Suntech Power Holdings Co., the world’s biggest solar-panel maker, fell to a seven-month low after HSBC Holdings Plc reduced its price estimate on the shares.Suntech tumbled to the lowest level since Oct. 3 after HSBC cut its price target on the solar company and Nomura Holdings Inc. reiterated a sell recommendation on the ADRs. The Bloomberg China-US Equity Index of the most-traded Chinese companies in the U.S. fell 0.8 percent to 90.60 yesterday in New York, ending the week down 0.1 percent. Commodity producers Yanzhou Coal Mining Co. and Aluminum Corp. of China Ltd. extended losses for the week.
Suntech reported this week a net loss of $133 million for the first three months of 2012, one of the three solar makers to report worse-than-estimated results among Chinese companies traded in New York, according to data compiled by Bloomberg. Earnings are falling at a time Europe is cutting solar energy subsidies as the region’s debt crisis lingers and the U.S. is imposing tariffs on Chinese solar-product imports.“Investors have been looking at all of the solar company earnings this week and seeing that companies are just not achieving the cost benefits and profits that people had expected,” Gordon Johnson, an analyst at Axiom Capital Management in New York, said by phone yesterday.Thirteen out of 18 analysts who updated their ratings on Suntech since May 23 recommended to sell the stock, according to data compiled by Bloomberg. HSBC cut the price target for Suntech to $1 from $1.27 yesterday, Bloomberg data show, and Axiom reduced the estimate to $1.24 from $1.50 on May 24.
China ETF Slumps
The iShares FTSE China 25 Index Fund (FXI), the biggest Chinese exchange-traded fund in the U.S., slipped 0.5 percent to $32.58, extending this week’s loss to 1.3 percent. The Shanghai Composite Index of mainland stocks dropped 0.7 percent to a six- week low of 2,333.55.The Standard & Poor’s 500 Index of U.S. shares fell 0.2 percent to 1,317.82 yesterday after four days of gains, as concern Spain’s regional governments are having trouble with finances tempered optimism with data showing American consumer confidence rose to the highest since 2007.
Suntech’s American depositary receipts tumbled 7.8 percent to $1.78, increasing the weekly decline to 11 percent.The U.S. imposed tariffs of 31 percent to 250 percent on Chinese solar-product imports, the Commerce Department announced on May 17. Suntech was told to pay 31.22 percent.
LDK Solar Co., the world’s second-largest maker of wafers, said on April 30 its net loss for the fourth quarter of 2011 was $588.7 million, compared with analysts’ average prediction of a $109.7 million loss. The company, based in Xinyu in China’s Jiangxi province, estimated first-quarter sales to be $190 million to $230 million, lower than a $285.7 million forecast by analysts.LDK’s ADRs tumbled 14 percent to a record low of $2.24, taking the loss in the week to 21 percent, the biggest weekly decline since September. The company said it is subject to a preliminary U.S. tariff rate of 31 percent in a statement on May 24.Yingli Green Energy Holding Co., the sixth-largest silicon- based solar module producer, will probably report a $32.8 million net loss in the first quarter on May 30, according to the average estimate of 12 analysts surveyed by Bloomberg. This compares with a $56.2 million net profit a year ago.
China said it lodged a complaint at the World Trade Organization over U.S. anti-subsidy duties. During probes to determine whether Chinese companies received illegal government aid, the U.S. acted “inconsistently with WTO rules and rulings in many aspects,” China’s mission to the WTO in Geneva said in an e-mailed statement on May 25. The U.S. “repeated its wrongful practice” during its recent anti-subsidy investigation on Chinese solar cells.The request for consultations is the first step in the case and means the two governments must now hold talks for at least 60 days in a bid to resolve the dispute. After that, China can ask WTO judges to investigate the complaint. Rulings are typically made within six months, after which either side can appeal.Semiconductor Manufacturing International Corp. (981), a circuit- chip maker based in Shanghai, sank for the fourth day, losing 5 percent to $1.90, the weakest level since April 2009. The ADRs are trading 3.3 percent below the Hong Kong stock.The company “is lagging in technology and the scale is too small to be competitive in cost,” Mark Li, an analyst at Sanford C. Bernstein (Hong Kong) Ltd., who has an underperform rating on Semiconductor, said by e-mail on May 23.