LDK Leads Solar Drop as Syria Sinks ADRs: China Overnight
Chinese solar stocks fell in New York, with LDK Solar Co. (LDK) tumbling the most in three months, after its cash balance dropped to the lowest level since 2009 and second-quarter sales sank 51 percent.
The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. slid 1.6 percent to 95.36 yesterday, the biggest retreat in eight weeks. LDK, the world’s second-biggest maker of solar wafers, fell the most since May 22, and Yingli Green Energy Holding Co. dropped 6.7 percent. Noah Holdings Ltd. (NOAH) extended a two-day slump to 23 percent. China Southern Airlines Co. widened the discount to its Hong Kong shares after reporting an operating loss.
The China-US gauge joined a global stock market rout on concern the U.S. will take military action against Syria. LDK, which reported a ninth consecutive quarterly loss and a drop in sales, has $2.8 billion in debt and ended the second quarter with $85.1 million in cash. The amount won’t suffice to make today’s bond payment, Chief Financial Officer Jack Lai said yesterday in a conference call with analysts.
“LDK, one of the biggest names in the industry, is taking a big hit itself because of a rapidly decline in cash balance and it’s highly indebted,” Angelo Zino, an analyst at Standard & Poor’s in New York, said in a phone interview yesterday. “We probably didn’t see enough along the lines of when these guys can come back to some type of break even levels.”
The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., declined 1.7 percent to $35.08. The S&P 500 Index slid 1.6 percent.
American depositary receipts of LDK retreated 12 percent to $1.53 in New York, trimming this year’s advance to 6.3 percent. Trading volume was twice the three-month average, according to data compiled by Bloomberg.
LDK’s second-quarter loss narrowed to $165.3 million from $254.3 million a year earlier. Sales slumped to $114.7 million from $235.4 million. The company expects third-quarter shipments of 350 megawatts to 450 megawatts of wafers and as much as 80 megawatts of cells and modules.
“It doesn’t look like its shipments will even get the company close toward a break-even level over the next couple of quarters,” S&P’s Zino said.
The delay in a bond payment was expected given its financial position, according to Zino. LDK is seeking to restructure its liabilities and raise capital, Chairman Peng Xiaofeng said yesterday on the call. The company failed to fully repay $23.8 million in bonds due April 15.
Baoding, China-based Yingli, the world’s largest solar-panel maker, sank to $4.07 in the biggest decline since June 20. Trina Solar Ltd. (TSL), based in Changzhou, fell 5.3 percent to $8.81.
Noah Holdings, which sells wealth-management products for commissions, slid 7 percent to $12.73 in New York. The stock posted the biggest two-day slump since September 2011. Volume was almost six times the 90-day average, data compiled by Bloomberg showed. JPMorgan & Chase Co. cut its recommendation on the stock to neutral from the equivalent of buy on Aug. 23.
YY Inc. (YY), an entertainment social media company, tumbled 5.9 percent to $39.19, sinking the most since Aug. 15.
ADRs of China Southern, Asia’s biggest airline by traffic, dropped 4.1 percent to $17.89. Its ADRs, each representing 50 underlying shares in the Guangzhou-based carrier, traded 1.2 percent below its Hong Kong-traded stock.
China Southern’s net income in the six months ended in June fell 19 percent to 344 million yuan ($56.2 million). That lagged behind the 516 million-yuan average profit estimate of five analysts surveyed by Bloomberg News. The operating loss was 114 million yuan.
The Hang Seng China Enterprises Index retreated 0.9 percent to 9,988.23 in the biggest drop in a week. The Shanghai Composite Index added 0.3 percent to 2,103.57, the highest level since Aug. 13.
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