Wednesday, August 22, 2012

Sector Snap: Chinese Solar Companies

U.S. shares of Chinese solar companies fell Monday, with some hitting multi-year lows, on concerns that a long-awaited rebound in the sector appears to have fizzled.

Cowen & Co. analyst Robert W. Stone said that solar shipments likely surged in the second quarter, but he doesn't see that continuing because of increased competition and weakness in Europe. He predicts widespread losses continuing through next year, and warned investors to remain cautious of the companies.

Problems with too much factory capacity and reductions in solar energy subsidies from Europe sparked by weakening economies there have weighed on solar producers for the past year.

And Chinese companies are dealing with trade issues. Last week, a group of manufacturers asked the European Commission to look into whether Chinese firms sold their wares at below-market rates. The U.S. already has anti-dumping tariffs in place, deciding in May that Chinese companies were selling solar panels below what was considered a fair price, making it tough for American manufacturers to compete.

In the future, demand for solar from Chinese providers is uncertain. Despite expectations that the market for solar will increase, other countries are expected to favor local companies, Stone said.

In afternoon trading, Trina Solar Ltd. tumbled to a three-year low after saying that second-quarter shipments will be worse than it previously anticipated. Separately, Suntech Power Holdings Co. plunged 14 percent after it said it may be the victim of a massive fraud.

Elsewhere in the sector, shares of JA Solar Holdings Co. lost 5 percent, or 5 cents, to 95 cents. Its year low is 89 cents. Yingli Green Energy Holding Co. gave up 21 cents, or 10 percent, to $1.84 after earlier hitting a low of $1.76, the stock's weakest point since Yingli's initial public stock offering in 2007.


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