[TYAK1]

Hanergy Thin Film’s Profit Surges on Sales and Disposals
by Bloomberg News
2:04 AM PDT
March 30, 2015

http://www.bloomberg.com/news/articl...sset-disposals

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(Bloomberg) -- Hanergy Thin Film Power Group Ltd., the Chinese solar-panel maker whose market value has swollen to $36 billion, said full-year profit surged 64 percent following the sale of five power projects in China.

Net income totaled HK$3.31 billion ($427 million), up from HK$2.02 billion a year earlier, according to a Hong Kong stock exchange filing. The company restated its 2013 profit after acquisitions of Hanergy Solar U.K. Ltd. and Global Solar Energy Inc. from the earlier HK$2.07 billion. Sales rose almost threefold to HK$9.6 billion.

Hanergy sold the photovoltaic power plants in China in 2014 for 1.42 billion yuan ($229 million), a net gain of about 778 million yuan, according to the statement. The full-year profit caps a tumultuous year for Hanergy, which has become the world’s biggest solar company by value and made its chairman, Li Hejun, a billionaire.

Li owns more than half of the shares in Hanergy Thin Film and controls the company through a closely held Beijing-based parent called Hanergy Holding Group Ltd. Shares of the listed company have more than quadrupled in the past six months, making Li among China’s richest men and raising questions about whether the stock is overvalued.

Valuation questions -- and the pattern of trades in the company’s stock -- have prompted Hanergy to issue at least two statements rebutting suggestions that either the company or its chairman manipulated its share price.

About 61 percent of the company’s revenue comes from sales it makes to the parent company Hanergy Group and its affiliates, according to the statement today.
Receivables Surge

The statement also showed that Hanergy Thin Film’s receivables surged 86 percent last year to HK$4.3 billion, with the parent company responsible for about half of the outstanding sum. A footnote in the document said the parent company settled its account as of today.

Instead, Hanergy said the surge in Hanergy Thin Film’s value may be a result of the Chinese government’s focus on the environment and renewable energy.

Hanergy has a market value of HK$279.9 billion, higher than all other listed Chinese solar companies combined and six times the value of Tempe, Arizona-based First Solar Inc., the biggest producer of thin-film solar panels.

A year ago, the Kowloon headquarters of Hanergy Thin Film housed a little-noticed subsidiary of Li’s Hanergy Holding, which initially was a hydroelectric-dam operator with more than 6 gigawatts of projects.
Four Acquisitions

The company has been investing in thin-film technology since 2009. It’s bought four overseas companies since 2012 -- the U.S. producers Global Solar Energy Inc., Miasole Inc. and Alta Devices and the Solibro unit of Germany’s Q-Cells.

Last month, the company said it would partner with vehicle designers to develop cars to be powered entirely by sunlight. Hanergy’s latest semi-annual earnings report identifies the automotive sector as an “important strategic direction” for the group.

But the company’s rapid growth, and Li’s promises of an energy revolution, have brought scrutiny to the company.

The Financial Times newspaper started raising questions about Hanergy on Jan. 28, when it published a story dissecting accounting practices including the company’s disclosure that most of its solar-panel sales come from its parent company. The shares have almost doubled since then.
Wildly Inflated

On Feb. 27, analysts Charles Yonts and Johnny Lau at CLSA Asia-Pacific Markets in Hong Kong issued a report saying Hanergy’s shares were wildly inflated. Jenny Chase, lead solar industry analyst at Bloomberg New Energy Finance, published a note on March 6 saying Hanergy is working with “unproven” technology and that it hasn’t detailed solar-project installations that would help justify its valuation.

Three analysts, Penny Chen of BNP Paribas Equity Research, Kenny Tang of AMTD Asset Management Ltd. and Andrew Zamfotis of Eva Dimensions LLC, couldn’t be reached for comment today.

Then on March 25, the FT wrote another story showing that Hanergy’s shares listed in Hong Kong tend to rise in the final 30 minutes of the trading day. The newspaper said the pattern is unlikely to occur randomly or because of electronic algorithms.

Following the report, Hanergy issued a statement dismissing the story as “innuendo.” All of Li’s share trading activities have been properly recorded and disclosed and he hasn’t engaged in any alleged market misconduct, Hanergy said.

The company has also sought to rebut earlier criticisms. Hanergy published a statement on Feb. 2 reassuring investors about the health of its finances and on March 4 said it expected full-year earnings to rise more than 55 percent.

To contact Bloomberg News staff for this story: Feifei Shen in Beijing at fshen11@bloomberg.net; Aibing Guo in Hong Kong at aguo10@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net Abhay Singh, Randall Hackley