Ultra-Japanese Solar performance Outlook pessimistic related transactions continued

"Investor" researcher Liqingfeng Bamboo Solar is a company engaged in the production of crystalline silicon solar cells, located in Shanghai Fengxian Nanqiao Town, from the scale, this is the PV industry junior, by sales of the sun in 2009 only 86.68MW, only the industry leading Wuxi Suntech 1/　　8, according to sales of more than the sun in Wuxi Suntech's about 1/9.　　Due to the low entry threshold, attracted by 2007-2008 years of high profit margin, a large number of companies into the industry, 2009 years, China's PV industry is facing serious overcapacity, product prices down, profit margins decline. Although the industry generally has the possibility of recovery, but in overcapacity, high pollution problems, the growth prospects of the PV industry is not optimistic.　　Moreover, industry leaders are expected to be more competitive in the upheaval, and followers may be out of competition. Another major obsession with the solar sun is associated transactions, which may pay a price for imperfect internal controls and governance.　　Investors should be wary of this risk.　　The industry outlook is hard to be optimistic 2009, the company's products include monocrystalline and polycrystalline silicon solar modules, the former accounted for 73%, the latter accounted for 27%. Almost all of the company for export exports, 2009 export share of 95%, 2010 in the first half of the increase to 99.7%. Sales in the German market dominate, with sales accounted for 64.3% and 90.3% respectively in 2009 and 2010 in the first half of the year. At present, Germany is the world's largest photovoltaic capacity of the country, close to the second Spanish three times times.　　These applications have been encouraging large imports of solar cell products.　　Due to the high profitability of the industry, a large number of enterprises in 2007-2008 years into the PV industry, but with the rapid increase in production capacity, as well as the global recession led to lower demand downstream, industry prices since 2009, the rapid decline in industrial products, profit margins decline.　　Since the third quarter of 2010, polysilicon prices have rebounded markedly, from the lowest 50 U.S. dollars/kg up to 100 U.S. dollars/kg, the performance growth of polysilicon manufacturers support. However, this may not be a substantial positive for the sun.　　The reason is that the company is not involved in the production of polysilicon, but focus on the production of solar cells, including silicon rods, wafers, batteries and battery components, and not into the downstream PV system integration business.　　The price of polysilicon does not constitute a direct positive for the company, but will lead to a rapid increase in costs, if the company can not be transferred to increase the cost of product prices, the company's gross margin will decline.　　In the PV industry chain, the cell and battery parts business is the lowest gross margin of the link, in this link, because the entry threshold is relatively low, competition is very fierce.　　The upstream polysilicon business and downstream PV system integration and photovoltaic power generation business, gross margin is higher than the battery business, the industry chain presents a very obvious "smile curve" characteristics. At present, the PV industry leader Wuxi Suntech and Yingli Two companies have realized thePV industry-wide chain of business coverage, the most comprehensive competitiveness.　　LDK, on the other hand, concentrates on the highest-margin polysilicon business.　　As a result, the solar business in the profitability of the operation has no advantage, coupled with the industry overcapacity problem, the company's growth capacity may not be optimistic. Profit negative growth in the first half of 2010, over the sun to achieve sales revenue of 1.028 billion yuan, net profit of 49.775 million yuan, according to the company's disclosure, "2010 1 ~ June by the European debt crisis, the euro against the renminbi, the impact of a sharp decline in the exchange rate,　　The first half of the company's exchange losses amounted to 50.3022 million yuan, while the overall gross profit margin has slipped, making the first half of the net profit margin than 2009 decline.　　The company did not disclose the extent of the decline, but the first half of the net profit was only 2009 annual net profit of 29%, this shows that the year-on-year decline in net profit may be larger. Although the company's earnings growth in 2009 was excellent, the problem behind it cannot be overlooked.　　When the company achieved net profit of 170 million yuan, an increase of 97.7%, but the growth of operating income is not ideal, only 2008 growth of 3.8%, reached 1.32 billion yuan.　　The reason for the big increase in profits in 2009, the main reason is that the price of polysilicon fell so that the cost of the company fell, gross profit margin than 2008 a significant increase.　　Since the third quarter of 2010, the price of polycrystalline silicon has rebounded sharply, which will increase the cost of the company and lead to a decline in gross profit margins, in fact, the first half of the company's overall gross profit margin has fallen from 23.72% in 2009 to 18.12%.　　The company's accounts receivable at the end of 2009 increased from 74.04 million to 278 million yuan at the end of last year, growth of 276% per cent, much higher than the increase in operating income or net profit, the issuer's approach to ensuring performance through a substantial loosening of credit policy worries us about possible future receivables recovery risks and the loss of bad debts. Related transaction Scissors since 2007, the major transactions between the sun and the associated parties mainly include: 2007, from the actual control of the original control of the Junkailong Kailo purchase 12.4 million yuan of aluminum products and other goods; 2007, to Chiron sales of solar module 5.4068 million yuan, to the original director Souvilly control of Sky　　Solar company sales of the battery pack 119.7471 million yuan, to the actual control of the Kailo shareholding Baoqi Bicycle Company, Junkailong Super Day and the original director Wan Shilong control of the company leasing houses, and pay rent. Among them, and Chiron related purchase and sale business in 2007 years later has stopped, and the sky Solar sales continue to this day.　　Although Souvilly is no longer in the issuer's position, it does not preclude any other association between the issuer and sky Solar. As for the rental of housing between the Baoqi and the company, the issuer was assigned to Baoqi bicycles at a cost of 1.5 million yuan for the building of the experimental workshop on June 20, 2007, while the publicDivision for this cumulative expenditure equipment and project funds reached 3.243 million yuan.　　And the company and Baoqi Bicycle Factory leasing contract is shown, since July 1, 2007, leasing Baoqi bicycles 2800 square meters plant, lease 10 years, the annual rent of 429,000 yuan. In other words, the issuer in the cumulative investment of 3.24 million yuan, will be part of the plant to the price of 1.5 million yuan sold to Baoqi bicycles, and then to 429,000 yuan/year, the lease period of 10 years to rent back to use.　　Although it was not disclosed that the two were in the same plant, the oddity of both deals was sufficient for us to suspect that the issuer had Baoqi the benefit of the bicycle.　　In addition, the issuer Hucheron, Baoqi Bicycles, the original director Wan Shilong control of capital Real estate, such as three companies exist funds lending behavior, 2007, the amount of more than 200 million yuan, 2008 is 5 million yuan. This shows that there are more related transactions between the issuer and the actual controller and other related parties, the money lending that has occurred is the performance of internal control failure, under the pressure of the listing standard terms, although this situation no longer occurs, but we are concerned that if corporate governance and internal control can not be completely changed, The interests of small and medium-sized investors may be threatened again after the listing.