China Industry: Sept. 2

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Sept. 2 -This is a regular series of relevant industry news from around China.

Solar power
Chinese photovoltaic (PV) maker Trina Solar said earnings per average diluted share topped US$0.71 for the second quarter of fiscal 2009, thanks to a drop in polysilicon prices.

Over the first quarter, the company scaled back polysilicon costs by 30 percent on the back of lower purchase price, effective management of long-term contracts and prudent inventory management. In addition, it drove down non-silicon manufacturing costs for its multi-crystalline modules by around 6 percent to US$73 per watt.

Revenues rose by 13.5 percent to US$150 million from the previous quarter but dipped 26.5 percent from a year earlier, dragged by a lower module average selling price. Total shipments went up to 63.9 MW from 48.8 MW in the first quarter and 47.6 MW in the corresponding period of 2008.

The increase was fueled by robust demand in the company’s key European markets, easier customer access to PV system purchase funding and expanded government schemes to encourage clean energy development.

The higher revenue and the lower cost structure helped a rise in gross margin to 27.4 percent in the second quarter from 17.2 percent in the first quarter and 23.3 percent a year ago.

The company confirmed its 2009 PV module shipment guidance at a range of 350 MW – 400 MW, expecting to ship between 90 MW and 110 MW in the third quarter. But it says its average selling price is headed for a 10-15 percent drop in the third quarter and a further 10-12 percent in the fourth. The decline should be offset by improvements in manufacturing costs by 15-20 percent in the fiscal 2009.

The construction of a 200 MW solar power plant was started in the Golmud Desert of Qinghai, western China, on Thursday. The investor, China Longyuan Power Group, a subsidiary of China Guodian, will invest RMB4 billion into the project. Some RMB400 million will be spent on the first phase of the power plant. The first phase will have an annual production capacity of 36 million kWh and will become operational in September 2010.

Following other major players in the electronic devices industry, Taiwan Semiconductor Manufacturing Company has decided to invest US$50 million in solar power industry, Electronics Weekly reported. U.S.-headquartered Applied Materials already earns half of its income from selling manufacturing equipment to solar-focused companies. In 2008, Intel established its solar power business SpectraWatt.

Chinese multicrystalline solar wafers maker LDK Solar said yesterday it has inked an agreement with Yancheng City, Jiangsu Province, under the terms of which LDK Solar will develop a number of PV power projects, including PV ground-power stations, and roof and building integration systems totalling up to 500 MW over the next five years.

Eager for a bulkier market share, Chinese solar heavyweight Suntech Power supplies solar PV panels in the United States below materials, assembly and shipping costs, founder and CEO Shi Zhengrong told the New York Times.

The move underpins a drive by Chinese manufacturers to gain a major foothold on the global green arena, where the United States is a major player. They have already driven down the price of solar panels by almost a half over the past year. Chinese producers will tap into generous government support to build assembly plants in the United States to skirt rules that would lock Chinese-made products out of stimulus monies.

The Obama administration has announced US$2.3 billion in tax credits to clean energy equipment manufacturers. Suntech is poised to take over from Germany’s Q-Cells as the world’s second largest PV cells supplier, breathing in the neck of U.S.-based First Solar. The Chinese company plans to construct a U.S. assembly unit on a location due to be announced in a month or two. It is now scouting Phoenix, Arizona and Texas.

Despite his bold ambitions about the United States, Shi predicted earlier this month that the Chinese market will grow by a less-than-expected margin this year before government stimulus measures could give it a bounce.

Singapore-based semiconductor foundry United Microelectronics said it will establish a new business development center to focus on solar power and light-emitting diode projects.The company’s board approved on August 24 an injection of up to TWD1.5 billion in a new wholly-owned subsidiary, named UMC New Business Investment. The entity will be run by Wen Yang Chen, senior vice president of UMC.

Initially, the new company will complete the development of respective technologies and establish a preliminary scale of operations. While in the future, UMC New Business Investment is expected to become a part of UMC’s core business with high competitive advantages.

Taiwanese power supplies, consumer electronics and optoelectronic products maker Lite-On Technology has signed an agreement with the government of Yingtan city, Jiangxi Province, to carry out a thin solar film power generation project for agricultural greenhouses, Xinhua’s China Economic Information Service reported. Prior to this deal, the company had signed a contract with Jiangxi’s Shangrao city for the construction of a solar power generation systems for five agricultural greenhouses, with 20 KW of installed capacity each.

Chinese PV maker Yingli Green Energy Holding said yesterday it would supply up to five MW of PV modules to Czech commercial property developer CTP Invest. The companies have inked a letter of intent (LoI), which calls for PV modules deliveries in the fourth quarter of 2009. The solar equipment will be utilized in several grid-connected rooftop installations at CTP’s industrial parks and office centers in the Czech Republic.

Remon L. Vos, managing director of CTP, expects the binding contract based upon this LoI will be achieved in the following weeks.The Chinese company has already delivered over 10 MW PV modules to customers in the Czech Republic since the beginning of 2009, Liansheng Miao, CEO of Yingli Green Energy, noted.

China-based solar cell and module products maker Canadian Solar said on August 26 it had signed a Letter of Intent (LOI) with the Administration Committee of Baotou National Rare Earth Hi-Tech Industrial Development Zone under which Canadian Solar has obtained the rights to design, install, operate, and maintain a 500 MW solar power plant system.

Under the terms of the LOI, the solar power project will be located in CPT.The project is pending government approval.

Chinese power generation systems distributor A-Power Energy Generation Systems reported yesterday an unaudited net profit of US$6.3 million for the second quarter of 2009, slightly up from US$6.2 million booked a year earlier.

Diluted earnings per share were US$0.14, down from US$0.18 a year earlier, as in the second quarter of 2009, the weighted average number of shares on a fully diluted basis was 35.3 million while in the same period of 2008 it was 33.9 million.

The fast-growing manufacturer of wind turbines said its revenues in the three months ended June 30, fell to US$57.5 million from US$65.7 million last year. The decline was attributed to delays in some distributed power generation projects.

Gross margin in the period went up to 13.4 percent versus 12.1 percent in the second quarter of 2008, thanks to higher efficiency derived from cost-saving in labour as the A-Power undertook 30 MW-plus DG projects.

However, higher selling, general and administrative expenses dragged the earnings before interest and taxes to US$4.7 million, down from US$6 million in the same period in 2008.

Commenting on the quarterly financial results, the CEO of the company, Jinxiang Lu, said that during the period A-Power has built a foundation for prospective growth in the future. The company set up a joint venture with Jiangsu Miracle Logistics System Engineering to produce and sell wind turbine components in China. A-Power has also completed assembly of two units of the 2.7 MW wind turbines in Shenyang and purchased Shenyang Huaren’s technology for 1.5 MW wind turbines, along with its backlog to produce and sell 10 units of the 1.5 MW wind turbines.

Focused mainly on wind power, the company has also signed a memorandum of understanding to take over Japanese thin-film PV products developer Evatech Co.

Chinese thin-film technology developer Astronergy announced today that it had won a bid for the development of a two MW PV project.

The large-scale grid-connected PV system will be located at the Hangzhou Energy and Environment Industrial Park in the province of Zhejiang, eastern China. Its installation will be financed by China Energy Conservation Investment, a promoter of energy-saving, environmental protection technologies and projects.

Astronergy will cover the roof of the Green Science and Technology Hall in the industrial park with a combination of its crystalline silicon-based and thin-film PV modules. The hall will incorporate mainly building-integrated PV technologies.

Chinese photovoltaic panels maker Sky Global will invest EUR14.5 million in a plant in Mataporquera, southern Spain. Sky Global will open the plant in 2011 and will create 465 jobs. The company will also build a 9.9-MW photovoltaic park with 672 panels. Sky Global operates in Spain through its subsidiary Sky Global Solar.

Air transport
Taiwan-based TransAsia Airways has initiated a direct route from Taipei’s Songshan Airport to Wuhan, Hubei Province, China.
The company will now fly to Wuhan two times a week.

By the end of September, the air carrier will also start flying to Fuzhou, Tianjin, Chengdu, Changsha, Kunming and Qindao.

John Holden, Cathay Pacific’s country manager for Sri Lanka and the Maldives, said that the air carrier will continue to operate daily flights despite competition by new companies in Sri Lanka. Holden said that since June 2009, the number of the company’s passengers had increased, boosted by improved security conditions in the island country. Load factors have also improved thanks to the holiday travel.

China-based Shenzhen Airlines has set up a branch in Taiwan. The air carrier will boost the number of weekly flights between Shenzhen and Taipei to five in September. The company will also start flying once a week from Zhengzhou, Henan Province, to Taipei, and from Shenyang, Liaoning Province, to Taipei.

Australian budget air carrier Jetstar will open a route between Singapore and Haikou, Hainan Province. The air carrier will fly on this route four times a week, starting December 16. The company will use a A320 aircraft. During the next 12 months, the low-cost carrier intends to boost its existing capacity from Singapore by 46 percent, aided by the delivery of three additional A320 air planes.

Air China is seen to post the strongest first-half financial report among the three major Chinese airlines, including China Southern Airlines and China Eastern Airlines, the South China Morning Post reported. Air China’s results will be aided by a write-back from fuel hedging deals and greater demand in domestic travel.

China Southern will report a weaker net income, because of smaller foreign exchange gains during the first half and no write-backs from fuel contracts. Earlier in August, China Eastern booked a profit of RMB984 million.

India-based air carrier Jet Airways will start daily flights between Delhi and Hong Kong from September 30, Asia Pulse reported. This is the company’s second daily route to Hong Kong (the other one being from Mumbai) and will be operated by Airbus 330 aircraft.

Cathay Pacific Airways Limited’s wholly-owned subsidiary, Dragonair, will start flying on a new route between Hong Kong and Guangzhou from September 14, Travel News Now reported. The route will be served by A320 and A321 aircraft.

Air China Limited posted a net profit of RMB2.93 billion for the first half of 2009, compared to RMB1.17 billion for the same period last year, under Chinese accounting standards.

The air carrier’s revenue decreased 12.7 percent to RMB22.41 billion. According to international accounting standards, Air China’s net profit totalled RMB2.88 billion.

Taiwan-headquartered China Airlines posted a net loss for the six months ended June 30 of TWD2.37 billion or diluted net loss per share of TWD0.71. For the corresponding period of 2008, the carrier posted a net loss of TWD6.53 billion or a net loss per share of TWD2.10.
The air carrier’s revenue decreased by 29.5 percent to TWD44.73 billion for the first half of 2009.

China Eastern Airlines Corporation Limited has started a transit service with Shanghai Airlines, SinoCast reported.The company’s move comes shortly after their merger. Currently, the service is present at ten transit stations, including Tianjin, Xiamen and Shenzhen.

Taiwan-based Mandarin Airlines plans to launch direct charter route from Taichung, Taiwan, to Kalibo, the Philippines, on October 16, Asia Pulse reported. The company has made this decision in order to handle the rising number of Taiwanese travelers.

Air China and Hong Kong-based Cathay Pacific Airways intend to establish a cargo joint venture in Shanghai this year, reported China Knowledge citing Air China’s chairman Kong Dong. According to Air China’s VP, Fan Cheng, the JV will be focused on exports from Shanghai through Hong Kong. Recently, Air China decided to raise its stake in Cathay by 12.5 percent to 29.99 percent.

This industry report brief is courtesy of Aii Data Processing.