Foreign media: Hanergy LI Hejun and LI Keqiang’s speech on television. What is the signal?
Source: Ifeng iMarkets
China Central Television’s “News Simulcast” showed the video frames in which Chairman of the Board of Hanergy Holding Group LI Hejun introduces Hanergy products to the Prime Minister LI Keqiang. A Bloomberg analyst said this might indicate that the Government supports this photovoltaic company in crisis. The frames last many seconds. Bloomberg New Energy Finance analyst DUAN Zhiyu said that this released the signal of good relationship between Hanergy and the Government.
The first “National Public Entrepreneurial Innovation Week” was held in Beijing. A Chinese Government website published a related video, in the video, LI Hejun talked with the Prime Minister LI Keqiang in front of Hanergy solar energy products booth. According to an article published by Hanergy’s official website, LI Keqiang said: “well done, I wish you success.”
Hong Kong Securities and Futures Commission ordered Hanergy’s listed company Hanergy Thin Film Power to suspend its stock transactions. In that moment, it was evaporated 19 billion dollar of its market value in less than half an hour. Before this plunge, Hanergy’s stock price increased 6 times. It was once the world’s highest market capitalization of renewable energy companies.
SWS Research Shanghai analyst HAN Qiming said that, LI Hejun’s appearance in CCTV news may indicate the fact that Government is supporting Hanergy.
HAN Qiming also said, although the positive impact cannot be inflected in the stock price due to the stock suspension, but it will benefit anyway the company.
A Hanergy Holding Group representative said the Group is gradually completing the staff reduction plan. With the advancement of the strategic shift and cost cutting actions, the company will continue to optimize the configuration.
He said also, Hanergy is planning to open its thin-film solar cell technology and to cooperate with other companies. In the meantime, Hanergy is attracting more dealers to join to sell solar home products. These two reforms both will lead to staff reduction.
Recognized the existence of related party transactions
On 30 September, LI Hejun said, Hanergy’s listed company in Hong Kong suffered a sudden plunge on 20 May. The share price fell to HK $ 3.91 from HK $ 7 in half an hour, down 47%, creating the largest single-day decline in Shanghai-Hong Kong market connection, becoming the headline of global financial news. July 15, the Hong Kong Stock Exchange suspended Hanergy’s stock trading.
“Hanergy’s suspension is a disaster to listed company, to the Holding Group, to investors and to myself.” “The only winners to get great benefits are short sellers and traders.” LI Hejun said. Hanergy’s suspension affects not only the economy but also the confidence of “China New Energy Revolution”. Hanergy thin-film technology has a leading position in the world. Hanergy’s dream of “mobile energy, industry serve the country” is seriously affected at the beginning. If we cannot reverse the passive situation as soon as possible, Hanergy’s hundreds million investment in thin-film power industry and even Chinese new energy industry will suffer a setback.Hanergy’s suspension caused also great impact on ‘Shanghai – Hong Kong stock market connection’. As the most active, attractive stock, Hanergy’s suspension hit the confidence of investors. This will create negative impact also to the connection between China domestic and Hong Kong capital markets, to the two-direction openings of the capital market and to the stability of Hong Kong’s strategic position as international financial center.
Regarding the problem of “connected transactions”. LI Hejun admitted the existence of connection transactions between the parent company and listed company. “this is a historical problem. Initially the Holding Group is a listed company’s customer, purchasing listed company’s production line. It was not a shareholder of the listed company, it is not involved in the decision-making of listed company, but it is entitled to subscribe the shares of listed company. One year later, Hanergy Holding Group became the largest shareholder of listed company. Meanwhile, in the 2014 fiscal year, the non-related trading income has exceeded 38% of the listed company’s revenue; continued profitability of listed company has undergone a fundamental change!”
“Listed company’s connected transactions are all legal, open and transparent. All connected transactions in recent years are strictly abide by the relevant rules, each of them are voted by small investors with announcement in time, reporting to SFC or the Exchange; meanwhile, in more than 4 years, regulator department has never raised any objection before.”