Trina Leads Solar Jump on Yingli Outlook: China Overnight
Trina Solar Ltd. (TSL), China’s third-largest maker of solar panels, drove gains in the Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S., which added 0.5 percent to 91.93 yesterday, after falling in the previous two days. Yingli, whose chief executive officer said yesterday that it will become the world’s biggest panel supplier in 2012, gained the most in nine months. Youku Tudou Inc. (YOKU) sank to the lowest level since Sept. 6 as analysts predict the online video company will post an eighth quarterly loss in results due today.
Chinese solar companies have reported losses since the second quarter of 2011 as the industry was plagued by overcapacity and as Europe’s debt crisis prompted governments to trim or eradicate subsidies for alternative energy. Yingli’s panel shipments this year will rise by as much as 37 percent from 2011, the company said in a statement yesterday, as CEO Miao Liansheng said demand in China is “growing rapidly.”
“Trina and Yingli appear to be the biggest survivors because they have the lowest costs than some other brands in the industry,” Aaron Chew, a senior analyst at Maxim Group LLC, which rates both stocks hold, said by phone in New York yesterday. “These two still have several hundred-million dollars of cash, and even though they are burning a lot of capital, they have years before they have to face the music.”
China ETF Rises
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S. was little changed at a four- day low of $36.84. The Standard & Poor’s 500 Index advanced 0.8 percent to 1,409.93 after comments by Speaker of the U.S. House of Representatives John Boehner and President Barack Obama fueled speculation an agreement can be reached over the budget impasse.
The China-US measure defied declines in mainland stocks, with the Shanghai Composite (SHCOMP) Index of domestic shares slipping 0.9 percent to 1,973.52 yesterday, the lowest level since Jan. 16, 2009. Hong Kong’s Hang Seng China Enterprises Index (HSCEI) fell 1.2 percent to 10,399.16 in the steepest decline since Nov. 15.
Trina, based in Changzhou, China, surged 21 percent to $2.81, the biggest advance in 10 months. Trading volumes were almost four times the three-month daily average, data compiled by Bloomberg show.
The company had $600 million of cash and cash equivalents as of Sept. 30, according to a Nov. 20 earnings statement. Trina reported a fifth consecutive net loss for the quarter ended in September and cut its 2012 shipment forecast to as low as 1.55 gigawatts from a previous target of at least 1.75 gigawatts.
‘Best Balance Sheet’
Trina “has the best balance sheet among all of the Chinese peers and they can hold their breath longer,” Maxim’s Chew said.
Yingli, China’s fourth-largest solar producer, surged 13 percent to $1.62, the steepest rally since Feb. 9, after it reported net revenue of $355.9 million for the third quarter, compared to the median analyst estimate of $353.9 million.
The Baoding, China-based company’s Yingli Green Energy Americas unit will provide 200 megawatts of solar modules to LS Power Group’s Centinela solar energy facility, scheduled for commercial operation in mid-2014, according to a Nov. 27 statement. LS Power is a developer of power generation and transmission projects.
JA Solar Holdings Co. jumped 7.7 percent to 70 cents yesterday in New York after reporting a wider-than-estimated net loss of 30 cents per ADR for the period from July to September. Quarterly sales for the Shanghai-based maker of solar cells were $260.9 million, beating the mean estimate of $230.4 million.
LDK Solar Co. (LDK) climbed 10 percent to $1.07, the highest close in two weeks. Jiangsu, China-based Suntech Power Holdings Ltd. (STP), the world’s largest solar-panel maker, gained 3.7 percent to 89 cents, the biggest advance since Nov. 12.
Focus Media Holdings Ltd., a Chinese digital advertising company, rose 3.2 percent to $24.53 in New York, gaining for the first time in three days.
The company said after U.S. markets closed on Nov. 27 that third-quarter adjusted net income was $94.6 million, or 71 cents per ADR, exceeding the 70-cent average of analysts’ estimates. Focus Media said fourth-quarter adjusted net income will be between $93 million and $98 million.
American depositary receipts of Youku Tudou dropped 2.8 percent to $16.73, the lowest level since Sept. 6. The Beijing- based company, which completed a merger with smaller competitor Tudou in August, owns China’s most-popular video websites.
Youku Tudou may report an adjusted net loss of 46 million yuan ($7.4 million) for the third quarter after markets close today, according to the average of five analysts’ estimates compiled by Bloomberg. That would be the eighth quarter of losses since Youku Tudou’s initial public offering in December 2010. It posted a loss of 29.3 million yuan in the three months to June 30.
Thirty-day volatility in the Bloomberg China-US gauge dropped to 19.67 yesterday, from 19.89 on Nov. 27 and compared with this year’s average of 22.5.
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