Singyes finally publishes details of last year’s annus horribilis

Embattled Chinese solar project developer and building-integrated PV manufacturer Singyes Solar has applied to resume trading in its shares on the Hong Kong exchange.

The company today finally published its full-year results for 2018 and wants to bring an end to a halt in trading of its stock that has been in place since April 1.

If the request is approved by the exchange, trading could resume on Monday and it is tempting to wonder how many investors will hold their nerve until October 2, when the Hong Kong High Court hears a winding-up petition issued by Deutsche Bank’s local branch over what the lender claims is an unpaid US$6.27 million debt.

If Singyes manages to dodge that bullet, its shareholders will face another test of nerve two days later, when the heavily indebted company is due to announce more details of a hoped-for Chinese state bail-out on which the future of the business hinges.

State bail-out

Provided long-suffering independent shareholders approve the plan, Water Development (HK) Holding Co Ltd – part of the Chinese state-owned Shuifa Group – will conduct a HK$1.55 billion (US$198 million) takeover by acquiring more than double the volume of existing Singyes shares in circulation to own 66.92% of the enlarged entity.

That shares subscription holds the key to a debt restructuring battle being fought by Singyes, which is currently in default to the holders of almost US$430 million of senior notes and convertible bonds – a situation exacerbated by Deutsche Bank’s seeming unwillingness to play ball.

The full year figures for 2018 published today also revealed China Singyes Solar Technologies Holdings Limited in May pledged all of its 62.4% holding in Singyes New Materials to secure a one-year, US$12 million loan. Remarkably, the company has also managed to secure commitments for a further RMB1.5 billion (US$191 million) in credit from “two banks in mainland China” – lenders which must surely be state-owned.

Singyes suffered a rapid turnaround in fortunes last year when it appeared to be caught entirely unawares by Beijing’s policy u-turn on solar subsidies. With 90.4% of its business concentrated on the mainland – and RMB1.33 billion of its 2018 total revenue of RMB4.42 billion concentrated in the hands of one, unnamed customer – Singyes was caught cold by the decision of the central authorities to rein in solar incentives.

Collapse in EPC business

That policy bombshell saw the revenue generated by the company’s solar project engineering, procurement and construction (EPC) services business collapse from almost RMB1.8 billion in the first six months of last year to just RMB301 million in the second half.

That prompted full-year losses of RMB672 million for the year, following a RMB150 million profit from a booming market 12 months earlier and as Singyes burned through deferred tax assets of RMB49 million in 2017 to just RMB1.6 million at the end of last year, the company was left with just RMB216 million in cash and equivalents by December 31, having had RMB1.2 billion in its current account at the end of 2017.

That in turn prompted the defaults which have left the future of the business hanging on the success of the proposed state bail-out and debt restructuring plan, not to mention that date in the High Court.