Industry slump, HK probe cast further doubt on future: analysts
Li Hejun, once the richest man in the Chinese mainland, resigned as the chairman of solar equipment maker Hanergy Thin Film Power and a new chairman was appointed, according to a filing on the Hong Kong bourse on Friday, the company's latest attempt to grapple with the headwinds it faces.
Yuan Yabin, who in 2013 joined Hanergy Holding Group, the company's parent, was appointed as the new chairman, the company said.
Li's resignation came exactly one year after the company's shares were suspended from trading in Hong Kong after a sharp price drop.
On May 20, 2015, the shares dived nearly 47 percent between 10:15 am and 10:45 am, wiping out over HK$140 billion ($18 billion) in market value. Trading has never resumed.
But in the two years before that, the shares rose steadily, especially in early 2015. The rise made Li the richest man in the mainland.
In a list released by the Hurun Research Institute in February 2015, Li ranked as the richest in the mainland with a fortune of 160 billion yuan ($20.43 billion). But in the list released in February this year, he wasn't even in the top 10.
"In Li's case, most of his fortune lies in a single company [Hanergy], making it particularly vulnerable to share price changes," Wang Danqing, a partner at Beijing-based consultancy ACG, told the Global Times on Sunday.
The sharp drop last May 20 provoked speculation that the company was under investigation by Hong Kong authorities for alleged stock price manipulation.
On May 28, 2015, the Hong Kong Securities and Futures Commission began an investigation, but it hasn't revealed further details.
In the year since the trading halt, the news has been bad for Hanergy. In August 2015, media reported that the company launched a massive layoff that involved about 2,000 employees in a bid to cut costs.
Also, the company lost the support of some of its business partners. In November 2015, furniture retailer IKEA Group announced that its deal with Hanergy to sell the latter's solar products in Europe had ended as of October 31, 2015 and would not be continued.
Achieving financial stability has been a major challenge, analysts said, but the company's several attempts to do so have failed.
Hanergy said on May 3 that a share subscription agreement with Macrolink New Resources Holding Co, valued at HK$5.46 billion, had been terminated, as Macrolink did not pay 80 percent of the sum due under the sales contract by April 30.
Hanergy's 2015 financial results show that the company had a challenging year. It reported a net loss of HK$12.2 billion, nearly twice as much as the total profits made in the previous four years.
The company's prospects are bleak.
"The fact that it is being investigated will surely damage its operations," Wang said. Another problem is that the solar industry still hasn't fully recovered from a recent downturn.
Whether Hanergy can emerge from its difficulties is unclear.
"The investigation of the Hong Kong Securities and Futures Commission could last for a long time," Jiang Caiying, a lawyer at Guangdong Bangyi Law Firm, told the Global Times on Sunday.
