Solar cell maker Neo Solar Power Energy Corp (新日光能源) yesterday said it expects to return to profit next year on the back of a business model restructuring and reduced costs following a three-way merger.
The Hsinchu-based company announced the forecast after shareholders approved a merger with local peers Gintech Energy Corp (昱晶能源) and Solartech Energy Corp (昇陽光電) in an extraordinary meeting.
“We hope our transformation efforts and the merger synergies will ... lead to a turnaround in operations,” Neo Solar chairman Sam Hong (洪傳獻) said.
The merger has already received approval from competition watchdogs in China and Germany, while at home it is being reviewed by the Fair Trade Commission, Hong said.
Neo Solar expects to complete the transaction on Oct. 1, should all review procedures run smoothly.
The company would be renamed United Renewable Energy Co (聯合再生) after the merger, Hong said.
The new company would focus on boosting its presence in the solar panel assembly business, which offers better margins, by utilizing the resources of the three companies, while scaling back efforts in the solar cell business, Neo Solar said.
The solar cell makers have expanded into solar power plant construction through their subsidiaries to rein in long-term losses, but their go-it-alone approach did not work well.
The merger would help reduce manufacturing costs, given stronger bargaining power for raw materials when buying on a large scale and improved manufacturing efficiency, Hong said.
Neo Solar expects to receive a much-needed capital injection of NT$4 billion (US$137.2 million) by the end of this year from the National Development Fund and government affiliate Yao Hua Glass Co (耀華玻璃) to fund the merger, Hong said.
Last year, the three solar cell makers lost a combined NT$8.67 billion amid weak demand and falling prices.
Hong attributed Neo Solar’s losses largely to a massive write-off from old equipment and costs from canceling long-term contracts for raw materials.
“The company will have a whole new start” after getting rid of those burdens, Hong said.
The solar panel assembly business is expected to make up half of United Renewable Energy’s projected revenue of NT$9 billion in 2022, according to its five-year business plan.
The other half would come from supplying solar modules and cells, it said.
Gintech and Solartech shareholders yesterday also approved the merger, which would see Gintech shareholders swap each of their shares for 1.39 common shares of Neo Solar, while Solartech shares would be swapped for 1.17 Neo Solar shares.
Gintech and Solartech would be delisted from the local stock market upon completion of the merger.
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