Li Hejun, formerly the second richest man in China, lost almost half of his wealth in a single day of trading on Wednesday. Mr. Hejun, the chairman and principal owner of Hanergy Thin Film Power Group (HKG:0566), lost an estimated US$14bn in market value in 24 minutes. Hanergy’s stock price plummeted 47 per cent in the opening hours of trading on the Hong Kong stock exchange amid concerns over market manipulation and questions surrounding the viability of the company’s main technology.
Mr. Hejun had been promoting his company over the past year, claiming that the company’s technology was thin, flexible and would usher in a new era of Chinese dominance in the solar energy market. He claimed “in the new round of energy revolution, the world will chose China and China will chose photovoltaics.” After a London research group released a report claiming it found no significant revolutionary technology that could explain the company’s share price, the share price of the company plummeted 47 per cent, wiping out more than US$19bn in 24 minutes.
In addition to the lack of technological breakthroughs, many other concerns were raised after analysts questioned the company’s source of revenue. More than 60 per cent of Hanergy’s sales come from the Beijing-based parent company Hanergy Holdings Group, a solar panel and hydroelectric company. The Hong Kong Securities and Futures Commission has been probing the company for market manipulation over the past few weeks, according to a Reuters report. The company has also made significant acquisitions to bolster its range of technologies. However, none of the technologies have seen any major breakthroughs to date. Jenny Chase, the lead solar industry analysts at Bloomberg New Energy Finance, said she was “skeptical that any thin-film technology unproven in bulk production will revolutionise the solar industry. While technological black swans can never be ruled out, the history of thin film has largely been one of losses and disappointments.”
Author: Simon Herrmann
May 21, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.