Hanergy Sees `Significant' Loss After Solar Customers Depart

  • Chinese manufacturer says sales were `substantially lower'
  • Existing customers scaled back work after shares halted

The impact of Hanergy Thin Film Power Group Ltd.’s spectacular crash is coming into focus. 

Hanergy, the once high-flying Chinese solar company whose shares plunged 47 percent in a single day in May, said revenue has plummeted and it expects to report a “significant” loss for 2015, according to a statement Friday.

The announcement caps months of turmoil for Hanergy. Its shares have been suspended from trading in Hong Kong since May after surging more than sixfold in the prior 12 months. Its market value once exceeded HK$300 billion ($36.6 billion), making it more valuable than Sony Corp. or Twitter Inc. While Chairman and principal owner Li Hejun predicted that its thin, flexible solar cells would festoon everything from recreational vehicles to buildings to backpacks, investors started questioning the technology and its business model.

The bulk of the company’s sales were to its Beijing-based parent company Hanergy Holding Group Ltd., accounting for 60 percent of 2014 revenue. Then on May 20, amid speculation of market manipulation, the shares fell 47 percent in 24 minutes, eviscerating $19 billion in market value. Trading was suspended, and it hasn’t resumed. A week later the Hong Kong Securities and Futures Commission confirmed it was investigating the company.

Shares Suspended

The company said Friday its reputation was shattered by the suspension, leading to lower orders. “A number of existing and potential customers, business partners and suppliers of the group have indicated to reduce/suspend/delay cooperation with the group due to the continued trading halt,” Hanergy said in the statement.

Sales, which were HK$9.6 billion in 2014, may fall “substantially” for 2015. Profits, which were HK$3.3 billion the prior year, would give way to a loss.

“The board of the company is currently seeking legal advice to continue to address the concerns of (Securities and Futures Commission) and will seek to resume trading as soon as possible,” Hanergy said.

In the meantime, revenue has withered and customers have stopped paying bills. Hanergy’s sales to its parent company and affiliates dropped by 96 percent last year, to less than HK$200 million, compared to HK$5.96 billion in 2014.

As of Dec. 31, customers owed Hanergy HK$2.3 billion, and Li’s parent company owed the listed subsidiary HK$2.6 billion.

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