Neo Solar Power Corp (新日光能源) shares yesterday tumbled 3.81 percent as investors shunned the launch of a new solar firm through a three-way merger.
Neo Solar shares fell to NT$10.1, its lowest in about two weeks, underperforming the TAIEX’s 0.41 percent gain.
The company absorbed its peers Gintech Energy Corp (昱晶能源) and Solartech Energy Corp (昇陽光電) through the merger. The new company, named United Renewable Energy Co (UREC, 聯合再生能源), became operational yesterday.
Neo Solar is to be renamed UREC when it completes the necessary procedures next month.
UREC chairman Sam Hong (洪傳獻) has said the new firm underlines a strategic shift toward the profitable solar power plant construction business from the money-losing solar cell manufacturing business, but it was not enough to persuade investors, who kept dumping Neo Solar shares.
UREC would gradually scale down its solar cell capacity to about 3 gigawatts a year over three years by retiring less cost-effective plants, Hong said in October last year, when plans for the merger were unveiled.
“We have learned from experience that our old business model is wrong,” Hong said on Sept. 19. “We have to transform ourselves into a company that generates revenue from every part of the solar supply chain.”
UREC would supply solar modules with a better cost structure after the merger, thanks to its expanding scale, but would slow down its solar module expansion, given sluggish demand for the products, the company said.
Demand for solar products has long been weak amid persistent oversupply, with no signs of recovery.
In a bid to weather the headwinds in the sector, solar cell maker Motech Industries Inc (茂迪) and solar wafer supplier Green Energy Technology Inc (綠能科技) last week announced a new round of job cuts, with Motech firing 2 percent of its workforce and Green Energy sacking 19 percent of its staff.
Motech and Green Energy shares yesterday tumbled 1.67 percent and 3.51 percent to NT$9.98 and NT$11 respectively.
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