Suniva solar panel. Author: Public Affairs. License: Creative Commons, Attribution-NoDerivs 2.0 Generic.
China’s Shunfeng International Clean Energy Ltd (HKG:1165) said on Thursday that the net loss it is to record for 2016 will be a lot larger than initially expected.
Following an additional assessment of the unaudited management accounts for 2016, the company now expects the net loss for the year to be CNY 2.4 billion (USD 349m/EUR 323m) instead of CNY 923 million as previously reported. For comparison, Shunfeng booked a profit of CNY 58 million in 2015.
The company blames the projected deficit on certain impairment losses in relation to its investment in loss-making US photovoltaic (PV) cells manufacturer Suniva Inc and in certain solar projects, whose construction ceased following the expiration of their permits.
Shunfeng explained that the pricing pressure on the solar module market, and lower price imports from southeast Asia to the US market have hurt Suniva's bottom line. The Chinese company is facing an impairment loss of about CNY 259 million on its investment in Suniva Inc and a provision of about CNY 228 million in relation to certain potential financial liabilities of the subsidiary.
Also, Shunfeng intends to recognise an additional impairment loss totalling CNY 550 million in relation to its investment in Lattice Power Corporation, while there was no such impairment in 2015.
Shunfeng’s expected loss from bad debts has increased to CNY 484 million from CNY 160 million.
The company will release its final results later this month.