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Shunfeng to Spend $4.1 Billion on Solar as China Fights Smog

Shunfeng Photovoltaic International Ltd. (1165), the solar manufacturer that surged 17-fold in market value last year, plans to invest about 25 billion yuan ($4.1 billion) to develop its own solar projects this year.

Shunfeng, with a market value of HK$13 billion ($1.66 billion), expects to install 3 gigawatts this year as part of a plan to build 10 gigawatts in the three years through 2016, Chairman Zhang Yi said yesterday by phone from Hong Kong. The company currently has about 890 megawatts in operation. Most of the new projects will be ground-mounted in northwestern areas including Xinjiang, Qinghai, Gansu and Inner Mongolia.

China is speeding the development of renewable energy to try to curb the country’s deadly smog, state broadcaster China Central Television reported yesterday. The world’s biggest carbon emitter plans to add 14 gigawatts of solar power in 2014 compared with 10 gigawatts scheduled last year.

Of the investment, “about 6 to 7 billion yuan will be project capital funding” provided by Shunfeng, while the rest may come from commercial banks or other financing measures in the capital market, Zhang said. Shunfeng has started generating cash from solar farms that are now online, he added.

“The solar market has broad prospects” given that power consumption is rising and the government is targeting 35 gigawatts of solar capacity by 2015, he said.

Solar Projects

Solar power projects in China have “considerable and foreseeable returns,” said Wang Xiaoting, a Beijing-based analyst from Bloomberg New Energy Finance.

The company said on Jan. 7 that its units will get 980 million yuan from China Development Bank Corp. for 130 megawatts of solar projects in Xinjiang. Its debt almost doubled to 2.21 billion yuan as of June 30 compared with the end of 2012, according to Bloomberg data.

“Our capital also increased significantly as debt rose; we issued convertible bonds that could be exchanged to stocks and we wouldn’t need to pay back,” Zhang said. “We’ll maintain a reasonable debt-to-asset ratio.”

Shunfeng in November agreed to sell HK$3.58 billion in convertible bonds.

The company expects to complete its 3 billion-yuan acquisition of Wuxi Suntech Power Co., the main unit of what was once the world’s largest photovoltaic maker, by the end of February after shareholders and Hong Kong’s securities’ regulator approve, Zhang said.

The shares were down 0.5 percent at HK$6.12 as of 2:14 p.m. local time in Hong Kong trading.

To contact Bloomberg News staff for this story: Feifei Shen in Beijing at fshen11@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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