Solargiga issues profit warning as it fails to come out of the red in 2020

Chinese PV products maker Solargiga Energy Holdings Ltd (HKG:0757) on Wednesday issued a profit warning saying it expects to record a loss of CNY 215 million (USD 33m/EUR 27.7m) attributable to equity holders in the fiscal year ended 2020, despite a 36.7% revenue jump in the same reporting period.

The loss would still narrow by around 40% compared to 2019 when the company saw CNY 355.5 million in the red.

Solargiga said it could not swing to profit due to a combination of unforeseen circumstances, among them the outbreak of the COVID-19 pandemic leading to increases of certain costs.

The wafers and ingots manufacturer faced supply shortage and surging price of polysilicon due to some of its suppliers having to deal with temporary suspension of operations due to floods and explosion accidents.

The COVID-19 crisis affected the supply of a number of major auxiliary materials, which cause their procurement costs to rise. The pandemic also led to the increase of selling expenses, such as shipment costs, Solargiga explained.

To this, the company adds that it adjusted it operating strategy in 2020 by suspending the in-house manufacturing of solar cells due to the aging of the existing production line without economies of scales. With this move, Solargiga wanted to focus its resources on the development of niche products such as monocrystalline silicon ingots/wafers and modules.

As a result, the net amount of the aging production line and related machinery and equipment had to be recognised as a one-off asset impairment loss during the reporting period, the company said.

(CNY 1.0 = USD 0.154/EUR 0.129)

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