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News >Bizchina

Sinovel Wind shares fall 9.6% on debut

2011-01-14 14:24

Beijing-based company raised 9.5 billion yuan in biggest IPO in China this year

Shanghai - Sinovel Wind Group Co, China's biggest maker of wind turbines, fell on its first day of trading in Shanghai as rising competition for clean-energy products fueled concern the company's shares may be overvalued.

The stock slumped over 9 percent from the 90 yuan ($13.62) offer price on the Shanghai Stock Exchange Thursday. The Beijing-based company raised 9.5 billion yuan in China's biggest IPO this year, according to data compiled by Bloomberg.

Sinovel Wind sold stock at 44 times 2009 earnings, compared with 18 for Xinjiang Goldwind Science & Technology Co. The company's sales grew 36 percent last year after more than doubling in 2009, Haitong Securities Co estimates, while a US complaint to the World Trade Organization may threaten overseas expansion by Chinese wind turbine companies.

Sinovel Wind closed 9.6 percent lower at 81.37 yuan. The benchmark Shanghai Composite Index rose 0.2 percent on Thursday.

"The 90 yuan offer price is too high, given the company's growth will slow to about 25 percent from almost 100 percent over the past few years," said Tao Zhengao, an analyst at Donghai Securities Co in Shanghai.

Wind turbine companies in China also face challenging times. "With a large installed base in China, turbine accidents and quality issues are becoming more common," said Justin Wu, head of wind research at Bloomberg New Energy Finance. "Turbine prices continue to sink at home while overseas expansion is being challenged by robust competition."

Sinovel Wind sales growth probably slowed to 34 percent in 2010, according to Century Securities Co.

Xinjiang Goldwind, the country's second-biggest maker of wind turbines, slid 2.1 percent to 21.4 yuan in Shenzhen on Thursday, extending its loss to 3.7 percent this year. The stock gained 24 percent last year.

China has pledged to cut carbon emissions by switching to clean energy, such as nuclear and wind power. The government plans to raise its total installed wind capacity to 100 gigawatts by 2015, from about 40 gigawatts at the end of 2010, Chen Shuoyi, head of the High-Tech Center of the Ministry of Science and Technology, said on Wednesday.

Chinese wind companies that export to the United States have been under pressure, since the Obama administration in December filed a complaint with the World Trade Organization over support China provides its wind-energy manufacturers, acting on a petition brought by the United Steelworkers union.

Bloomberg News

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