China

China

Shanghai exchange confirms Sinovel suspension

CHINA: China's Shanghai Stock Exchange (SSE) has decided to maintain the suspension of Sinovel's two bonds.

In a statement posted on the SSE website, Sinovel said it had received a formal letter from the stock exchange notifying it of the ruling.

The two bonds have had their designations altered, replaced by new names "Rui 01 Zanting"and "Rui 02 Zanting". The Chinese "Zanting" literally means "suspended". But their code numbers remain unchanged.

The two bonds were issued in December 2011, totalling CNY 2.8 billion in value. They were temporarily suspended on 30 April, seven working days before SSE's final ruling landed.

The suspension came in accordance with China's regulatory rules on stock listing. This stipulates that a listed company will have special treatment if it reports negative net profit in two consecutive years.

On 5 May "Huarui Fengdian", the designation of the Sinovel stock, was also changed into " *ST Ruidian". ST stands for "special treatment"and the asterisk mark warns investors of the highly risky nature of the stock. The share will surely be delisted if the company fails to make a profit in the following year, an SSE analyst said.

The Chinese manufacturer posted a loss of CNY 3.45 billion ($559 million) in 2013, more tha twice the previous year's loss of CNY 583 million.

It is not known how long the suspension period for the two bonds will last. In the above mentioned statement, Sinovel said it would continue to fulfill the legal obligations associated with the listed bonds.

Sinovel's annual report said the firm had canvassed 303MW in new orders in 2013, including 30MW from the international market. Shipments of wind turbines was expected to reach 200MW this year, roughly doube that of last year, Sinovel president Liu Zhengqi said earlier this month.

"The priority of the company is to turn deficit-running into profit-making this year. We have confidence that no debt default will occur, " Liu said.

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