Bloomberg News

Solars Rally on Obama Focus as TAL Falls: China Overnight

January 22, 2013

Jan. 23 (Bloomberg) --Chinese solar stocks rose in New York after U.S. President Barack Obama called for the development of sustainable energy in his inauguration speech, boosting the outlook for panel manufacturers.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. rose 0.1 percent to 101.79, as 36 stocks climbed while 18 declined. Yingli Green Energy Holding Co. (YGE:US), China’s fourth-largest solar maker, surged 10 percent, while Trina Solar Ltd. (TSL:US), the third-biggest, soared the most in two weeks. TAL Education Group (XRS:US) tumbled after issuing a sales forecast that missed analysts’ estimates, while China Mobile Ltd. (CHL:US) traded at the first discount (CHL:US) to Hong Kong in a week.

Yingli extended its surge this year to 26 percent after Obama said that the U.S. will respond to “the threat of climate change” and transition toward sustainable energy sources. The president wouldn’t have mentioned climate change if his administration weren’t preparing policy on the subject, David Doniger, climate policy director at the Natural Resources Defense Council in Washington, said yesterday.

The address “showed a very positive outlook for renewable energy,” Dave Smith, a portfolio manager of the Gabelli Green Fund, said by e-mail from Purchase, New York yesterday. “The development of solar farms in the U.S. will absorb production capacity globally, and would benefit Chinese makers as well.”

The iShares FTSE China 25 Index Fund (FXI:US), the largest exchange- traded fund (FXI:US) in the U.S., was little changed at $41.74, after rising 1.5 percent last week. The Standard & Poor’s 500 Index climbed 0.4 percent to 1,492.56 amid better-than-estimated earnings reports.

Solars Advance

The Hang Seng China Enterprises Index (HSCEI) added 0.6 percent in a third day of gains to 12,196.74, the highest level since August 2011. The Shanghai Composite Index (SHCOMP) of domestic Chinese shares retreated 0.6 percent to 2,315.14, dropping from a seven- month high.

Baoding, China-based Yingli jumped to $2.97 for the steepest gain since Jan. 3. Changzhou-based Trina, the nation’s third-largest solar maker, surged 8.8 percent to $5.46, the biggest advance since Jan. 9. The NYSE BNEF Global Solar Energy Index (NBGLSRDP), which tracks 100 companies across the industry globally, rallied 0.7 percent yesterday, the most gain in a week.

LDK Solar Co. (LDK:US), the second-largest maker of wafers globally, climbed 7.7 percent to $1.97 in its first increase in three days. The company, which has more than $3.1 billion in debt, agreed to sell about a 12 percent stake to Fulai Investments Ltd. for $31 million, it said in a regulatory filing yesterday.

Xinyu-based LDK plans to issue 17 million new shares at $1.83 each, which will boost its total outstanding to about 144 million, and offered two board seats to Fulai, according to the document.

TAL Sinks

American depositary receipts of TAL, an after-school tutoring services provider, declined 5 percent to a one-month low of $8.83 in its third day of declines in New York.

The Beijing-based company said yesterday sales for the three month ending in February will rise as much as 15 percent from a year earlier to $60 million. That was below the average $64 million forecast (XRS:US) of five analysts in a Bloomberg survey.

TAL’s $48.9 million revenue for the quarter through November also fell short of analysts’ $49.5 million mean estimate. It reported net income per ADR of 7 cents, compared with analysts’ estimates of 1 cent.

“Many Chinese educational companies have expanded too fast in the past year, hurting their profit margin,” Tian X. Hou, the founder of T.H. Capital LLC, a research company that focuses on Chinese stocks listed in the U.S., said by phone from Beijing yesterday. “TAL’s quarterly sales guidance was below our projection as well as the consensus.”

Ambow Retreats

Ambow Education Holding Ltd. (AMBO:US), a private education company also based in Beijing, dropped 4.2 percent to $2.06, a record low. Ambow reported in July a net loss for the three months through March of $12.7 million, compared with net income of $2 million a year earlier. The company hasn’t published financial results since. Ambow’s media manager Mandy Li didn’t respond to Bloomberg’s e-mails seeking comment on when it plans to release earnings.

New Oriental Education & Technology Group Inc. (EDU:US), the biggest private educational service provider in China, slid 1.4 percent to a one-month low of $18.1, extending its decline into a fourth day. The company is scheduled to report earnings on Jan. 29 for the three months ended Nov. 30. It may post its first quarterly loss since the three months ended May 31, 2007, data compiled by Bloomberg show.

Mobile Subscribers

ADRs of China Mobile Ltd. (941), the nation’s biggest wireless carrier, slid 1.5 percent to $55.69, the lowest level since Nov. 20. The ADRs, each representing five underlying shares, traded 0.4 percent below the stock traded in Hong Kong, the first discount since Jan. 15. China Telecom Corp. (CHA:US) lost 0.8 percent to $56.46 in New York while China Unicom (Hong Kong) Ltd., the nation’s second-largest mobile phone company, slipped 0.4 percent to $16.74.

China Mobile’s 5.5 million addition of third-generation phone subscribers was partly offset by its 2.5 million loss in 2G service users, while China Unicom attracted 10 percent fewer new 3G customers in December compared with a year earlier, Bloomberg Industry said in research reports Jan. 21, citing company data.

Ten-day volatility (CH55BN:US) on the China-US gauge fell to 14.6 yesterday, the lowest level since Dec. 28. The Bloomberg Chinese Reverse Mergers Index (CHINARTO), which tracks a basket of companies that gained U.S. listings after buying firms that already trade, advanced 1.2 percent to 79.99, the highest level since May.

To contact the reporter on this story: Belinda Cao in New York at lcao4@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net


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Companies Mentioned

  • YGE
    (Yingli Green Energy Holding Co Ltd)
    • $3.48 USD
    • 0.18
    • 5.17%
  • TSL
    (Trina Solar Ltd)
    • $11.46 USD
    • 0.18
    • 1.57%
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