Financial Times lifts lid on Hanergy

Since bursting on to the solar scene in 2009, thin film aspirant Hanergy has been adept at making headlines. It hasn’t however been quite as adept at making or selling solar modules, it now appears.

The UK’s Financial Times (FT) newspaper published a report yesterday in which it concludes that it has uncovered “some unconventional practices behind Hanergy Group’s soaring fortunes.”

The FT has poured over the Hanergy Thin Film Power (HTF) Group’s financial statements and found that “much of the growth comes from within.” The FT reveals that the vast majority of HTF’s reported revenue since 2010 has come from sales to Hanergy Group, which itself owns 73% of HTF’s shares.

HTF sells PV manufacturing equipment to Hanergy Group. The equipment component of its business is ostensibly that of Apollo Energy, which was the supplier of amorphous silicon (a-Si) equipment to Hanergy Group under the latter’s initial plan to install many GWs of a-Si manufacturing capacity across nine factories in China. Hanergy Group acquired Apollo in 2009.

Despite these “unconventional practices” HTF’s fortunes are riding high on solar stock indexes. In the latest Bloomberg Solar Energy Index, set to be published in the February edition of pv magazine, HTF’s shares are shown to have grown 44% MoM, “due to its diversified business model,” notes the Trout Group’s Adam Kropp.

HTF accounts for a whopping 11.79% of Index – which charts the leading 25 solar stocks, right across the solar value chain. By contrast, SolarCity accounts for 5.75%, First Solar 5.51%, GCL-Poly Energy Holdings 4.75%, SunPower 4.16% and SunEdison 3.28%.

Manufacturing strategy

Hanergy Group pivoted from its a-Si production strategy in 2012, when it began acquiring failed CIGS operations and technologies. In a relatively short space of time Hanergy acquired Germany’s Solibro, and MiaSolé, Global Solar and Alta Devices from the U.S. The acquisitions were made at low cost, after the U.S. companies in particular had failed to commercialize their promising thin film technologies.

At the time the move away from a-Si seemed obvious to many, as the competitiveness of the technology was rapidly receding in the face of falling c-Si module costs and prices.

The FT reports that HTF’s financials indicate that “nearly all” of its HK$14.8 billion (US$1.91 billion) in sales since 2010 have been to the Hanergy Group. Of those sales, the FT finds, only 35% of those contracts have been settled, with the remaining total held as receivables.

Hanergy responds

The FT has managed to obtain responses from HTF about the curious state of affairs. Reportedly HTF CEO Frank Dai Mingfang “brushed off all worries” saying that there were misunderstandings regarding Hanergy’s product offerings.

“No one else can do what we do with solar power embedded in glass windows,” Mr Dai told the FT. OPV developers and the makers of semi-transparent CdTe or even glass/glass c-Si products may beg to differ.

On the sales front, the FT has uncovered that at Hanergy Group’s nine factories there is “a large gap between the reported revenues up to 2012 and the money the factories spent buying equipment from HTF.” More recent documents were not available.

HTF’s Mr Dai said that 2013 and 2014 should show an improvement in sales.

Shipments

Shipments of Hanergy product have been difficult to track. Speaking to pv magazine late last year, the IHS analyst said that it is “extremely difficult for anyone outside of the company to predict what Hanergy will do next.”

“Solibro product has been shipping constantly going back to the days of ownership under Q Cells,” said de Haan. “So Solibro has not changed, it’s just now it is coming as a Hanergy Solibro product as opposed to a Q Cells Solibro product.”

Very likely the improvement in sales that Mr Dai points to could actually be production emanating from Hanergy’s acquisitions that were operating somewhere close to scale, such as Solibro and MiaSolé.

The FT has tracked one “notable sale” of downstream solar products by HTF, a 180 MW utility scale PV project in far western China, registering a Rmb777.6 million ($124.50 million) profit. Digging deeper into the sale, the FT has uncovered that the purchaser, Hongsheng, was incorporated only 13 days before the deal became public. Hongsheng’s management itself has familial connections with a former HTF board member.

Responding to this Mr Dai said it did not breach any rules for Hong Kong-listed companies.

“Actually we have to thank you,” Mr Dai told the FT. “Only after we received your questions did we realize this.”

Public profile

The FT report may be a sign that HTF and the Hanergy Group cannot continue to maintain its strong public profile and stellar stock performance without registering genuine results. Until now it has appeared adept at managing its public image. It has repeatedly declined to speak with pv magazine since 2012.

Hanergy’s public image has been maintained through a serious of high profile partnerships, such as with Aston Martin Formula One team, with Tesla to roll out solar charging stations in China, and through product placement in Holywood films such as Transformers III and Transcendence.

Hanergy has made high profile partnerships with distributors such as Ikea in the U.K., only for that business to be disposed of in a curious fashion. It’s CIGS acquisitions brought great hope for the technology and made for happy reading for investors, however it is difficult to find evidence of tool orders or module shipments. Since acquiring its thin film fleet of technologies, HTF has shuffled the ownership of the assets amongst subsidiaries.

Hanergy Group’s aspirations to become a 10 GW PV manufacture within five years was met with surprise and some delight by industry observers, however it is becoming increasingly clear that few tangible results have eventuated.

HTF’s Mr Dai told the FT that the solar market was “different than other industries”. On the back of this emerging chink in its armor, it will be intriguing to see whether this remains to be the case.

pv magazine has contacted Hanergy for comment.