Hanergy Thin Film Power (HTF), under investigation by Hong Kong's share market regulator, said on Sunday it may record a loss for the first half of the year after suspending or terminating a large number of sales to its parent company and affiliates.
Its unlisted Chinese parent, Hanergy Holding, buys solar panel-making machines from HTF and then makes solar panels for sale to third parties.
But HTF said in a statement on Sunday that the cancellation of those deals have resulted in a substantial decline in the income arising from connected transactions during the period to around HK$200 million ($25.79 million), an over 90 percent drop from a year ago.
"The Securities and Futures Commission (SFC) was concerned about the ongoing viability of the group given its financial dependence on (parent) Hanergy Holding Group Limited and its affiliates," HTF said in the statement to stock exchange.
"Therefore the Company has suspended or terminated the majority of connected transactions with the member companies and other affiliates of Hanergy Holding."
The company said last month it may launch a judicial challenge to a decision by the SFC to suspend trading in its shares, after the Hong Kong exchange said it had been directed by the securities regulator to extend a nearly two-month share trading suspension on HTF following a plunge in its share price in May.
HTF's first-half revenue and net profit in 2014 were HK$3.2 billion and HK$1.7 billion, respectively.