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Yingli Leads Chinese Solar Stock Rally on Supply Outlook

Chinese solar manufacturers rallied in U.S. trading, led by Yingli Green Energy Holding Co. (YGE), on speculation a global supply glut that has weighed on component prices is easing.

Yingli, the world’s biggest solar panel maker, jumped 5.6 percent. Trina Solar Ltd. (TSL) advanced to a two-month high. Perfect World Co. tumbled 12 percent after the online games operator said its second-quarter gross margin shrank. The Bloomberg China-US Equity Index (HSCEI) rose less than 0.1 percent to 117.18.

Manufacturers including SunPower Corp. in the U.S. and Germany’s Manz AG are expecting a looming shortage of solar panels to spur orders after an oversupply that began in 2011. Global demand in 2014 will rise to about 45 to 50 gigawatts from below 40 gigawatts last year as shipments to new markets tightens the available supply, David Smith, the manager of the Gabelli Green Fund at Gamco Investors Inc., estimated.

“Overall demand is going global -- South America, Africa, India -- while China and Japan both have strong demand right now,” Smith, who is based in Rye, New York, said by e-mail. “New markets are opening up, and we are starting to see early signs of new capacity added. Many of the Chinese names are undervalued and have good upside from present levels.”

Average spot prices for modules, which have been tumbling since October, slid this week to the lowest since at least January 2010, data compiled by Bloomberg show. Trina, China’s largest profitable panel manufacturer, trades at 9.9 times projected 12-month earnings, compared with an average multiple of 22 among the 17 members of the Bloomberg Global Large Solar index.

Yingli, JinkoSolar

Yingli, based in Baoding in China’s Hebei province, rallied the most in two months to $3.77. Trina climbed 4.9 percent to $13.06, the highest since June 20.

JinkoSolar Holding Co., a solar cell maker based in Shangrao in China’s Jiangxi province, said Aug. 18 it started a new module plant with capacity of 120 megawatts in South Africa, its first outside of China. Its shares rose 2.3 percent to $28.01.

Perfect World, based in Beijing, sank to $20.18 in the biggest decline since January 2012. Trading volume of 2.12 million shares was more than five times the average of the past three months. The company said in an Aug. 18 statement that gross margin narrowed to 73.1 percent in the second quarter from 76.5 percent a year earlier and 73.6 percent in the previous three months.

The iShares China Large-Cap ETF, the biggest Chinese exchange-traded fund in the U.S., added 0.1 percent to $41.43. The Standard & Poor’s 500 Index gained 0.5 percent as retailers rallied on better-than-projected earnings while data showed inflation pressures remain limited and housing starts jumped.

The Hang Seng China Enterprises Index gained 0.3 percent to 11,094.59, while the Shanghai Composite Index (SHCOMP) rose 0.5 percent to an eight-month high of 2,245.33.

To contact the reporter on this story: Belinda Cao in New York at lcao4@bloomberg.net

To contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net Richard Richtmyer, Marie-France Han

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