Yingli Green Energy Tumbles On Reports Of Production Halt

Shares of Yingli Green Energy Hold. Co. Ltd. (ADR) YGE were down more than 5 percent on Thursday, after two independent sources close to the company told pv magazine that production has been suspended. The halt came after Yingli’s talks with creditors broke down.

A few weeks ago, management had announced that the company might not be able to meet its obligations with its lenders. Following the announcement, investors and analysts started speculating about the company itself being in trouble, or even unviable.

Wednesday’s report about Yingly stopping production might exacerbate shareholders’ concerns regarding the company’s cash availability.

BNEF solar analyst Jenny Chase recently explained to on pv magazine the origin of Yingli’s troubles. According to the expert, the company’s strategy of selling high volumes at low prices had “put enormous stress on its balance sheet.”

“It wasn’t crazy thinking because I think during the very tough years, 2013 especially, a lot of these companies had to sell at a net loss or simply close up factories and give up,” Chase added. “So I think that the rationale behind selling below cost is not always terrible, but when it puts a company in a position where it cannot service its debt obligations that is not ideal,” she concluded.

Yingli has yet to comment on the rumor of production being halted.

The company’s Twitter feed features a picture from last Tuesday that shows two trucks transporting Gen2 300Wp and 260Wp modules out of a factory in Africa.

Year-to-date, the stock is down more than 61 percent.