June 21 (Bloomberg) -- Investors’ interest in Chinese wind- energy companies may be slowing after Xinjiang Goldwind Science & Technology Co., China’s second-largest wind turbine maker, shelved a share sale in Hong Kong, analysts said.
Goldwind shares declined as much as 9.4 percent in Shenzhen before recovering to close 1 percent lower at 18.84 yuan. The stock slumped by the daily limit of 10 percent on June 18, the first trading day after the company canceled a plan to raise as much as HK$9.09 billion ($1.2 billion) in Hong Kong for domestic and foreign expansion, citing poor market conditions.
Global investment in wind power eased during the economic slump in the U.S. and Europe, lowering the prices paid for wind farms, according to Bloomberg New Energy Finance. Turbine makers are most at risk of a slowdown as overcapacity narrows margins, said Justin Wu, an analyst for the research group.
“It’s a tough situation to be a wind turbine manufacturer anywhere in the world right now, including in China,” Wu said in a telephone interview from his office in Beijing. “They’re in a highly competitive situation, with high price competition and their margins are very thin.”
Goldwind, based in Urumqi city in Xinjiang province, had planned to sell 395.3 million new shares, equal to a 15 percent stake, at between HK$19.80 and HK$23 apiece, it said June 6. About 40 percent of the proceeds would be spent on building plants and 24 percent on overseas expansion, the company said.
Foreign Trading
Chinese renewable energy companies like to list or sell shares on overseas bourses because it gives them international credibility to boost exports, Wu said.
Chinese solar panel makers including Yingli Green Energy Holding Co., Suntech Power Holdings Co. and Trina Solar Ltd. are listed in New York.
Renewable-energy stocks have fallen worldwide after the failure of United Nations climate talks in December to produce a treaty to fight global warming and promote clean power. The WilderHill New Energy Global Innovation Index, an 88-member benchmark, has declined about 20 percent in 2010.
Investors may be concerned that China’s domestic demand for wind energy may also be slowing, Honda Wei, a Shanghai-based machinery and alternative energy analyst at KGI Asia Ltd., said in an e-mail. Annual installations may decline to as low as 10 gigawatts between this year and 2012 from 13.8 gigawatts in 2009, he said.
Canceled Offers
Goldwind isn’t the only company to shelve its listing plans. Hong Kong’s Hang Seng Index is down 4.4 percent this year. Swire Properties Ltd. delayed a plan to sell shares in Hong Kong on May 6, its parent said at the time. Strikeforce Mining & Resources Plc delayed taking orders for its Hong Kong IPO until equity markets have stabilized, a person with knowledge of the decision said in May.
China Tian Yuan Mining Ltd., the largest privately owned iron ore producer in the northern province of Hebei, delayed a Hong Kong IPO last month, two people with knowledge of the decision said on May 7.
The average price paid for wind farms worldwide declined to 1.66 million euros ($2.1 million) per megawatt from a peak of 1.75 million euros in mid-2008, New Energy Finance estimates.
China Longyuan Power Group Corp., the nation’s biggest wind-power producer, raised a net $2.2 billion through an initial public offering in Hong Kong in December. The shares have declined 12 percent since the listing.
Chinese wind turbine manufacturer Sinovel Wind Co. said in March it plans to raise 3.5 billion yuan in an initial public offering on the Shanghai Stock Exchange.
“Given that there’s a large pipeline of wind-related IPOs planned for China and for Hong Kong, we’re not sure how much investor appetite there is for wind companies,” Wu said. “The first couple may be very successful, but how much money can you really put into it?”
--Editors: Reed Landberg, Todd White
To contact the reporter on this story: Stuart Biggs in Tokyo at sbiggs3@bloomberg.net.
To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net.
