Registration Statement No. 333-139258


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Filed pursuant to Rule 424(b)(4)

Registration Statement No. 333-139258



Solarfun Power Holdings Co., Ltd.

12,000,000 American Depositary Shares

Representing

60,000,000 Ordinary Shares

 

       Solarfun Power Holdings Co., Ltd., or Solarfun, is offering 12,000,000 American depositary shares, or ADSs. Each ADS represents five ordinary shares, par value US$0.0001 per share, of Solarfun. The ADSs are evidenced by American depositary receipts, or ADRs.

       Prior to this offering, there has been no public market for our ADSs or our ordinary shares. The initial public offering price of the ADSs is US$12.50 per ADS. The ADSs have been approved for quotation on the Nasdaq Global Market under the symbol “SOLF.”

       See “Risk Factors” beginning on page 13 to read about risks you should consider before buying our ADSs.

 

       Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 

 

 

 

 

 

 

 

 

 

 

 

Per ADS

 

 

Total

 

 

 

 

 

 

 

 

Initial public offering price

 

US$

12.50

 

 

US$

150,000,000

 

Underwriting discount

 

US$

0.875

 

 

US$

10,500,000

 

Proceeds, before expenses, to Solarfun

 

US$

11.625

 

 

US$

139,500,000

 

Proceeds, before expenses, to the selling shareholders

 

US$

0

 

 

US$

0

 

       To the extent that the underwriters sell more than 12,000,000 ADSs, the underwriters have an option to purchase up to an additional 1,800,000 ADSs from the selling shareholders at the initial public offering price less the underwriting discount.

 

       The underwriters expect to deliver the ADSs evidenced by the ADRs against payment in U.S. dollars in New York, New York on December 26, 2006.

Goldman Sachs (Asia) L.L.C.

 

CIBC World Markets

 

Prospectus dated December 19, 2006
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PROSPECTUS SUMMARY

 

 

       The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our ADSs discussed under “Risk Factors,” before deciding whether to buy our ADSs.

 

Our Business

 

 

       We are an established manufacturer of both photovoltaic, or PV, cells and PV modules in China. We manufacture and sell a variety of PV cells and PV modules using advanced manufacturing process technologies that have helped us to rapidly increase our operational efficiency. All of our PV modules are currently produced using PV cells manufactured at our own facilities. We sell our products both directly to system integrators and through third party distributors. We also provide PV cell processing services for some of our silicon suppliers. We conduct our business in China through our operating subsidiary, Jiangsu Linyang Solarfun Co., Ltd., or Linyang China. In addition, we recently incorporated Shanghai Linyang Solar Technology Co., Ltd., or Shanghai Linyang, to provide system integration services in China whereby we tailor our PV products for specific customers’ needs and link them with the end-use devices that require solar power. In November 2006, Shanghai Linyang won a competitive bid to provide a substantial majority of the PV modules to be used in a 1 MW solar power plant in Shanghai. Shanghai Linyang is still in the process of negotiating the final agreement relating to this project.

 

 

 

       Since our first PV cell production line became operational in November 2005, we have increased the average daily output of each of our monocrystalline PV cell production lines to 26,000 cells for the month ended September 30, 2006, improved the conversion efficiency of our monocrystalline PV cells to 16.8%, and reduced monocrystalline PV cell thickness to 200 microns and the average cell breakage rate to 2.7%.

 

 

 

       We currently operate two PV cell production lines, each with 30 MW of annual manufacturing capacity. We commenced commercial production on these lines in November 2005 and September 2006, respectively. In order to meet the fast-growing market demands for solar products, we plan to significantly expand our PV cell manufacturing capacity over the next several years. We expect that, by the end of 2006, the aggregate annual manufacturing capacity of our PV cell production lines that are completed or under construction will reach 120 MW. In addition, we plan to achieve an aggregate annual manufacturing capacity of 240 MW by the end of 2007 and 360 MW by the end of 2008.

 

 

 

       We increased our annual PV module manufacturing capacity to 60 MW in October 2006, and plan to achieve an aggregate annual manufacturing capacity of 80 MW by the end of 2006, 180 MW by the end of 2007 and 300 MW by the end of 2008. In addition, we established Sichuan Leshan Jiayang New Energy Co., Ltd., or Sichuan Jiayang, in April 2006, to increase our PV module production capacity and capture potential system integration opportunities in western China. Sichuan Jiayang’s 10 MW of PV module assembly capacity became operational in June 2006 and we expect to increase this capacity to 20 MW by the end of 2007 and 60 MW by the end of 2008. As part of our expansion plans, we also ordered the equipment for a new 15 MW automatic “building integrated” PV production line in May 2006, which is expected to become operational by early 2007. A “building integrated” PV system integrates PV modules into the core structure of a building’s roof or facade.

 

 

 

       We have experienced significant revenue and earnings growth since our establishment in August 2004. Our net revenue and net income were RMB166.2 million (US$21.0 million) and RMB14.4 million (US$1.8 million), respectively, in 2005. Our net revenue was RMB386.2 million (US$48.9 million) in the first nine months of 2006, compared to RMB86.5 million in the first nine months of 2005. We had net income of RMB72.9 million (US$9.2 million) in the nine months ended September 30, 2006, compared to RMB4.2 million in the same period in 2005.

 

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Industry Background

       The PV industry has experienced significant growth since the beginning of this decade. According to Solarbuzz, an independent solar energy research firm, the global PV market increased from 345 MW in 2001 to 1,460 MW in 2005 in terms of total annual PV installations, representing a compound annual growth rate of 43.4%. The PV industry revenue increased from US$7 billion in 2004 to US$9.8 billion in 2005. Moreover, cumulative installed PV electricity generating capacity expanded by 39% in 2005 and currently exceeds 5 GW worldwide, while investment in new plants to manufacture PV cells exceeded US$1 billion in 2005. According to Solarbuzz, annual PV installations are expected to increase to 3.9 GW, and PV industry revenue is expected to increase to US$23.1 billion, in 2010.

       The PV cell production industry is currently dominated by a small number of manufacturers. According to Solarbuzz, the top ten PV cell manufacturers accounted for 74% of the total PV cells produced worldwide in 2005.

       We believe that rising energy demand, the increasing scarcity of traditional energy resources coupled with rising prices, the growing adoption of government incentives for solar energy due to increasing environmental awareness, and the decreasing production costs of solar energy will continue to drive the growth of the solar industry.

Our Competitive Strengths

       We believe the following strengths enable us to capture opportunities in the rapidly growing PV industry and compete effectively in the PV market in China and internationally:

 

 

 

 

• 

strong execution capability demonstrated by significant and rapid operational and financial achievements in a competitive market;

 

 

 

 

• 

extensive industry relationships and scalable manufacturing capacity to support our manufacturing expansion plans;

 

 

 

 

• 

operational cost advantages achieved through efficient utilization of management, engineering, labor and manufacturing resources in China;

 

 

 

 

• 

industry experience to support our development of downstream business opportunities in China;

 

 

 

 

• 

research and development capabilities that leverage both third party collaborations and internal resources; and

 

 

 

 

• 

entrepreneurial management with extensive industry contacts and strong track record of successful execution.

Our Strategies

       Our long-term goal is to become a leading global PV cell and module manufacturer and to leverage our core strengths to become an innovator and an important player in the downstream PV markets, particularly in China. To achieve this goal, we plan to implement the following specific strategies:

 

 

 

 

• 

continue to expand manufacturing capacity and reduce operational costs to achieve greater economies of scale;

 

 

 

 

• 

increase investments for research and development activities, enhance production process technologies and develop next generation products through continuous innovation;

 

 

 

 

• 

diversify our product and service offerings and expand our business in downstream markets;

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• 

secure long-term supplies of silicon;

 

 

 

 

• 

broaden our geographical revenue base, and build and enhance brand recognition both domestically and internationally; and

 

 

 

 

• 

strengthen and grow our management and research and development teams through training and professional development and recruitment of personnel with international experience.
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