Trony Solar Pulls IPO, China Nuokang Prices But Stumbles

NEW YORK (Reuters) – Two Chinese companies struggled to gain a foothold in the U.S. equity markets on Thursday, with one falling as much as 11.1 percent in its first day of trading and another withdrawing its initial offering altogether.

Chinese thin film solar company Trony Solar Holdings Co Ltd (TRO.N) postponed indefinitely its IPO due to weak market conditions, an underwriter said.

And China Nuokang Bio-Pharmaceutical Inc (NKBP.O) closed down 3.7 percent at $8.67 on Thursday after selling for $9 late on Wednesday, below its expected pricing range. Underwriters usually aim to sell initial offerings at a price that will create first-day gains for investors.

“Most liquidity is gone for new names. Books are just closed,” said founder Ben Holmes.

Holmes said year-end initial offerings often struggle.

China Nuokang sold 5 million American Depositary Shares for $9 a piece on Wednesday, raising about $45 million. The company had expected the shares to sell for between $10 and $12 each.

China Nuokang develops, manufactures and sells blood- and heart-related products, including those that control bleeding and irregular heartbeats.

Shareholders in the company include Anglo China Bio-technology Investment Holdings Ltd, Sequoia Capital China Growth Fund and affiliated funds, Britain Ukan Technology Investment Holdings (Group) Ltd and HBM BioMed China. Britain Ukan and HBM BioMed China are each selling part of their stakes in the company.

The company reported revenue of 200 million yuan ($29 million) in the nine months ended Sept. 30, up 30.3 percent from a year ago. The company reported net income of 41.64 million yuan compared with 41.72 million yuan in the year ago period.

It plans to use the proceeds from the offering to fund research and development, expansion and general corporate purposes.

Underwriters for the offering, who have the option to purchase an additional 750,000 American Depositary Shares, are led by Jefferies & Co.


Shenzhen, China-based Trony Solar posted increased revenue and profits compared with a year ago, but likely postponed its offering amid concerns about future profit growth, analysts said. The offering would have been worth about $241.5 million, according to a regulatory filing.

Despite signs of a pickup in the industry, solar companies trying to go public are still struggling.

In November, Connecticut-based STR Holdings Inc (STRI.N), which makes products to hold solar modules together and protect them, priced below an already-reduced expected range. And last week Danish wind and solar park developer Scan Energy 18SE.DE canceled its IPO on weak demand from investors.

Chinese solar manufacturers typically have lower production costs, but tough competition in the sector and sluggish sales for the renewable energy systems outside China likely hurt the launch, said IPO Boutique senior managing partner Scott Sweet.

“The playing field is getting extremely crowded,” Sweet said. “Overseas, the sales have been light and some of the subsidies for solar have been pulled.”

Solar companies have struggled this year as prices for their cells and panels have fallen by half because of oversupply in the market. But demand has begun to pick up, raising hopes the industry will resume its steep growth path in 2010.

Simmons and Co analyst Burt Chao said Trony may benefit by waiting.

“It seems like most people are getting pretty excited about solar headed into the first half of next year. It would behoove management teams to wait a little bit for that to materialize to get a little bit of the upswing and the momentum,” Chao said.

JPMorgan Special Situations (Mauritius) Ltd and Intel Capital Corp, which currently own a combined 11.9 percent of the company, had each planned to sell half of their shares. Underwriters were led by J.P. Morgan and Credit Suisse.

Three more IPOs are set to price on Thursday evening, including China-based Concord Medical Services Holdings Ltd, Ellington Financial LLC and KAR Auction Services Inc.

By Clare Baldwin
(Additional reporting by Steve Eder, Matt Daily and Laura Isensee; editing by Phil Berlowitz and Andre Grenon)