THE SUN IN CHINA

China Solar Industry to Start Weed Out the Weak?

2012 -08-03 (Energy Trend)

"Affected by the bleak global economic outlook and the sharp drop in the PV prices, certain European and American companies could not survive in the price war started by Chinese companies’ low-priced products…[The] Chinese PV industry [now] starts to follow suit…LDK Solar was reported to apply for bankruptcy or become nationalized. As the representative solar company in China, LDK finally received help from the Chinese government…[and may] eventually become a state-run company.

"…[LDK’s earnings are linked closely to the revenues of Xinyu City, Jiangxi Province, China, where it is located]…Xinyu City Government [revenues grew RMB 3 billion in 2006 to 2011’s RMB 11.13 billion]…Based on the financial statistics, Xinyu City’s 1H12 income totaled RMB 6.39 billion, representing a growth rate of 2.2%...Compared with 2011’s growth rate of 63.7%...By the end of 2011, LDK’s debt has amounted to US$30.230 billion, an increase of US$8.849 billion compared to that in 2010. Due to the continuous losses, LDK’s net assets decreased from 2010’s US$5.252 to US$4.718 at present, with the debt asset ratio rising to 87.05%."

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"The other solar giant SUNTECH debt has piled up to US$1.66 billion [June 30] and had only US$648 million cash. Also, SUNTECH has a huge amount of bank loan, which requires the company to pay an interest of US$32.5 million every two quarters…[T]the company’s [1H 2012] utilization rate was low. To lighten up the operation pressure, the company may reduce its self-supply of Si wafers and purchase them on the market with prices lower than the manufacturing costs…Trina Solar’s stock price is relatively high and is considered the potential company that could survive in the competition. However, according to the stock price trend, the company’s stock price continued to go down after 1H11, indicating the investors’ worries.

"The top four solar Si wafer and solar cell makers in China are SUNTECH, Trina Solar, Yingli Solar, and Canadian Solar, with JA Solar, Jinko Solar, LDK, Renesola, and Hanwha being the major competitors…Among over 50 Chinese solar firm that have announced their 1H12 revenues, 70% of them suffered from losses…[O]nly the few strong ones will remain and become the solar brands that represent China…"

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