20 February 2019
United Photovoltaics is betting on solar farms to generate a recovery.Photo: Reuters
United Photovoltaics is betting on solar farms to generate a recovery.Photo: Reuters

United PV promises hard numbers on solar plant-powered revival

United Photovoltaics (00686.HK) booked a staggering HK$2.3 billion (US$370 million) loss last year due to heavy impairment charges. But all is not lost, it insists — the firm is looking to make a break from the past by stepping up investment in solar farms.

The company has been heavily reliant on the upstream solar cell business, with the segment making up 95 percent of its 2013 sales. Up to then, selling solar cells was United PV’s single core business. That focus left it exposed to huge volatility in product prices when an economic downturn, industry overcapacity and adverse trade conditions hit.

The firm went through a major restructure last year. Its solar farm projects increased to 133 megawatts by the end of 2013 and new capacity is expected to reach 1 gigawatt this year.

But after the pain of the industry’s sharp downturn in recent years, investors are easily spooked by any sign of trouble. After all, United PV’s new focus — solar farms — is far from a proven business. There was a new round of government support last year, and companies big and small are rushing into the field, but it is still premature to judge whether such a business can make a sustainable profit and what are the related risks.

United PV experienced this week just how shaky investor confidence can be. Shares tumbled 20 percent Wednesday following reports of the resignation of the solar firm’s chief financial officer, Leung Yuk-lun.

The termination of a deal to buy a solar project also left the market wondering what has gone wrong.
Responding to the selloff, the company filed an announcement Wednesday night saying Leung’s departure was purely a personal decision and has nothing to do with the company. In a separate statement, United PV also underscored the support of its biggest shareholder, China Merchants New Energy.

Investors seemed relieved by the explanation; United PV’s share price bounced back around 23 percent Thursday morning.

Most importantly, investors will soon have more information to judge whether United PV is truly turning the page. The company has promised to release it first-quarter operating numbers before mid-April to give the market a closer look at how its solar stations are performing financially.

United PV chairman and CEO Alan Li Yuan {李原} said previously he expects the financial status of the firm to improve significantly this year.

If the company is willing to come up with solid numbers, things are probably going in the right direction.

– Contact the writer at [email protected]



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