Chinese firm Shunfeng International Clean Energy Ltd (HKG:1165) reported last week an expanded net loss of CNY 1.71 billion (USD 255m/EUR 227m) for 2018, a year in which it “faced greater challenges than ever before”.
The loss in 2017 stood at CNY 834.1 million. As previously announced, it expanded further mainly due to the company’s decision to recognise a CNY-771.5-million impairment loss on property, plant and equipment at its solar products manufacturing segment.
Last year, China reduced its targets and subsidies for solar energy, which led to a drop in solar prices as competition grew. In addition, the US introduced additional duties on Chinese solar products, and India imposed provisional safeguard duties on solar imports. Only the EU was the source of good news for solar photovoltaics (PV) makers as it ended the anti-dumping measures against Chinese products in September so sales went up, Shunfeng chairman Zhang Fubo said.
The decline on the Chinese market and increase in solar product sales abroad led to a 74.1% jump in distribution and selling expenses to CNY 595.3 million. The company calculates that some 53.7% of its 2018 revenue was generated from sales to Chinese customers, down from a share of 74.9% in 2017.
Solar cell and module manufacturing and installation services was the company’s top business in 2018, bringing over 80% of the CNY 10.29 billion of revenues recorded.
More specifically, Shunfeng reported revenue from the sales of solar modules of CNY 6.9 billion, up by 17%, as sales volumes rose by 33.4% to 3,301.1 MW. However, this volume increase was in part offset by a 12.5% drop in the average selling price (ASP) of modules last year to CNY 2.1 per watt.
The sale of solar cells brought revenues of nearly CNY 1.18 billion, down by 41.6% on the year, as sales volume dropped by 12.9% to 1,172.7 MW, and the ASP shrank by a third to CNY 1 per watt.
The solar power generation division, which has 1.5 GW of on-grid generation capacity, fetched revenues of CNY 1.38 billion in 2018. Generation was up 12.9% to 1,766.4 GWh.
As at the end of 2018, Shunfeng’s current ratio (current assets divided by current liabilities) was 0.55% and it was in a negative net cash position. Last week the company announced it had conditionally agreed to sell the subsidiary that owns solar module maker Wuxi Suntech Power, its upstream manufacturing business and some overseas operations to Asia Pacific Resources Development Investment for some CNY 3 billion. Following the sale, Shunfeng International will be focused on solar power generation in China, including the construction of new parks, and on its LED business.
(CNY 10 = USD 1.49/EUR 1.33)
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