LDK Tops Solar Rally as Soufun Sinks: China Overnight
Most Chinese stocks in New York climbed, led by LDK Solar Co. after the government said it will accept new applications for renewable energy subsidies. Soufun Holdings Ltd. (SFUN) slid the most in a month.
LDK, the world’s second-biggest maker of solar wafers, surged 20 percent, while Suntech Power Holdings Co., the No. 1 manufacturer of solar panels, jumped the most in a week. The Bloomberg China-US Equity Index of the most-traded Chinese stocks in New York was little changed at 92.78 yesterday. Real estate information website SouFun tumbled on concern new products will cannibalize existing streams of revenue. Yuan forwards rose to the strongest level since April.
China, the world’s biggest supplier of solar modules, will accept new applications from regional governments seeking to qualify for alternative energy subsidies, the nation’s Finance Ministry said in a Nov. 9 statement. Both Suntech and LDK have reported losses since the second quarter of 2011 and have received assistance from local administrations in the past two months as the industry seeks to avoid loan defaults and mergers.
“Some investors may think a government bailout may be good for the solar stocks and companies like Suntech have been shorted heavily over the past few months and so there aren’t many shares available to sell,” Aaron Chew, a senior analyst at Maxim Group LLC in New York, said by phone yesterday. “The government’s subsidy plan is better than nothing, but I don’t think it will save the industry as it’s still not profitable. It may take a few weeks to investors to realize this.”
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., climbed 0.2 percent to $36.55, after dropping 2.7 percent last week. The Standard & Poor’s 500 Index was little changed at 1,380.
‘Edge of Bankruptcy’
American depositary receipts of Suntech jumped 5.1 percent to 95 cents. Maxim’s Chew last reiterated his sell recommendations in October with a price target of 50 cents.
Suntech’s worst time is behind it, and it “isn’t on the edge of bankruptcy,” the Economy & Nation Weekly, a magazine controlled by the Xinhua News Agency, said in a report dated Nov. 8, citing an interview with Vice President Gong Xuejin. The company made almost $30 million in profit in the third quarter, and its shipments of 2.097 gigawatts for the first 10 months surpassed its estimates of as much as 2 gigawatts at the beginning of the year, Gong said, according to the report.
LDK, the world’s second-biggest maker of solar cells, rallied to $1.08, the highest level since Oct. 4.
Yingli Green Energy Holding Co. (YGE), the sixth-largest silicon-based solar module producer, climbed 3.7 percent to $1.68 in New York. Maxim’s Chew kept a hold rating on Yingli in his report last month.
The company, based in Baoding of China’s Hebei province, was among the 100 developers of 1.7 gigawatts capacity projects that were selected for the first phase of the government’s subsidy program this year in May.
The Shanghai Composite Index (SHCOMP) of Chinese domestic shares advanced 0.5 percent to 2,079.27, rising for the first time in six days. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong fell for a third day, retreating 0.1 percent to 10,443.47.
Twelve-month non-deliverable forwards on the yuan rose 0.31 percent to 6.3290 a dollar in New York, the strongest level since April, after the currency gained 0.3 percent to 6.2291 a dollar in Shanghai yesterday.
Soufun, the biggest real-estate information website owner in China, sank 4.5 percent to $18.38, the steepest loss since Oct. 8.
The Beijing-based company raised its 2012 sales forecast to between $400 million and $420 million, from its previous estimate of as much as $410 million, according to its statement yesterday. That compared with the average $415 million estimate of three analysts in a Bloomberg survey.
“Even though Soufun has lifted its full-year guidance, its mid-range is still below market consensus,” Tian X. Hou, the founder of T.H. Capital LLC, said by phone yesterday from New York. “The company has shifted to drive sales from a transaction-based e-commerce membership program, which may cannibalize the existing display marketing services.”
Hou maintained a hold recommendation on the stock.
Huaneng Power International Inc. (600011), China’s largest electricity generator, advanced 1.3 percent to $31.74, the biggest gain this month. The ADRs, each representing 40 underlying shares, traded 0.5 percent below the Hong Kong stock, the smallest discount in four days.
China’s Qinhuangdao coal price, a benchmark for power-station coal, fell in the week through Nov. 11 to be between 630 yuan ($101) to 645 yuan a ton from as low as 635 yuan the previous week, data from China Coal Transport and Distribution Association showed yesterday.
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