Chinese solar module maker Trony Solar Holdings Co Ltd. postponed its initial public offering due to market conditions after failing to price Wednesday night.
The deal, which was expected to begin trading Thursday on the New York Stock Exchange under the symbol TRO, was postponed indefinitely. No new date has been set for its debut.
Market conditions are commonly blamed when IPO plans are scrapped, even if other IPOs are getting done, as is the case now; another company, China Nuokang Bio-Pharmaceutical Inc. (NKBP), will begin trading Thursday, albeit after pricing lower than expected.
Sometimes, industry or company-specific factors can make it difficult to attract investors at a price acceptable to the issuer. In Trony's case demand for solar products has decreased during the recent global financial crisis, yet production has ramped up, creating an oversupply that began at the end of 2008. As a result, solar manufacturers like Trony have faced increased pricing pressure, with its average selling prices and profit margins declining. The company expects prices will continue to decline over time due to supply ramp-ups and lower raw material expenses.
Companies such as First Solar Inc. and SunPower Corp. have recently lowered their forecasts for the year, hurt by excess inventory and price competition.
Trony, however, had been able to produce good financial numbers in 2009 even in the face of negative industry factors because its sales volume kept ahead of pricing pressure. Its June-ended fiscal year showed revenue doubling to $79 million, and the three months ended in September were up 81% to $37 million, compared to the same timeframe a year earlier. Net income during those periods rose 92% and 62%, respectively.
Based in Shenzhen, Trony Solar specializes in thin film solar modules, which costs less to make than traditional solar panels because they use less silicon. Thin film can result in higher total installation costs to customers because it requires more space to install.
Trony had planned to sell 19.5 million American Depository Shares at a price between $9 and $11. Underwriters JPMorgan Chase & Co. (JPM) and Credit Suisse Group (CS) were managing the deal.
