UPDATE 2-Jetion Solar says weak euro to hurt H1 profit

* Sees H1 profit lower than last year

* Expects Hong Kong IPO in late summer

* Shares drop 26 percent

(Adds CEO comments, analyst, updates shares)

By Victoria Bryan

LONDON, May 28 (Reuters) - Solar cell and module maker Jetion Solar JHL.L joined other Chinese manufacturers in predicting the weak euro will hurt margins this year, despite an expected increase in sales volumes.

Germany is the world's largest solar market, and low-cost Chinese manufacturers were last year able to snatch market share there from their European rivals.

"The underlying business is very robust, but unfortunately with Europe being the largest solar market we can't just walk away because of the exchange rate," Chairman Gabriel Kow told Reuters after reporting a 6 percent rise in pretax profit for 2009.

Shares in London-listed Jetion, which makes almost all its sales into the European market, were down 26 percent at 73 pence at 1138 GMT, making them the biggest faller on London's junior AIM market.

The firm said first-half profit would probably fall, despite a forecast 130 percent rise in sales, because the weak euro was hurting margins, and its 2010 profit was dependent on the exchange rate.

Other Chinese solar companies, such as Yingli Green Energy (YGE.N) and SolarFun Power SOLF.O, have expressed concern over prices this year because of the euro. [ID:nN24246544] [ID:nSGE64P0DI] Jetion said it hoped a planned listing in Hong Kong late in the summer would allow it to develop sales in China and Asia Pacific as well as provide funding for capacity expansion.

Kow said if the IPO did not go through for any reason, Jetion had other funding options.

"The Chinese government is very supportive of any industries that are export-oriented, so there should not be any problem raising money through the government, and it's at very low interest rate compared to what is in the western world today."

Broker Nomura said a planned $1.3 billion listing by Chinese wind turbine maker Goldwind (002202.SZ) could help gauge the appetite for new issues in Hong Kong and that it estimates expansion would cost Jetion around $45 million.

"Therefore much of the expansion could be funded with internally generated cash, with the listing in Hong Kong expected to provide additional capital, if the markets allow."

Kow said the group had an order book of 175 megawatts, more than the company was able to produce at present.

"We will not turn any customer away," he said. "We might have to do some contract manufacturing." (Reporting by Victoria Bryan; Editing by Dan Lalor and Will Waterman)