(Yicai Global) May 5 -- Shares in Shanghai Tianchen surged as much as 6.3 percent today before dropping as investors cashed in after the Chinese property developer said it will invest CNY11.6 billion (USD1.7 billion) to branch into the photovoltaic and energy storage equipment industries.

Tianchen’s share price [SHA:600620] closed down 1.2 percent at CNY11.97 (USD1.73). Earlier in the day it hit CNY12.89.

Tianchen plans to build a high-efficiency solar cell factory with an annual output of 20 gigawatts and another plant that makes energy storage converters and integrated systems with a yearly capacity of 20GW, the Shanghai-based developer said yesterday. The first phase will produce 5GW of high-efficiency solar cells and 6GW of energy storage converters and integrated systems, it added.

The facility, which will be located in Wuhu, eastern Anhui province, will be built by the district government of Wuhu's Fanchang district, Tianchen said, citing the deal signed with the district government. The construction period is 14 months and Tianchen should realize pilot production within six months of the building being finished.

But where the money will come from remains to be seen as raising funds can be a challenge for small developers like Tianchen, not to mention finding enough qualified staff.

Tianchen, whose main real estate business comes from the Shanghai area, only held CNY598 million (USD86.5 million) in cash as of March 31, according to its first-quarter financial report released last month. The firm logged a 70.8 percent plunge in net profit in 2022 from the year before to CNY35.9 million (USD5.2 million), according to its annual report also published in April. Revenue for the year was CNY244 million (USD35.3 million), 94.9 percent of which came from real estate.

More firms from outside the solar industry are moving into the PV sector to seize the opportunity as new PV cells with higher efficiency in converting optical energy to electricity come onto the market. Online game developer Xiamen 35.Com Technology, drug and medical products maker Sunflower Great Health and dairy cow breeder Royal Group have also said earlier they will set up high-efficiency solar cell plants.

Editor: Kim Taylor