Short Hanergy

Hanergy stock’s valuation have always been absurd, not supported by any strong fundamentals. The market capitalization is higher than many top leading shippers in the industry. It deals in thin film which is not widely popular. Moreover, most of its shipments are internal, recognising revenues form its parent company. I highly doubt the valuation here and would recommend getting away from this stock and look for other strong potential players in the industry.

Given below is the one-year stock performance for Hanergy Thin Film Power Group Ltd (HNGSF), showing that the stock gained sharply during March. The market capitalization of the company is currently $25.8 billion, which looks very overvalued, as compared to the industry leading shippers like Yingli Green Energy (YGE) with market cap of just $312 million. Hanergy mostly manufactures thin film panels which are less popular than crystalline silicon modules, widely used today. Also the company is not a large shipper, with 94% of its sales to its parent company in 2011 and no sale to outside parties in 2012 and 2013. I have already written earlier that Hanergy valuations are a bit absurd. It is not supported by the strong fundamentals.

“Everybody–from investors to journalists to industry participants–seems to agree that the stock is wildly overvalued,” said CLSA analysts Charles Yonts and Jonny Lau in a report published last Friday.

The stock price saw a steep rise, at a time when most energy stocks were down following the falling oil prices. Moreover, the management has no clue for this gain in share prices. According to the website, shares have been bought through a program that connects the Shanghai and Hong Kong stock markets. I would thus advise investors to stay away from this stock and look for better options.

Source: Morning Star