Hot stock: Sunpower falls as much as 8.5% after issuing profit guidance

SHARES of mainboard-listed Sunpower Group 5GD hit a 2-month low on Thursday (Oct 28) after the group said it expects net profit for the third quarter to be negatively impacted by the recent rises in commodity prices and a power rationing occurring in China.

Sunpower, which ended 6.2 per cent lower on Wednesday (Oct 27), continued its decline on Thursday. The counter dropped to a low of S$0.485 during early morning trade, down 8.5 per cent or S$0.045 as at 10.24 am. The last time the counter closed near this level was on Aug 3.

By 2.58 pm, the provider of energy-saving and clean power solutions was trading 6.6 per cent or S$0.035 lower at S$0.495, with 11 million shares changing hands. The counter closed down 7.55 per cent or S$0.04 on Thursday at S$0.49.

The profit guidance, issued on Wednesday night, is based on a "holistic assessment" of factors that may affect near-term earnings prospects and a review to date of the group's unaudited consolidated financial results for the third quarter and nine months ended Sep 30.

The group cited a rise in commodity prices as one of the reasons for its guidance. Rising commodity prices have pushed up the company's feedstock costs, leading to cost pressures on the production operations of its green investment projects.

Moreover, a power rationing in China since September 2021 has resulted in downstream customers temporarily reducing their steam consumption due to operational constraints.

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The expected net profit for Q3 excludes the financial effects of convertible bonds, the group said.

Despite the negative estimates, Sunpower said steam sales volume in the third quarter still saw a notable year-on-year increase due to strong demand from customers and the ramping up of existing green investment projects, including the Shantou project.

The group also estimates profit attributable to equityholders generated by its green investment businesses for the 9 months ended Sep 30 to record a year-on-year increase, without the financial effects of convertible bonds.