Hanergy: Let There Be No Doubt

Background: Hanergy (HNGSF) is a large cap solar cell manufacturer that has been suspended on the Hong Kong market. The biggest shareholder supposedly lost USD14 billion in one day

Now that Hanergy has been suspended I can let these out.

I went to visit Hanergy's main factory in China about six weeks ago. It was almost entirely silent. There was essentially no production of solar cells at all and the accounts that suggest significant production and sales are entirely fraudulent.

There was some evidence that someone was exploring starting production - and I will get to that - but the factory was almost entirely idle.

Here are a few photos.

This is the plant. There were almost no cars despite a vast car park. All gates except one were locked.
 


There was a single truck being loaded with solar cells - so there was some production. However this truck was being loaded when we arrived and still there when we left two hours later. This plant, if it had any production at all, had it only on a trial basis. The accounts that suggest substantial production are false.
 


This is another photograph of the main drive to the plant. One car was parked. There was no movement.
 


This I found particularly bizarre. There were solar cells set up around the plant. Some of them were set up in triangle-patterns. This is the only place I have ever seen solar cells set up so that they are not orientated towards the sun.
 



I walked around the enormous plant. Not a truck went by and the only people we saw except at the side were the gardeners. (There were several of them - and we asked them if it ever got any busier. They confirmed it did not.)

However on the side there was a shaded area with some motorbikes parked - which suggest that the plant is not entirely idle. Just almost.
 


Strangely, two white guys walked out of the plant. I think they were Americans trying to sell some technology - maybe sales guys from AMAT - but I am only guessing. I tried to signal for them to come over but they did not.

There has been much press that compares Hanergy to other solar companies and suggests there may be disruptions in the market for panels. Garbage, I say. The right comparison is Sino Forest or Longtop Financial Technology.

Hanergy barely existed.


Disclosure that will annoy my clients: Despite sitting on these, we were not short Hanergy. Too much squeeze risk for my liking.

Disclosure: The content contained in this blog represents the opinions of Mr. Hempton. Mr. Hempton may hold either long or short positions in securities of various companies discussed in the blog ...

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Karl Yong 3 years ago Member's comment

It just remind me the CDOs era, however this guy will definitely be prosecuted and potential face the death penalty in China. Question must be raise HKSE and the due diligent effort.

However who are we to criticize, those investment bankers during the CDOs era, selling their client faulty products and take up position against them. The top management made billions, not only free but get every cents they cheated others. Their actions cause millions of people to lose their home, world recession, millions around the world lost their jobs and made all the banks they work face bankruptcy. Cannot imagine, these people were/appointed as Authorities or President advisers. AIG as part of bill out, was force to agreed not to take legal actions against the investment banks and all these devils. I guessed this is the best of America dream, robbed billions of dollars, screwed millions of life, not only walk free but US tax payers had to pick up the tap.

It is even more amazing, some of these devils become head and prof. of the best universities while others play key roles in the government, regulating the financial industry. The most disappointing is Obama, I thought he will make a different, with all his promises, nothing came about, worst he appointed them for the last eight years to make US worse..... FYI a French lady that head the IMF did a better job, at least she pushed to implement what was promised by Obama, she was successful as it is implemented across EC.

Caleb Presswood 3 years ago Member's comment

I agree with Wendell Brown - I am skeptical and cynical about your "knowledge", but thanks for a (possible) explanation on the drop...although you could have omitted the implied reference that you could have used this information to make a ton of money shorting this supposed shell of a company. More credible to just report the facts, disclose you had no positions, move on with life and let readers form their own opinions. The Hong Kong authorities claim they are investigating a single investor/investment vehicle that caused the meteoric rise early March that (possibly) correlates with the insane drop this week...I'm not touching the company either way - short or long - but it is the equivalent of entertainment news for me as an investor. :) Unrelated note - anyone curious why steel is remaining so cheap even after the oversupply of the past year has dried up, demand has slowly recovered, and inventories are starting to drop off their peak? Is there a new building material that is replacing steel I'm not aware of? At the current prices, many smaller and high-cost factories/companies are going to go bankrupt as they are literally selling below cost to keep cashflow positive...when the big Chinese steel firms are in danger with their razor-thin margins, you know steel has to rebound. Just a thought. No wild tips or ticker symbols, I'll let you conduct your own research.

Wendell Brown 3 years ago Member's comment

Hm. You say you were 'sitting on these' - why? I'm guessing because going public with the info might have affected the stock price and gotten a lot of pushback, And that you were taking them in order to do due diligence for your own investors? I guess I'm curious about the ethics of your position.