Hanergy Thin Film Power Group Ltd.’s decision Monday to scrap a deal to buy solar panels from its parent company is an attempt to weaken the relationship at the center of concerns about its business model.
The announcement minimizes “connected transactions” with Hanergy Holding Group, according to a statement from Hanergy Thin Film late Monday to the Hong Kong stock exchange. About 61 percent of its sales derive from its Beijing-based parent, the listed company said in March.
That so much of Hanergy Thin Film’s revenue comes from sales to Hanergy Group is a cause of concern among analysts and investors. Hanergy Group makes thin film solar panels with equipment supplied by Hanergy Thin Film. Hanergy Thin Film’s shares plunged 47 percent on May 20 before trading was halted indefinitely in Hong Kong, wiping $19 billion off its market capitalization.
“The group will definitely continue to consolidate the development of its downstream business in order to realize continuous development in the areas of solar energy projects and application products,” Hanergy Thin Film said in the statement.
An e-mail sent to Hanergy Thin Film’s investor relations department requesting further comment wasn’t immediately returned.
Before the stock plunge on May 20, Hanergy Thin Film had surged more than six-fold in a 12-month period. At its peak, the gains made Hanergy Thin Film six times bigger than Tempe, Arizona-based First Solar Inc., the largest U.S. developer of utility-scale solar farms.
Hong Kong’s Securities and Futures Commission, which is probing Hanergy Thin Film, is asking for audited accounts of Hanergy’s parent, and details of loans taken by Chairman Li Hejun amid concern that the company has failed to keep investors properly informed, Hanergy Thin Film said on July 16. At the same time, the company said it plans to challenge the regulator’s suspension of the solar company’s shares.