Hong-Kong listed solar thin film company Hanergy Thin Film Power Group which had its shares suspended in May has issued a statement to the Hong Kong Stock Exchange warning that it expects a possible record first half loss following a chastening six months.
May 20 resulted in the companys shares being suspended on the back of a 47% drop in share price that saw $19 billion of market capitalization wiped from the books in a matter of minutes, and has warned that the"suspension and termination" of most of the connected deals between Hanergy and its parent company Hanergy Holding Group may swing to a net loss for the six months ending June 30.
The filing to the Hong Kong Stock Exchange said that income from connected transactions will fall by $25.8 million, while costs incurred because of the cancelled deals (including a 900 MW order in June) amounted to more than $586 million. The company did not state just how wide the losses are expected to be. In the first half of 2014, by contrast, Hanergy posted a net profit of HK$1.73 billion ($129 million)
In the 2014 financial year, 62% of Hanergy Thin Films sales were made via dealings with its parent company, but 2015 has brought more troubled waters as share value has plunged and the Hong Kong Securities and Futures Commission (SFC) launched an investigation into the companys business dealings. The SFC has since ordered that shares in Hanergy Thin Film remain suspended indefinitely, leading the company to propose to the SFC that it would end all trading with its parent company.
As part of this proposal, Hanergy Thin Film has since confirmed that its parent company will compensate its thin film division for money owed, as well as "compensations as a result of the cancellation of orders".
Interim results are expected to be published at the end of August, with Hanergy Thin Film confirming in the filing that its finances are "sound" and the company is still functioning normally.