Yingli Leads Chinese Solar Rally as CFO Predicts Profit
Yingli Green Energy Holding Co. (YGE) is leading a rally this month in Chinese solar-panel makers traded in New York as the company predicts it will post its first profit in three years as soon as the second quarter.
Yingli has jumped 36 percent this year and Trina Solar Ltd. (TSL) has surged 18 percent, after at least doubling in 2013. The Bloomberg China-US Equity Index of the most traded Chinese stocks in the U.S. advanced 1.8 percent to 103.14 yesterday, the most in eight weeks. E-Commerce China Dangdang Inc. (DANG) rose 9.4 percent while YY Inc. (YY), a social entertainment website, climbed to a record. Travel agency Ctrip.com International Ltd. (CTRP) gained while Shanda Games Ltd. dropped the most in two months.
Yingli, based in Baoding, China, will post its first profit since 2011 as early as next quarter, Chief Financial Officer Wang Yiyu said in a Jan. 7 interview, indicating growing optimism that solar panel makers are recovering from a price plunge caused by a glut of manufacturing capacity. Yingli said yesterday it partnered with Kyoto, Japan-based XSOL Co. to sell its solar modules in the Japanese market.
“The China-based names are moving as much as they are because they are getting into more of the project development business, which commands higher margins,” Angelo Zino, an analyst at S&P Capital IQ, said by phone from New York yesterday. “The shift in this business for a lot of these tier-one manufacturers is creating better visibility over the next couple of years.”
The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., rallied 1.5 percent to $36.26 in New York, after slumping the most in a week. The Standard & Poor’s 500 Index rose 1.1 percent as better-than-forecast retail sales and corporate merger activity signaled confidence in the U.S. economy.
Yingli’s American depositary receipts advanced 5.7 percent to $6.89. ADRs of Changzhou-based Trina surged 6.6 percent to $16.18, the biggest rally since Jan. 2.
Yingli’s shares dropped 5.4 percent Jan. 13 while Trina’s tumbled 6.6 percent after The Financial Times reported that the European Union is considering scrapping 2030 targets for renewable energy.
“Europe is not as important as it was five years ago,” Zino at S&P Capital said, forecasting Europe will only represent 20 percent of total global solar shipments this year. Sales in China, Japan and U.S. will account for about 60 percent of the total, he added.
Ctrip, China’s biggest online travel agency, climbed 2.5 percent to $40.10, trimming its slump this year to 19 percent. JPMorgan Chase & Co. raised its rating on Ctrip to overweight, equivalent to buy, from neutral yesterday in a note.
The “recent stock pullback has factored in the potential earnings downgrade in 2014 but overlooked the earnings power in the medium to long term,” according to the JPMorgan report.
Dangdang, China’s biggest online book retailer, soared to a two-month high of $10.80. Trading volume was double the 90-day average compiled by Bloomberg.
While Dangdang welcomes strategic investors, it isn’t for sale, Chief Executive Officer Li Guoqing said in a post on his Weibo account run by Sina Corp. Dec. 18.
“The speculation that Dangdang will be acquired isn’t going away totally even though its management tried to clarify rumors,” Henry Guo, a senior analyst at ABR Investment Strategy LLC, said yesterday by phone from San Francisco.
YY, based in Guangzhou, advanced 6.7 percent to $67 in New York, the highest level since it started trading in the U.S. in November 2012.
Shanda, a Shanghai-based Internet games operator, fell 6 percent to $4.22, the largest drop since October. It has slumped 7.9 percent this year after a 51 percent gain in 2013.
The Hang Seng China Enterprises Index in Hong Kong slipped 0.3 percent to 10,149.22, the lowest level in four months. The Shanghai Composite Index (SHCOMP) gained 0.9 percent to 2,026.84, halting a four-day decline.
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