Jiangsu Sunshine Shinpei suspected of violations

Currently, the overall polysilicon production and operation situation in the country is very unsatisfactory. There may be less than 10 polysilicon companies in operation, and there are more than 40 actual polysilicon companies in China. Although China and the European Union have already reached a price commitment agreement on photovoltaic exports, in the future, China's photovoltaic cell and module manufacturers can continue to sell products to Europe, but the Chinese companies' losses in the photovoltaic industry are still fermenting. The Jiangsu Sunshine subsidiary Ningxia Sunshine Silicon Industry Co., Ltd. (hereinafter referred to as “Ningxia Silicon Industry”) is suspected of violating the trust and the loss, bankruptcy, and reflects the prospect of the polysilicon industry is not optimistic.

Last weekend, the polysilicon producer - Jiangsu Sunshine announced that it had received the decision of the administrative supervision measures of the Jiangsu Securities Regulatory Bureau of the China Securities Regulatory Commission (hereinafter referred to as the "Jiangsu Securities Regulatory Bureau"), which was in the (subsidiary company) - silicon production in Ningxia was discontinued. In case of information disclosure violations, a written rectification report needs to be submitted to the Jiangsu Securities Regulatory Bureau.

Yesterday, Jiangsu Sunshine Director Xu Weimin told reporters that this violation was caused by the lack of timely disclosure of relevant information on Ningxia Silicon. Some analysts believe that the delay may be that companies also want to see if the polysilicon business still has a turn for the better. However, since silicon industry in Ningxia has entered bankruptcy liquidation stage, Xu Weimin also stated that it is unlikely that Jiangsu Sunshine will enter the photovoltaic industry.

Two letters were questioned

According to the warning letter issued by Jiangsu Securities Regulatory Bureau, Jiangsu Sunshine has breached the regulations regarding the suspension of its production subsidiary Ningxia Silicon.

Xu Weimin said that Ningxia Silicon began to suspend production and inspections in late August last year. At that time, Jiangsu Sunshine did not issue a temporary announcement. Instead, it put the situation in the mid-2012 financial report. "The timing of the publication of the interim financial report and Ningxia Silicon The shutdown time of the industry was relatively close, so it was announced that the production was suspended in the financial report. However, the Jiangsu Securities Regulatory Commission did not recognize this, and Jiangsu Sunshine should make an announcement on the suspension of production alone.

The Jiangsu Securities Regulatory Bureau also stated that there are violations (behaviors) in Jiangsu Sunshine’s decision-making process and application of credit for the bankruptcy of silicon industry in Ningxia.

Xu Weimin told the reporter that due to the serious losses of silicon industry in Ningxia, the assets were insufficient to pay off all matured debts and there was a clear lack of solvency. Jiangsu Sunshine, as a creditor, applied for the bankruptcy liquidation of Ningxia Silicon in the Ningxia Shizuishan Intermediate People’s Court and obtained The court officially accepted the news, which was announced at the end of January this year.

The reporter noted that the incident was released with the announcement of Jiangsu Sunshine's pre-loss announcement. "But the securities regulatory department may think that we should publish this news earlier, for example, when we file a bankruptcy application with the court, it should be announced to the public," said Xu Weimin.

"Ningxia silicon industry, a loss of this polysilicon production company, is indeed more serious, and is currently handled in accordance with the court's process, we also made a larger provision." Xu Weimin said.

Industry outlook is not optimistic

Jiangsu Sunshine's investment in polysilicon projects can be traced back to July 2006. At that time, it set up a joint venture company with Zhongxiang (Ningxia) Dongfang Group and Ningxia Electric Power Investment Group to build a 4,000-ton/year polysilicon project in Shizuishan, Ningxia, and this zone is close to a 4.2 billion tons of silica deposit, which can be described as superior geographical conditions. . According to subsequent public information, the cumulative investment for the entire project was 1.78 billion yuan, of which registered capital was 360 million yuan, and Jiangsu Sunshine was involved in 65% of the shares. In the first phase, it was to build an annual output of 1,000 tons of polysilicon.

From 2006 to 2008, the polysilicon industry was still in an ascending period. The peak cost was only US$30/kg, and it was stunned to US$400/kg. However, compared to polysilicon companies such as GCL-Poly and Daxin Brand-new energy, Ningxia Silicon did not formally produce polysilicon products on December 23, 2008, but the polysilicon market at that time had been rapidly turned down. However, the aforementioned two polysilicon companies put into production earlier, and thus made a fortune in the market. In the following five years, the price of polysilicon turned sharply and Ningxia silicon industry collapsed.

In 2011 and 2012, the polysilicon production of silicon in Ningxia was 1,527 tons and 594 tons respectively, while the sales volume was 1,342 tons and 816 tons. In 2012, the production and sales volume all decreased significantly. In addition, in 2012 Ningxia Silicon Polysilicon revenue was 124 million yuan, gross profit margin -21%. As of 2012, Ningxia Silicon has total book assets of RMB 1.4 billion and liabilities of RMB 1.44 billion. It is insolvent, its net assets are RMB 46.15 million, and its annual loss is RMB 247.4 million.

Xu Weimin said that after 2012, the polysilicon market price will be between 150,000 yuan and 180,000 yuan per ton, but the actual cost of the company's enterprises has reached 400,000 yuan per ton, including the financial costs of borrowing by Ningxia Silicon.

According to the annual report of Jiangsu Sunshine in 2012, its equity investment in Ningxia Silicon Industry was 234 million yuan, and the borrowings owed by Jiangsu Silicon Solar to Ningxia Silicon reached 1.275 billion yuan, which is expected to be unrecoverable. Therefore, in 2012, Jiangsu Sunshine Co., Ltd. The total provision for impairment of subsidiaries was RMB 1.5 billion, causing a huge loss in 2012 (the amount of losses for that year was RMB 1.36 billion).

Not only is Ningxia Silicon Industry, an analyst at Shenyin Wanguo also told reporters that the overall polysilicon production and operation situation in the country is very unsatisfactory. The number of operating polysilicon companies may be less than 10, while domestic actual polysilicon companies have 40 Many. These operating companies include TBEA, GCL-Poly, Daxin Brand New Energy, CSG, and Asia Silicon, but their production capacity is not sufficient. “If a special production line of TBEA opens 60% of its production capacity, the production line of Daxin Brand New Energy in Xinjiang is also operating, but its Chongqing production line has not yet officially resumed. This year, the country’s polysilicon production is around 50,000 tons, compared with 6 of last year. Ten thousand tons have been reduced."

As for the question of whether polysilicon's market price may rise, the Shenyin Wanguo analyst said that the product is still maintained at around US$18/kg. If the Ministry of Commerce formally imposes anti-dumping sanctions against overseas polysilicon companies, domestic Polysilicon prices may increase.

After a year or so of investigation, on July 24 this year, the Ministry of Commerce formally imposed temporary anti-dumping measures on imported polysilicon from the United States and South Korea. The maximum levy is 57%. On November 1st last year, the Ministry of Commerce also implemented a "double reverse" investigation on polysilicon companies from the European Union. However, as of now, no initial grounds have been imposed.