18 July 2018
Shares of Hanergy Thin Film Power soared sky high, taking its founder Li Hejun to the top of the wealth chart. Photo:
Shares of Hanergy Thin Film Power soared sky high, taking its founder Li Hejun to the top of the wealth chart. Photo:

Doubts raised about China’s new wealthiest man

Alibaba’s public squabble with Chinese regulators over fake goods being sold on its online platform has resulted in a dramatic change in the country’s rich list.

While shares of the New York-listed e-commerce giant tanked, those of solar panel maker Hanergy Thin Film Power (HTF, 00566.HK) doubled in value over the past three months. Consequently, HTF founder Li Hejun zoomed to the top of the wealth chart.

According to mainland media, Li’s wealth swelled to over 200 billion yuan (US$31.9 billion), surpassing that of Alibaba founder Jack Ma.

However, Li continues to draw doubts about the accuracy of the financial data of his solar business.

In 2012, for example, the National Audit Office said one of his factories overstated its scale and installed capacity to obtain government subsidy.

Although Hanergy said it has “the world’s largest output and most advanced technology”, the company has never been included in rankings of top solar module shipments. This suggests that Hanergy has falsified its data or its capacity utilization has been low, Want Daily said, citing a report from Chinese newspaper Ta Kung Po.

In an article published on Jan. 28, the Financial Times said it has found a number of anomalies about HTF.

Analysts have pointed to the extremely close relationship between HTF and its parent Hanergy Group. Independent stock analyst David Webb also noted that the group has been totally dependent on its parent.

Since 2010, HTF has accumulated revenue of HK$14.8 billion (US$1.9 billion), most of which came from equipment sales to Hanergy Group and at a very high profit margin of 50 percent.

However, there is a large gap between the revenues reported for 2010-2012 and the money that its parent spent on buying equipment from HTF during the period, the Financial Times reported.

While many players in the solar panel industry are struggling to remain profitable, HTF’s market value soared and is now worth three times more than its largest competitor—the United States-based First Solar. In China, the company is worth more than the combined value of all the other listed players in the sector.

HTF’s share price fell nearly 3.5 percent the day after the FT article was published. Still, HTC shares more than tripled since the start of 2014.

Two days after the FT report, HTF issued an announcement, saying that although its parent Hanergy Group is a major client, it has been developing downstream solar power business recently. HTF said it will also work on diversifying its income stream.

HTF‘s prospects remain brighter than ever, according to the company’s management.

Whether the company’s financial figures are accurate can be the subject of a long debate, but there is no doubt the solar player is good at generating buzz and drumming up investor excitement through its corporate moves.

Last week, HTF announced that it has completely acquired Alta Devices, whose thin-film solar technology has a conversion efficiency of 30.8 percent, the highest in the industry, for US$15 million.

The group also sold five subsidiaries with photovoltaic power station assets last month and recorded a gain of over 777 million yuan. The buyer was investment fund Beijing Hongsheng.

HTF said that it will use the proceeds as general working capital for the development of its thin-film photovoltaic business, and also to expand into downstream thin-film power generation and application.

Many investors are buying what the company says.

HTF has been the investors’ darling since the launch of the Shanghai-Hong Kong Stock Connect in November last year.

Even with the negative reports, HTF managed to remain number one or number two on the list of most actively traded counters for four days between Jan. 23 and Jan. 28.

As mainland capital continued to flow into the local stock market, HTF’s share price has doubled since November and accounted for most of the gains since the start of 2014.

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EJ Insight writer

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