Hanergy Solar Group Ltd. (00566.HK) took a dip on Thursday after the provider of turnkey solutions for production of thin-film silicon solar modules disclosed that its controlling shareholder is still HK$2.09 billion (US$268 million) in arrears to the company.
Hanergy Group had committed to settle all the overdue payment of HK$3.7 billion to its Hong Kong-listed subsidiary by the end of September. However, the parent firm paid only HK$1.61 billion before the due date.
Hanergy Group then told its Hong Kong-listed company that it “intends” to settle the remaining past-due payment in installments in the coming three months. But it did not say whether punitive interest will be included.
The repeated defaults should sound alarms because the owed amount is more than Hanergy Solar Group’s first-half revenue.
Hanergy Solar Group’s share price has more than doubled over the last three months with a spate of good news, including the launch of subsidy scheme for distributed PV power generation in China. It’s also been buoyed by the exclusion of thin-film PV modules from the Sino-EU solar dispute and technological breakthroughs in the conversion efficient ratio of its products.
That said, the huge arrears from parent firm are a reminder about Hanergy Solar Group’s big weakness: overreliance on a single client. In the first six months, most of the sales were generated from connected transactions with the controlling shareholder.
Hanergy Solar Group is on a fast restructuring track but the long outstanding receivables from the parent firm may cripple the group’s capacity to make its way into the capital-intensive downstream solar power station business.
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