Shunfeng Talks to Banks With Aim to Rival Biggest Solar Makers

Sep 02, 2014 6:39 am ET

Sept. 2 (Bloomberg) -- Shunfeng Photovoltaic International Ltd., which plans to become one of the world’s biggest solar cell manufacturers this year, said it’s speaking with as many as five banks about finance for expanding installations.

Chairman Zhang Yi said he’s targeting installations of 3 gigawatts this year. The company expects capacity of 2.2 gigawatts for cell making and 2.4 gigawatts for finished panels. That would make Shunfeng competitive with the biggest cell manufacturers, JA Solar Holdings Co., Trina Solar Ltd. and Yingli Green Energy Holding Co.

The company with a market value of HK$22.6 billion ($2.92 billion) has increased its solar-power output and shipments of cells and panels in the first half as it took control of assets it bought from LDK Solar Co. and Suntech Power Holdings Co. Those were two of the biggest Chinese solar manufacturers that ran into difficulty as plunging prices for PV equipment gutted margins across the industry.

“The company is very positive about its future growth,” Zhang said at a briefing with reporters in Hong Kong today. “The Chinese government has made it clear clean energy will count for a significant share of China’s energy mix. Shunfeng, with its effective cost quality, improved quality and heavy investment in R&D, is in a good position to benefit.”

Zhang didn’t name the banks he’s speaking with or discuss exactly what the money will go for. Loans are crucial to the company’s expansion because they cover about 80 percent of the cost of solar projects that absorb solar cells and panels the company makes. Shunfeng’s own capital funds the rest.

Credit Line

Last month, the company obtained a credit line of as much as 20 billion yuan ($3.3 billion) from China Minsheng Banking Corp. It expects 200 million yuan of borrowing costs this year.

Shunfeng’s expansion also is taking it beyond PV manufacturing. It bought stakes in two energy storage companies earlier this year and said on Aug. 31 that it agreed to purchase the operations and assets of insolvent solar developer S.A.G. Solarstrom AG to expand in Europe.

The Chinese company will increase research in seawater power generation, Zhang said today. Shunfeng last month entered into a license agreement to use such battery technology from Taiwan Carbon Nanotube Technology Corp.

Shunfeng is controlled by Hong Kong real estate tycoon Zheng Jianming, who owns a 36 percent stake through his Peace Link Services Ltd. and has spent or pledged more than half a billion dollars to buy solar assets once valued at almost $20 billion.

Profit Returns

Last week, Shunfeng said it returned to profit in the first half. The Hong Kong-listed company, whose stock has gained 53 percent this year, had a profit of 502.5 million yuan in the six months ended June 30, compared with a net loss of 670.8 million yuan a year earlier.

It’s targeting investment of about 25 billion yuan ($4 billion) as part of a plan to build 10 gigawatts of solar facilities in the three years through 2016, Zhang said in January.

The company had 890 megawatts of grid-connected solar power capacity and another 876 megawatts of projects under construction as of June 30, Shunfeng said on Aug. 28.

Shunfeng also is expanding into energy storage and other forms of clean energy following its $480 million acquisition of Wuxi Suntech Power Co., a unit of Suntech, which until about two years ago was the world’s largest panel maker.

--With assistance from Alex Devine in London.