Taipei, July 21 (CNA)
Shares of Gintech Energy Corp., one of Taiwan's leading solar cell suppliers, moved higher Tuesday morning after a Chinese company agreed to take a 10 percent stake in the Taiwanese company, dealers said. Although the agreed acquisition price represented an almost 13 percent discount on Gintech's closing price Monday, investors focused more on the potential the strategic partnership will have as a springboard for Gintech to penetrate China's market, they said.
The buying also reflected signs of a recovery in solar energy product prices, which are expected to continue in the third quarter, a traditional peak season for the industry, they added.
As of 11:57 a.m., shares of Gintech had added 4.62 percent to NT$20.40 (US$0.65), with 9.33 million shares changing hands. The weighted index on the Taiwan Stock Exchange was down 0.02 percent at 8,972.80.
"Investors were encouraged by the stake buy-out lead from Gintech, rushing to pick up the stock soon after the local bourse opened," Taishin Securities Investment Advisory analyst Tony Huang said.
At a news conference, Gintech announced that the China-based Tongwei Group has agreed to participate in the Taiwanese company's private placement by buying 50 million shares, or about a 10 percent stake in company, at NT$17 per share.
The acquisition price represented a 12.8 percent discount on Gintech's closing price of NT$19.50 on Monday.
If the deal goes through, it will be the first acquisition by a Chinese firm in Taiwan's solar energy sector. The acquisition is pending approval from the Investment Commission under Taiwan's Ministry of Economic Affairs.
"Investors have high expectations that Gintech will take advantage of the strategic partnership with Tongwei to enter the China market," Huang said.
"My understanding is that Tongwei owns solar power plants in China. So as long as Gintech is able to supply solar panels to Tongwei, the Taiwanese firm will no doubt secure an extra sales source."
According to Gintech, Tongwei has a solar energy division that operates solar power stations with a total capacity of 200MW and factories with 2.3GW in solar cell production capacity. "
Like its counterparts, Gintech is looking forward to adding solar power plant investments, the downstream business of the solar energy industry, to its operations," Huang said.
"Such integration is expected to help the company better use its solar cell capacity, and the investment by Tongwei is expected to help it realize the plan," he said.
Among local solar energy firms operating solar power plants, Giga Solar Materials Corp. announced in early July that it has acquired a solar power generation station in Fukuoka Prefecture in Japan. Gintech said Tongwei also produces multi-crystalline silicon wafers, and it expected the links with the Chinese group to lower its production costs by buying the partner's silicon wafers.
The company also expects the partnership with Tongwei to transform it into a world-class green energy supplier.
"Investors who are buying into Gintech shares were also upbeat about a recovery of solar energy product prices in the past few weeks (after weakness in the first quarter). With the peak third quarter arriving, a price rebound is expected to continue," Huang said. According to EnergyTrend, a green energy research division of market information advisory firm TrendForce, the average price of multi crystalline silicon solar cells in the spot market rose 0.32 percent in the global market, and the average asking price from Taiwan gained 0.34 percent during the week. (By Jackson Chang and Frances Huang)
Taipei, July 21 (CNA)