32pm
UPDATED : Friday, 13 July, 2018, 12:32pm

Shares in Chinese solar panel maker Irico Group New Energy rose by the most in four months on Friday, outperforming the broader market and the renewables energy sector, after the company said it expected a surge in net profit for the six months to June.

The Shaanxi-based, state-owned company said after the market had closed on Thursday that net profit was expected to be between 179 million yuan and 195 million yuan (US$26.8 million to US$29.2 million) for the period, an increase of between 483 per cent and 550 per cent from the same period of 2017.

Revenue was likely to be around 144 million yuan, helped by its acquisition of 51 per cent of component maker Zhuhai Caizhu Industrial in May, it said.

“ … The company achieved new breakthroughs in product yield and output, cut costs through lean production and energy conservation and consumption reduction, and optimised its product structure to increase gross profit margins,” Si Yuncong, chairman of Irico, said in a filing to the Hong Kong stock exchange.

Shares in Irico jumped as much as 11.94 per cent, the biggest daily gain since March 15 on an intra-day basis, before most recently trading 7.46 per cent higher at HK$0.72. The stock has slid about 13 per cent this year.

The Hang Seng Index was up 0.6 per cent, or 172.11 points, at 28,652.94 and the Hang Seng China Enterprises Index added 0.4 per cent, or 40.01 points, to 10,792.87.

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Other renewables shares were mixed, with China Glass Holdings dropping 1 per cent to HK$0.495 and Xinyi Solar Holdings slipping 0.43 per cent to HK$2.32. In Shanghai, Veken Technology shot up by its 10 per cent limit to 5.57 yuan but Sungrow Power Supply eased 1 per cent to 8.20 yuan and Xinjiang Goldwind Science and Technology lost 1.9 per cent to 12.67 yuan.

In recent months, the National Development and Reform Commission, China’s top planning regulator, has announced a slew of policies aimed at reining in overcapacity in the renewable energy sector. It has suspended the allocation of new quotas and cut subsidies for solar panels and has also announced plans for competitive bidding for wind farm development to replace subsidies.