China Sunergy says credit conditions easing


In yesterday's third-quarter trading update from Chinese cell and module manufacturer China Sunergy, CEO Stephen Cai laid the blame for falling figures squarely on restricted credit conditions in China from July to September.

Without fleshing out the claim anywhere in the figures, Cai went on to predict a rebound in shipment figures and to revise the full year estimates after claiming the temporary credit squeeze in China is already easing.

The figures painted a picture of revenues and shipments in retreat with Sunergy instead churning out more of its modules to be branded by different manufacturers – OEM operations.

Revenue tumbled 20% from the second quarter to US$57.1 million on the back of a 10.8% dip in total shipments to 112.7 MW, of which modules made up 99.6%, or 112.2 MW. Of that module figure, 21.8 MW will be branded by other manufacturers.

Average module selling price dips

The average selling price of Sunergy modules – excluding those manufactured for third parties – also dipped $0.01/W to $0.62/W as a result of the company's rising sales to low-cost regions. Exports to Asia accounted for 63.2% of shipments, of which 24% were to India and 23.1% to China with just 16.1% of total sales to the premium priced Japanese market.

Those sobering figures meant gross profit slumped from $6.7 million to $1.7 million with increased production in September and the falling selling price giving Sunergy an inventory provision of $900,000, up from a negligible $12,000 in the second quarter.

Despite the retreating figures, the company stuck its neck out to predict fourth-quarter shipments of 158-168 MW with 40 MW of OEM modules and revised its full year shipment estimates up from 440-480 MW to 500-510 MW.

The truth of Cai's confident prediction about easing credit conditions will become known in the final quarter figures.

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