Taipei, Shares of United Renewable Energy Co. (UREC), a new solar energy company, came under pressure Monday morning as concerns over a global supply glut dampened buying interest, dealers said.
Market sentiment was also affected by plans for layoff at other solar energy companies as they remained unprofitable under the current unfavorable market conditions, dealers said.
As of 12:03 a.m. Monday, shares of UREC had dropped 2.86 percent to NT$10.20 (US$0.33), with 13.92 million shares changing hands on the first day of the new company's listing on the Taiwan Stock Exchange, where the weighted index was up 0.37 percent at 11,047.29 points.
"The selling reflected worry over a global solar energy supply glut," MasterLink Securities analyst Tom Tang said. "Such concerns have been fueled by China's decision earlier this year to stop subsidizing solar energy purchases."
Since the subsidies ended, demand from Chinese buyers has dropped by about 30 percent, worsening the imbalance in global demand and supply, according to Tang.
UREC, the largest solar energy firm of its kind in Taiwan, was created by means of a merger of Gintech Energy Corp. and Solartech Energy Corp. and is capitalized at NT$21.1 billion.
The new company, now fully under the corporate umbrella of Neo Solar Power Corp., provides one-stop services ranging from solar cell supply to back-end module production.
In the first quarter of the year, Neo Solar, Gintech and Solartech posted a loss per share of NT$0.63, NT$1.07 and NT$0.57, respectively, after recording a loss per share of NT$4.08, NT$2.93 and NT$2.51 for 2017.
Before the merger, Neo Solar had said UREC would set its sights on the global market in a bid to reduce the Taiwan solar energy sector's over-dependence on the China market.
Neo Solar had forecast UREC sales of NT$50 billion in its first year of operations and annual revenue of NT$90 billion to NT$100 billion within five years.
However, according to Tang, the solar energy sector is unlikely to make an immediate turnaround amid the current global supply glut.
"Furthermore, recent layoff decisions by Motech Industries Inc. and Green Energy Technology Inc. have made investors nervous," he said.
On Sept. 25, solar cell maker Motech said it was planning to reduce its workforce by about 2 percent after announcing a week earlier that it was terminating the employment contracts of 300 migrant workers due to challenges in the solar power industry.
Last Friday, Green Energy Technology made a similar announcement, saying it was laying off 203 workers at the Southern Taiwan Science Park, a number that the local media said was 20 percent of the company's total workforce.
Amid such developments in the industry and the current market conditions, it will be a challenge for UREC to turn a profit, according to equity analyst Wang Chao-li (???).
In January, the National Development Fund (NDF) decided to help fund UREC as part of the government's efforts to develop renewable energy.
The amount of funding, however, will not be finalized until UREC decides to increase its capital by issuing up to 380 million new shares, the NDF said.
Source: Focus Taiwan News Channel