JA Solar Jumps; Morgan Stanley Turns Bullish

By Eric Savitz
barrons.com

JA Solar (JASO) shares are getting a boost today from Morgan Stanley analyst Sunil Gupta, who today raised his rating on the stock to Overweight from Equal Weight, setting a price target of $5.30. The stock closed Friday at $3.71.

“JA Solar is a globally competitive low-cost cell producer now trading below replacement cost,” Gupta writes in a research note. “Besides offering strategic value, it also offers trading value,” trading below book value, with a P/E of 12.4x estimates 2010 recurring EPS. He thinks the company will gain market share against higher-cost U.S. and European solar cell manufacturers.

He says shipments may have grown 75% in Q3; he expects 60% shipment growth in 2010.

Gupta lifted his 2010 EPS estimate to 20 cents, from 7 cents; for 2011 he goes to 28 cents, from 20 cents.

JASO today is up 28 cents, or 7.6%, to $3.99.

JA Solar Announces Changes to Its Board of Directors

8:30 am EDT, Monday October 19, 2009

SHANGHAI, Oct. 19 /PRNewswire-FirstCall/ — JA Solar Holdings Co., Ltd. (JASO), a leading manufacturer of high-performance solar products, today announced the appointment of Mr. Yuwen Zhao as an independent member of its board of directors, effective immediately. Concurrently, the company announced that its board of directors has accepted Mr. Huaijin (Samuel) Yang’s resignation as vice chairman and board member. Mr. Yang, who founded JA Solar in 2005, is leaving the company to pursue various other business interests. Mr. Honghua Xu is leaving the JASO board to focus on his other professional endeavors.

Mr. Yuwen Zhao has extensive experience in the study of high efficiency solar cell and solar energy materials. He is a well-known international solar industry expert, currently serving as vice chairman of the Chinese Renewable Energy Industries Association and is a director of international solar energy industry associations such as PVSEC and WCPEC. Since 1978, Mr. Zhao has been vice chairman, chief engineer, director of academy committee and chief scientist of Beijing Solar Energy Institute. He is also a member of the editorial board of Solar Energy Journal. Prior to his engagement at Beijing Solar Energy Institute, Mr. Zhao was a researcher in the Institute of Mechanics in the Chinese Academy of Sciences and 501 Institute of Ministry of Aerospace Industry. He is also the founder of Chinese National New Energy Engineering Research Center. Mr. Zhao graduated from Tianjin University in 1964 and studied in Germany in 1990 and 1991.

“I would like to welcome Mr. Zhao to the JA Solar board of directors,” said Mr. Baofang Jin, CEO and chairman of JA Solar. “We are eager to benefit from his extensive experience in the renewable energy industry and expect that his guidance will further strengthen our company,” said Mr. Jin.

“On behalf of the board and the company, I would like to express our sincere gratitude to Mr. Yang and Mr. Xu for their dedicated service and support to JA Solar over the years,” he said. “We especially appreciate Mr. Yang’s leadership and contributions since JA Solar’s founding and we wish him success in his future endeavors.”

Watch Out: Solar Stocks Might Sink

By James Altucher

As a financial adviser you have one goal: Don’t lose clients’ money. So even more important than finding stocks that could double or triple over the next year, you want to steer clear of stocks that could collapse.

It’s ugly, it’s painful, and nobody wants to call a client and point out an investment sank 90%.

Over the next two articles I’ll be analyzing a few stocks that fit this category. This is purely my view, of course, and I’d welcome anyone with differing views to use the comments section. (As I say in the comments section, I am not shorting these stocks.)

In general I don’t like the solar industry as an investment opportunity, which includes First Solar (FSLR), Energy Conversion Devices (ENER), JA Solar (JASO), LDK Solar Co. (LDK), Suntech Power (STP), Solarfun Power (SOLF), Yingli Green Energy (YGE), and Rene Sola (SOL).

First Solar, for instance, has been a glam stock for day traders for the past few years as the solar industry had almost as much hype behind it as the dot-com industry back in the heyday.

Let’s look at the macro picture and then the micro picture and you’ll see why this stock could go down 90%.

Macro picture:

Solar power is more expensive than other forms of power: coal, natural gas, nuclear, even wind, so the primary customer for all of the solar companies are the countries where solar power is subsidized with no cap on how high the subsidy could go.

In other words: Germany, which is the only such country. Spain tried it, but it was too expensive, so they began to cap the subsidy and as a result the solar industry is now one-fifth the size in Spain that it was when the subsidy was in place.

In fact, approximately 60% of First Solar’s revenue comes from sales to Germany.

JA Solar Developing Next Generation Solar Products using Silicon Ink Technology from Innovalight

Tuesday September 15, 2009, 8:05 am EDT

SHANGHAI, Sept. 15 /PRNewswire-FirstCall/ — JA Solar Holdings Co., Ltd. (JASO), a leading manufacturer of high-performance solar products, today announced that it is working to commercialize a new generation of high-performance solar products using silicon ink technology from Innovalight, Inc.

Innovalight, Inc., a privately held firm based in Sunnyvale, Calif. recently announced that it has demonstrated a record 18 percent conversion efficiency using silicon ink technology and conventional silicon wafers. Results were independently certified by two of the world’s recognized solar cell testing centers, the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL), and The Fraunhofer Institute for Solar Energy Systems (ISE) in Germany.

JA Solar is currently developing silicon ink-based high efficiency solar cells at its R&D pilot line in Yangzhou, China with plans for initial commercialization in 2010.

“Innovalight’s silicon ink in conjunction with JA Solar’s leadership in high volume solar cell manufacturing with demonstrated yield, conversion efficiency, and low production costs, provides a very promising solution to enhance the conversion efficiency of solar cells utilizing our existing solar cell manufacturing lines,” said Qingtang Jiang, JA Solar’s chief technology officer. “JA Solar will continue to invest in new technologies to stay at the forefront of the solar sector,” he added.

“We are delighted to be working with a solar industry visionary like JA Solar,” said Conrad Burke, chief executive officer at Innovalight. “JA Solar’s leadership in manufacturing and Innovalight’s silicon ink technology offer a very powerful platform for producing solar cells,” he said.

About Innovalight

Innovalight is a privately held firm based in Sunnyvale, Calif. Based on silicon-ink technology, the company is developing low-cost, high-performance technologies to produce lower cost solar cells. Innovalight is venture capital backed and has also received significant development funds from the United States Department of Energy.

For more information visit www.innovalight.com

First Solar to build huge Chinese solar plant

Tue Sep 8, 2009 1:30pm EDT
By Matt Daily

NEW YORK (Reuters) – First Solar Inc. (FSLR) said on Tuesday it plans to build the world’s largest solar plant in China in the first major foray by a U.S. company into the Asian nation’s fast growing alternative energy sector.

Under a memorandum of understanding with the Chinese government, First Solar will build a 2-gigawatt power plant, enough to power about 3 million Chinese households, at Ordos City, in Inner Mongolia, and consider building a new manufacturing plant in China.

The announcement comes as the solar industry struggles to emerge from a year-long slump that saw financing for new projects dry up and reduced subsidies in Spain create a glut of unsold cells and panels.

The project is part of China’s program to generate 10 percent of its energy from renewable resources by 2010 and 15 percent by 2020 to help meet its growing energy appetite that has made the country the world’s top emitter of carbon dioxide.

First Solar will begin constructing a 30 megawatt demonstration project in June 2010 in Ordos. The second and third phases call for 100 megawatt and 870 megawatt projects that will be completed in 2014. A final 1,000 megawatt installation will be finished in 2019.

Solar projects have so far been built on a smaller scale, and the First Solar project will be a test of whether the technology behind the plant — which will be 30 times the size of the largest current plant — can be scaled up.

“In most people’s heads, (solar) is a nice little niche thing,” First Solar Chairman and Chief Executive Michael Ahearn told Reuters. “Having a demonstration of something that’s nuclear plant size will begin to change that image.”

Solar crisis set to hit in 2010

50% of manufacturers may not survive, says The Information Network

Michael McManus, DIGITIMES, Taipei [Friday 4 September 2009]

The solar industry is at a critical stage and 50% of existing solar manufacturers may not survive 2010, according to The Information Network.

The market research firm recently noted massive inventory buildup and huge overcapacity were having a serious impact on the solar panel industry and manufacturers, and Dr. Robert Castellano, president of The Information Network has now pointed out that inventory is averaging 122 days in 2009 versus 71 days in 2008. Capacity utilization dropped to 27.9% in 2009 from 48.0% in 2008.

A key reason is increased supply from China, which added an additional 1GW of capacity. The price per watt has now dropped to US$1.80 for polysilicon-based products, which is lower than the US$1.85 level The Information Network previously thought the industry would see at the end of 2009. By way of comparison, the average selling price in the third quarter of 2008 was US$4.05 per watt.

The Information Network doesn’t expect other industry players to back down from increased competition from China. Other makers are expected to increase their capacities despite the low utilization rates in order to reach economies of scale and better compete against the Chinese. The market research firm expects the industry to see a 25.7% capacity utilization rate and 133 days inventory in 2010.

Average selling prices could drop below US$1 per watt in 2010 and US$0.50 in 2011. As many as 50% of the more than 200 solar manufacturers, mired in red ink with current selling prices above US$2.00 per watt, may not survive, The Information Network stated.

Solar panel manufacturers that have reported loses just in the past few weeks include Energy Conversion Devices (ENER), JA Solar (JASO), LDK Solar (LDK), Q-Cells, ReneSola (SOL), Solar Power (SOPW), and Yingli Green Energy Holding (YGE).

The Information Network: Planned global solar capacity increases, 2008-2010
Item	2008	2009	2010
Solar consumption (MW)	5,625	4,894	6,215
Solar capacity (MW)	11,722	17,551	24,212
Utilization	48.0%	27.9%	25.7%
Inventory days	71	122	133

Source: The Information Network, compiled by Digitimes, September 2009

Spain’s Solar-Power Collapse Dims Subsidy Model

By ANGEL GONZALEZ and KEITH JOHNSON

Spain’s hopes of becoming a world leader in solar power have collapsed since the Spanish government slammed the brakes on generous subsidies.

The sudden change has rippled across the global solar industry, in a warning of the problems that government-supported renewable-energy programs can encounter.

In 2008, Spain accounted for half the world’s new solar-power installations in terms of wattage, thanks to government subsidies to promote clean energy. But late last year, as the global economic crisis worsened, the government dramatically scaled back those subsidies and capped the amount of subsidized solar power that could be installed.

Factories world-wide that had ramped up production of solar-power components found that demand for solar panels was plummeting, leaving a glut in supply and pushing prices down. Job cuts followed.

“The solar industry in 2009 has been undermined by [a] collapse in demand due to the decision by Spain,” says Henning Wicht, a solar-power analyst at research group iSuppli.

Spain is providing important lessons for the U.S., where lawmakers are engaged in a debate about how to support renewable energy. Boosters of clean energy, including President Barack Obama, have pointed to Spain as a success story showing how government policies jump-started renewable energy, created new industries, and helped the environment.

Spain’s early bet on wind power paid off: The country is one of the world leaders in generating such power, only recently eclipsed by the U.S. Spanish wind-power companies have become global players. In 2008, wind power accounted for 11% of Spanish electricity production, compared to less than 1% for solar power.

Reyad Fezzani, chief executive of BP Solar, a unit of oil giant BP PLC (BP), said that despite the current crisis, the Spanish model succeeded in creating a solar industry from scratch. “Once you pay for the infrastructure, you have a skilled work force and you can expand and contract very easily,” he said.

Clean-energy skeptics, however, point to Spain as a cautionary tale of a government policy that created a speculative bubble with disastrous consequences. Some Republicans have cited Spain’s solar bubble and bust as an example of how unsustainable government clean-energy pushes are.

Chinese Solar Stocks Slide After Big Shanghai Tumble

Posted by Eric Savitz
barrons.com

Shares of China-based solar stocks are down across the board today after the Shanghai stock market fell 6.7% overnight on fears that the country’s economic growth could slow due to a slowdown in lending growth. Acording to Bloomberg, former Morgan Stanley Asian economist Andy Xie said the China market could drop another 25%, on top of a 22% slide in August.

Among the China-based solar names:

* JA Solar (JASO) is down 14 cents, or 3.9%, to $3.48.
* LDK Solar (LDK) is down 32 cents, or 3.5%, to $8.92.
* China Sunergy (CSUN) is down 29 cents, or 6.3%, to $4.29.
* Suntech (STP) is down 78 cents, or 5.2%, to $14.27.
* Canadian Solar (CSIQ) is down 60 cents, or 4%, to $14.59.
* Yingli Green Energy (YGE) is down 46 cents, or 4.2%, to $10.56.
* ReneSola (SOL) is down 9 cents, or 1.6%, to $5.64.

Solar stocks pressured by sales price of panels

Analyst says solar industry faces rising pressure from falling solar panel prices, demand

Tuesday August 25, 2009, 9:21 am EDT

NEW YORK (AP) — Solar panel prices and demand for solar modules will likely decline in the coming quarters, which will lead to a slowdown in production capacity and the overall solar industry said an analyst on Tuesday.

Credit Suisse analyst Satya Kumar said he expects panel prices to decline to $1.50 per watt by the second quarter of 2010, down from $2.35 per watt in the second quarter of 2009. At this lower level, and with polysilicon prices around $50 per kilogram on long term contracts, he expects manufacturing capacity to pull back. Polysilicon is a key raw material used in the production of solar cells.

In the near term, Kumar said he prefers Trina Solar Ltd. (TSL) and Renesola Ltd. (SOL) given their cheap shares and competitive cost structures. Also, Kumar believes these companies will benefit from China’s new feed-in tariff, which will pay for electricity generated by renewable resources. Kumar expects the Chinese government to introduce the tariff in the near future. Kumar rates Trina Solar and ReneSola “Outperform.”

Shares of Trina Solar rose 68 cents, or 2.6 percent, to $26.99 in premarket trading. Renesola shares climbed 24 cents, or 4.5 percent, to $5.53 before the opening bell.

Elsewhere in the industry, Kumar rates Energy Conversion Devices (ENER), First Solar Inc. (FSLR) and JA Solar Holdings Co. Ltd. (JASO) “Neutral.” Shares of Energy Conversion Devices fell 24 cents, or 1.9 percent, to $12.20; First Solar shares rose 82 cents to $124.90 and JA Solar shares increased 3 cents to $3.85 before the opening bell.

Mostly Cloudy For Solar Stocks

Peter C. Beller, 08.17.09, 4:00 PM ET

Competition hurts. This is especially evident in the nascent solar power industry, which has been boosted in recent years by hefty government subsidies, high oil prices and alarm over global warming. As firms rushed to ramp up capacity, global recession hit and now prices are plummeting, taking solar stocks with them. One group that could get hurt, says Barclays Capital analyst Vishal Shah, is one of the least likely: Chinese solar makers.

The thesis for investing in Chinese firms that make solar power cells is pretty simple: when it comes to manufacturing products where brand name doesn’t matter, the companies with the lowest labor costs are going to win. That kind of thinking has been a boon to firms like China’s Suntech Power (STP), Yingli Green Energy (YGE) and JA Solar Holdings (JASO). With lower labor costs, cheap land and abundant financing, Asian solar firms have been grabbing market share from their older U.S. and European rivals.

That may not last, says Shah, who recommends investors steer clear of the sector until the current shakeout is over. Solar prices are falling fast, off 50% from last year and likely to decline another 25% or 30% in the next year. Solar makers have been able to lower prices, in part, because prices for polysilicon, the raw material of solar cells, were until recently falling even faster. A silicon shortage five years ago turned into a glut in 2008 as chemical companies rushed to make more. But those declines are ending meaning solar companies are lowering prices while their costs are starting to level out, writes Shah.

Chinese firms have also placed market share ahead of being profitable and are increasing capacity even as the global downturn saps overseas demand. Another reason demand could fall off is that generous subsidies, like Germany’s, could be in jeopardy as governments look to rein in costs.

But the biggest surprise for investors may be that the basic logic for investing in Chinese solar could be flawed. Chinese companies pay what the rest of the world does for raw materials, but lower wages for factory workers knock 25 cents off the cost of each Watt produced. At $1.80 a Watt, which is Shah’s estimate for end-of-the-year prices, that comes to a discount of 14% off the American and European competition. That advantage isn’t likely to last, warns Shah. Western companies are going to close the gap by being more efficient with raw materials and with their capital spending. Shah also thinks European solar makers will also be able to charge a premium for their brand names, a significant change for a market that most people think of as “commoditized.”

Likely to make the most of a bad situation are the top Asian solar companies: Suntech Power and Yingli Green Energy. Both companies will probably gain market share from rivals but will have to convince customers their products match European solar cells in quality if they are to grow profitably. Shah likes shares of Yingli but has a neutral rating on Suntech.

The fallout of fierce competition will likely be on display this week as many solar companies report earnings. Yingli, announcing results before the bell on Wednesday, is expected to have quarterly earnings of just four cents a share, down from $1.81 last year. Wall Street thinks Suntech, reporting before trading on Thursday, earned only two cents per share, compared with 41 cents in 2008.

Why the Gloom on Solar-Energy Stocks?

Solar-power equipment makers’ profits have been hit by the credit crunch and the glut of a key raw material

By David Bogoslaw

The global credit freeze and a supply glut of polysilicon—the key raw material used in photovoltaic solar panels—have hurt solar-power equipment manufacturers’ earnings this year. Over the long run, some analysts are hopeful the lower prices will make the technology more competitive with conventionally generated power and make these companies more compelling plays in the eyes of investors. But the road to solar riches remains bumpy.

Case in point: On Aug. 12, China-based LDK Solar (LDK) reported a second-quarter loss of $2.03 per American Depository Share (ADS) on a 48% drop in revenue, to $228.3 million, compared with a profit of $1.29 per ADS a year ago on $441.7 million in revenue. A writedown of $176.3 million on a plunge in value of its inventories accounted for most of the $216.9 million quarterly loss.

LDK, which makes multicrystalline wafers used in solar panels, also issued a third-quarter revenue outlook well below Wall Street expectations, sending its ADSs down 18% on Aug. 13.

Major Shifts in Market Share

LDK’s results came on the heels of two other Chinese solar companies that disappointed the market on Aug. 12. Wafer producer ReneSola (SOL) posted a loss of 3¢ per ADS, vs. earnings of 19¢ a year ago, on a 52% drop in revenue, to $82.6 million. The company’s bottom-line results beat the market’s consensus estimate of a 6¢ loss but missed analysts’ forecast of $90 million in revenue.

Meanwhile, solar-cell maker JA Solar (JASO) recorded a loss of 18¢ per ADS, missing analysts’ estimates by 12¢. That compared with a 1¢ loss in the second quarter of 2008, while revenue fell more than 51%, to $88 million. The latest loss included charges related to stock-based compensation and a hedging loss.

The move from shortage to oversupply of polysilicon in just around 18 months has caused a major shift in business models and market share. Panel manufacturers that locked in fixed-price contracts for polysilicon, which gave them an edge over producers that had to pay much higher prices in the spot market, now have to scramble to renegotiate contracts at lower prices or write down the value of their inventories.

Solar shares tumble on 2nd-quarter results, analysts warn of near-term sector weakness

Thursday August 13, 2009, 2:24 pm EDT

NEW YORK (AP) — Shares of solar stocks tumbled Thursday on troubled second-quarter results, as analysts warned of a dismal near-term outlook.

After the closing bell on Wednesday, LDK Solar Co. Ltd. (LDK) reported a second-quarter loss as it wrote down the plummeting value of its inventory, missing analyst expectations. Shares of the company plunged $2.09, or 18.6 percent, to $9.12 in afternoon trading.

JA Solar Holdings (JASO) on Wednesday posted a wider second-quarter loss on sharply lower revenue, stock-related expenses and buying back bonds. JA Solar shares fell 35 cents, or 7.6 percent.

Credit Suisse analyst Satya Kumar said JA Solar, along with other solar companies, has little visibility beyond November. Kumar estimates that fourth-quarter shipments will tumble up to 15 percent quarter over quarter. Kumar rates the company “Neutral” and raised its price target to $4 from $3.

Barclays Capital analyst Vishal Shah said there are few near-term catalysts to boost the sector. That, combined with weak seasonality and the sector trading near fair value, will likely weaken solar stocks. Shah downgraded the sector to “Neutral” from “Positive.”

Shah predicted greater-than-expected pricing declines through the first quarter of 2010 and said industry oversupply could extend into the second half of next year.

Elsewhere, shares of Suntech Power Holdings Co. Ltd. (STP) fell $1.28, or 7 percent, to $17.05. Trina Solar Ltd. (TSL) shares dropped $2.65, or 8.9 percent, to $27.16. Shares of Yingli Green Energy Holding Co. (YGE) slid $1.20, or 8.9 percent, to $12.26.

U.S. solar stocks down on dim results, Barclays cut

Thu Aug 13, 2009 1:06pm EDT

* LDK Solar drops more than 18 percent

* Barclays downgrades U.S. solar energy sector to neutral

* Analysts upgrade, raise target price for JA Solar

NEW YORK, Aug 13 (Reuters) – U.S. solar power company shares fell on Thursday, led by an 18-percent drop in LDK Solar Co Ltd (LDK), which posted a wider-than-expected quarterly loss.

The slump came as Barclays Capital downgraded the U.S. solar energy sector to “neutral” from “positive,” as it sees slowing growth in demand and recommended that investors wait for better entry points.

And in Germany, Q-Cells AG, one of the world’s largest solar cell makers, said it would slash its workforce by about a fifth as a result of a price slump in the industry that caused a first-half loss before interest and tax.

“Although solar shares have underperformed so far, we believe lack of potential near-term catalysts, relatively rich valuation and weak seasonality could likely result in further downside pressure,” Barclays analyst Vishal Shah wrote in a note to clients.

In trading on the New York Stock Exchange, LDK Solar’s stock was down $2.06, or 18.38 percent, at $9.15.

China’s Yingli Green Energy Holding Co Ltd (YGE) was down 8.25 percent to $12.35, Suntech Power Holdings Co Ltd (STP) fell 7.19 percent to $17.03 and Trina Solar Ltd (TSL) fell 8.69 percent to $27.22.

On the Nasdaq, First Solar Inc (FSLR) was down about 60 cents at $144.39 and Sunpower Corp (SPWRA, SPWRB) slipped 44 cents to $28.32.

Still, some analysts saw a few sunny rays. Analysts at Simmons and Co upgraded Chinese solar company JA Solar Holdings Co Ltd (JASO) to “neutral” from “underweight” and Credit Suisse raised the target price of the company’s stock to $4 from $3.

JA Solar’s stock was down more than 8 percent to $4.09 on the Nasdaq on Thursday, a day after it posted a quarterly net loss.

(Reporting by Steve James in New York and Laura Isensee in Los Angeles. Editing by Gerald E. McCormick and Robert MacMillan)

Solar: More Trouble Looms Ahead, Barclays Warns

Posted by Eric Savitz
barrons.com

The troubles for the solar sector are far from over, Barclays Capital analyst Vishal Shah warned this morning.

Formerly bullish on the group as a whole, Shah today reduced his sector rating on solar to Neutral. Shah says the Q2 weakness in solar company results represents a “secular, not seasonal decline.”

Pricing pressure, he contends, is intensifying. Shah says checks find Q4 module ASPs from Chinese companies could drop to $1.80/watt, worse than the $2/watt he had previously been expecting. “Given the overly optimistic demand outlook of most Chinese solar players and expectations of continued production ramps, we see additional downside risk to module pricing exiting 2009,” he adds. “More importantly, we expect 2010 module ASPs to decline by 25%-30%.”

At the same time, Shah warns that the supply/demand outlook is deteriorating, rather than improving. “We expect U.S. demand to pick-up at a slower pace relative to prior expectations and see potential downside risk to inflated demand expectations in China,” he writes. “Moreover, our updated supply outlook suggests that industry over-supply could persist in [the 2010 second half] until production capacity reductions occur at a rapid pace across the industry.”

For the Chinese solar stocks, he warns, earnings risk is to the downside. “Market share gains and not profitability is the motive for most Chinese solar companies – given the inflated opex/interest cost structures, operating break-even levels of companies continue to increase and as such we expect companies to continue to produce even as overall profitability levels deteriorate.” As for the U.S. solar players, he says the outlook is “mixed at best,” given a pick-up which he thinks will be slower than expected.

Finally, raising a potentially huge problem for the solar industry, he wonders whether the current German feed-in tariff level is sustainable, given significant volume growth in 2009 and the potential for further acceleration in 2010, and the impact of the trend on rate-payers in the difficult economic environment. He adds that significant module price declines and attractive project economics “may prompt policy makers to reconsider generous FIT levels.”

Shah’s comments follow earnings disappointments yesterday from JA Solar (JASO), ReneSola (SOL) and LDK Solar (LDK), The reports spurred a number of rating changes this morning:

* Shah cut JASO to Equal Weight from Overweight, trimming his price target to $4, from $5.
* On SOL, there was a split decision. Piper Jaffray analyst Jesse Pichel cut his rating to Underweight from Neutral, with a new price target of $4, down from $6.50. But Creidit Suisse analyst Satya Kumar upgraded the stock to Outperform from Neutral, with a target price of $7.50, up from $3.80.

In today’s trading:

* JA Solar is down 20 cents, or 4.5%, to $4.27.
* LDK Solar is down $1.66, or 14.8%, to $9.55.
* ReneSola is up 22 cents, or 4.1%, to $5.58.
* SunPower (SPWRA, SPWRB) is off 38 cents, or 1.3%, to $28.38.
* Suntech (STP) is down 67 cents, or 3.7%, to $17.68.
* First Solar (FSLR) is up $2.15, or 1.5%, to $147.14.
* MEMC Electronic Materials (WFR) is up 9 cents, or 0.5%, to $16.89.
* Canadian Solar (CSIQ) is off 22 cents, or 1.2%, to $18.12.
* Yingli Green Energy (YGE) is down $1.08, or 8%, to $12.38.

Q-Cells to cut about 500 jobs in restructuring

Thu Aug 13, 2009 3:49am EDT

* Q-Cells says to review all investment projects

* Aims to reduce production costs by 25 pct

* Books further write-down for REC, H1 loss 697 mln euros

* Phoenix Solar EBIT lags expectations, confirms ‘09 outlook

* Q-Cells indicated down 6.6 pct, Phoenix Solar up 0.4 pct

By Christoph Steitz

FRANKFURT, Aug 13 (Reuters) – Q-Cells, one of the world’s biggest makers of solar cells, is planning to slash about a fifth of its workforce, it said on Thursday, in a move to counter the effects of a price war.

“Together with the necessary reduction in overheads in all areas, around 500 jobs will be cut permanently. Short-time work will continue to be in operation at the Thalheim plant depending on the market development,” Q-Cells said in a statement, adding it would review all investment projects.

It now employs about 2,600 staff.

The news comes a day after Chinese rivals JA Solar Holdings Co Ltd (JASO) and LDK Solar Co Ltd (LDK) posted quarterly net losses due to a price slump that has put a sudden stop to growth in the sector.

Q-Cells in July withdrew its 2009 sales forecast after the price slump and high operating costs brought a 62 million-euro ($87.58 million) second-quarter operating loss. At the same time it announced outline details of the restructuring program.

It expects the restructuring to cut production costs by 25 percent, necessary after Asian rivals cut prices.

In the first half of 2009 the company made a net loss of 696.9 million euros, caused by further writedowns on the sale of its stake in Norway’s Renewable Energy Corp in May. The writedowns were widely expected by analysts.

Solar industry seeing a big glut

Price cuts may present opportunity to expand in U.S.

By Therese Poletti, MarketWatch

SAN FRANCISCO (MarketWatch) — After two years of tight supply, the solar market is now awash in modules and cells to make solar panels.

That is the word from two market-research firms this week, and it’s not clear if investors have baked in some of the more drastic observations into the shares of the many publicly traded solar companies.

But with all the gloom and doom that too much inventory implies for investors, there is also an opportunity for solar companies to try to further expand their industry.

First, how bad is the current glut and how did it occur?

Paul Semenza, a senior vice president at DisplaySearch, a unit of the NPD Group in Port Washington, N.Y., said that a big reason for the current glut of product is that government subsidies in Spain, a big market for solar panels, were cut.

“There was a tremendous amount of activity and then the subsidies were pulled back,” he added.

Spain accounted for 50% of worldwide installations in 2008, according to market research firm iSuppli, based in El Segundo, Calif.

“Solar-module prices have dropped 40% since the beginning of 2009,” wrote Henning Wicht, principal analyst for photovoltaics at iSuppli, in a report this week on the industry. He said that almost one out of every two panels produced in 2009 will not be installed, but stored in inventory. “This inventory glut will have a long-term impact on the solar business, with panels set to remain in a state of oversupply until 2012.”

ISuppli cut its forecast for solar-panel production for 2009 through 2012.

Some Wall Street analysts have also been warning investors. Last month, Al Kaschalk, a Wedbush Morgan analyst, said the earnings season would likely reflect the negative impact of “rapidly declining average selling prices, inventory write-downs and cancellations/push-outs of customer orders.”

Solar cos LDK, JA Solar lose money, shares slump

Wed Aug 12, 2009 8:04pm EDT

* China’s JA Solar, LDK Solar post quarterly losses

* LDK takes bigger-than-expected inventory writedown

* JA Solar inventories up, prices down nearly 30 pct

* JA stock slides nearly 15 pct, LDK down 15 pct

By Nichola Groom

LOS ANGELES, Aug 12 (Reuters) – Chinese solar companies JA Solar Holdings Co Ltd (JASO) and LDK Solar Co Ltd (LDK) posted quarterly net losses on Wednesday as a global glut of solar panels battered prices for their products, sending the companies’ shares down sharply.

The solar industry has suffered from a dearth of financing for renewable energy projects due to the global financial crisis. In addition, an economic recession and a pullback in solar incentives in Spain have led to an oversupply of solar panels that has sent prices into tailspin and hampered manufacturers’ profits.

JA Solar, which is based in Shanghai, said inventories rose 18 percent in the second quarter while average selling prices tumbled nearly 30 percent.

LDK, meanwhile, posted a wider-than-expected net loss after taking a large inventory writedown. It also forecast third-quarter revenue below Wall Street estimates.

“The numbers were miserable,” Soleil analyst Paul Leming said of LDK’s results. “This company continues to burn cash and book value has been cut in half over the last three quarters …. There is not much to like here.”

JA Solar posts loss, shares slide sharply

Wed Aug 12, 2009 1:50pm EDT

* Q2 net loss of 18 cents per share

* Shr loss ex items $0.09/shr vs loss of $0.07/shr view

* Sees 5-10 pct price decline in Q3

* Shares fall as much as 16 percent

NEW YORK/LOS ANGELES, Aug 12 (Reuters) – China’s JA Solar Holdings Co Ltd (JASO) reported on Wednesday a wider quarterly net loss as inventories rose and prices on its solar cells slid nearly 30 percent, sending shares down as much as 16 percent.

Like many in the solar industry, JA Solar has suffered from a dearth of financing for renewable energy projects due to the global financial crisis. In addition, a global recession and a pullback in solar incentives in Spain have led to a global oversupply of solar panels, sending prices into a tailspin.

JA Solar said its average selling prices would fall another 5 to 10 percent in the third quarter after sliding 27 percent in the previous period. It also said inventories rose 18 percent during the second quarter.

JA Solar’s second-quarter net loss was $28.5 million, or 18 cents per share, compared with a loss of 1 cent per share a year earlier.

Before one-time items, Reuters Estimates said the company’s loss was 9 cents a share, compared with analysts’ average estimate of a loss of 7 cents per share. Simmons & Co analyst Burt Chao, however, said the company’s loss excluding items was 6 cents per share, while Barclays Capital analyst Vishal Shah said the loss per share was 4 cents excluding items.

Revenue slid 51 percent to $88 million, but analysts had been expecting revenue to fall as low as $66.7 million, according to Reuters Estimates.

Simmons & Co’s Chao said in addition to the rise in inventories and sharp drop in prices, investors were disappointed that the company did not announce any new major customers. BP Plc’s BP Solar accounts for about 30 percent of JA Solar’s sales, he said, and investors would like to see a more diverse mix of customers.

JA Solar Announces Second Quarter 2009 Financial Results

Wednesday August 12, 2009, 7:05 am EDT

SHANGHAI, Aug. 12 /PRNewswire-FirstCall/ — JA Solar Holdings Co., Ltd. (JASO), a leading manufacturer of high-performance solar products, today announced financial results for its second quarter ended June 30, 2009.

Second Quarter 2009 Results

Revenue in the second quarter of 2009 was RMB 600.7 million ($88.0 million), a decrease of 51.4 percent from RMB 1.2 billion ($181.1 million) in the second quarter of 2008 and an increase of 159.3 percent from RMB 231.7 million ($33.9 million) reported in the first quarter of 2009. Total gross profit in the second quarter was RMB 68.3 million ($10.0 million) or 11.4 percent, compared with RMB 288.4 million ($42.2 million) or 23.3 percent in the second quarter of 2008, and gross loss of RMB 142.7 million ($20.9 million) or 61.6 percent in the first quarter of 2009.

Total operating expenses in the second quarter of 2009 were RMB 177.4 million ($26.0 million), compared with RMB 72.1 million ($10.6 million) in the second quarter of 2008 and RMB 50.4 million ($7.4 million) in the first quarter of 2009. Included in operating expenses was a charge of RMB 81.1 million ($11.9 million) of non-cash stock-based compensation charge in the second quarter of 2009, compared with RMB 44.3 million ($6.5 million) in the second quarter of 2008 and RMB 11.9 million ($1.7 million) in the first quarter of 2009. Stock-based compensation charge in the second quarter of 2009 included a one-time charge of RMB 56.3 million ($8.2 million) related to surrender of stock options to the company by employees during the quarter. In the second quarter of 2009, the company also recorded a reserve for prepayment to suppliers and provision for accounts receivable of RMB 44.5 million ($6.5 million). Total operating expenses, excluding the stock-based compensation charge and the reserve for prepayment to suppliers and provision for accounts receivable, were RMB 51.9 ($7.6 million).

Operating loss in the second quarter of 2009 was RMB 109.0 million (a loss of $16.0 million), compared with operating income of RMB 216.3 million ($31.7 million) in the second quarter of 2008 and operating loss of RMB 193.1 million (a loss of $28.3 million) in the first quarter of 2009. Excluding stock-based compensation charge, provision for prepayments to suppliers and reserve for receivables, the company generated an operating income of RMB 16.5 million ($2.4 million) for the second quarter of 2009.

GAAP net loss per diluted ADS in the second quarter of 2009 was RMB 1.21 (a loss of $0.18), compared with net loss per diluted ADS of RMB 0.04 (a loss of $0.01) in the same period of 2008 and net loss per diluted ADS of RMB 1.20 (a loss of $0.18) in the first quarter of 2009.

At June 30, 2009, JA Solar had cash and cash equivalents of RMB 2.2 billion ($328.8 million), compared with RMB 1.3 billion ($192.9 million) at March 31, 2009. During the second quarter of 2009, the company used long-term loans with favorable interest rates obtained from Chinese banks to retire certain short-term loans. The company also repurchased RMB 128.1 million ($18.8 million) face value of convertible bonds at discount during the second quarter, and RMB 170.7 million ($25.0 million) face value subsequent to the quarter end. As a result of positive operating cash flow in the quarter and the effort to strengthen the balance sheet, the company’s working capital balance at June 30, 2009 improved by 37.6 percent from RMB 2.6 billion ($385.4 million) at the end of the first quarter to RMB 3.6 billion ($530.5 million) at June 30, 2009. The convertible bonds outstanding at June 30, 2009 were RMB 2.0 billion ($296.5 million) and RMB 1.9 billion ($271.5 million) as of today. Total long-term bank loans outstanding at June 30, 2009 were RMB 920.0 million ($134.7 million).

“We are pleased with our second quarter results, which reflect our success in growing JA Solar’s customer base and our market share,” said Baofang Jin, JA Solar’s chairman and CEO. “JA Solar continues to offer high quality products at a very competitive price, afforded by our industry-leading technology and cost structure. We are also pleased that because of our focus on operations and cost reductions, we were able to show gross margin improvement in the second quarter,” he said.

“Looking ahead, we are seeing significant signs of market improvement in both end-market demand and financing. We believe our cost structure and customer relationships will drive even stronger third quarter results,” he said.

JASO, SOL, LDK Reports Make Tomorrow Key For Solars

Posted by Eric Savitz
barrons.com

Tomorrow, the solar sector will receive a flurry of earnings reports, with June quarter results due before the open from JA Solar (JASO) and ReneSola (SOL), and LDK Solar (LDK) expected to report after the closing bell. All three stocks are trading modestly lower on Tuesday.

Barclays Capital analyst Vishal Shah writes in a research note today that he maintains his cautious stance on the sector heading into tomorrow’s reports. He contends that expectations are high, and that there is downside risk to shipment and margin guidance for some Chinese solar players. He says Q3 is likely to be the peak quarter for industry shipments, and that pricing pressure could intensify as the Chinese module manufacturers aggressively price product to move large volumes and gain market share.

* For JA Solar, he sees Q2 revenue of $52 million and a loss of 6 cents a share, which is well below the Street consensus at $78 million and a loss of 5 cents.
* For ReneSola, he sees Q2 revenue of $89 million and a loss of 8 cents; consensus is $90 million and a loss of 6 cents.
* For LDK, he sees Q2 revenue of $230 million and a loss of $1.77 a share; the consensus view is $236 million and a loss of 91 cents.

Solar cell production to grow 56 pct in ‘09-report

Tue Aug 11, 2009 2:00pm EDT

* Solar cell manufacturing to grow 56 pct to 17 gigawatts

* Research group forecasts industry to pass 42 GW in 2013

LOS ANGELES, Aug 11 (Reuters) – Solar cell manufacturing capacity will grow 56 percent in 2009 despite weakened demand for renewable energy projects in the face of tight credit markets and a global economic recession, a report issued on Monday by research group DisplaySearch said.

The report predicts that cell manufacturing capacity will reach 17 gigawatts this year and will surpass 42 GW by 2013, growing at a rate of 49 percent per year.

Despite demand for photovoltaic panels shrinking 17 percent this year and an “enormous over-supply” eroding prices, the solar industry will “begin working through this excess capacity as demand recovers next year and takes off in 2011 and beyond,” said Charles Annis, vice president of manufacturing research for DisplaySearch and author of the report.

Expansion projects that were previously committed are driving the growth in capacity despite falling demand, the report said. From January 2008 to July 2009, about 11.4 GW of new solar cell capacity was installed worldwide.

The report named U.S.-based company First Solar Inc (FSLR) as the largest solar cell manufacturer with more than 1 GW of capacity. Germany’s Q-Cells AG and China’s Suntech Power Holdings Co Ltd (STP) come in second.

By 2013, these companies and China’s JA Solar Holdings Co Ltd (JASO), Taiwan’s Motech Industries Inc, Norway’s Renewable Energy Corp, U.S.-based SunPower Corp (SPWRA, SPWRB), China’s Yingli Green Energy Holding Co Ltd (YGE), and Japan’s Showa Shell Sekiyu KK and Sharp Corp may be among the top 10 makers, with more than 16 GW, or 38 percent, of total capacity in 2013, the report said.

DisplaySearch is part of the NPD Group. (Reporting by Laura Isensee. Editing by Robert MacMillan)

Solar Glut: PV Cell Mfg Capacity To Surge 56% In 2009

Posted by Eric Savitz
barrons.com

So here’s a pretty good explanation for why pricing has collapsed in the solar sector.

DisplaySearch, a unit of research firm NPD Group that focuses on the display and solar markets, reports today that global solar cell manufacturing capacity is expected to grow 56% in 2009 to 17 gigawatts, with further growth at a 49% compounded rate to more than 42 GW in 2013. The growth in demand this year is in contrast to an expected 17% decline this year in photovoltaic module demand, the firm says.

“With demand and capacity moving in different directions, the PV industry is currently experiencing an enormous over supply that is causing rapid price erosion and potentially setting the stage for the failure of multiple cell manufacturers, particularly companies pursing [amorphous silicon] thin film solar cells,” DisplaySearch analyst Charles Annis said in a statement. “The PV industry will begin working through this excess capacity as demand recover next year and take off in 2011 and beyond.”

DisplaySearch expects the top 10 suppliers to account for 38% of capacity by 2013. They expect the top 10 in terms of capacity to include First Solar (FSLR), Q-Cells, Suntech (STP), JA Solar (JASO), Motech, REC, SunPower (SPWRA, SPWRB), Yingli (YGE), Showa Shell Solar and Sharp.

Suntech to be biggest panel maker in ‘09-iSuppli

Mon Aug 10, 2009 6:17pm EDT

* Suntech to overtake Q-Cells as top panel maker this year

* Suntech defending market position by raising production

* Nearly half of panels made in ‘09 won’t be sold in ‘09

LOS ANGELES, Aug 10 (Reuters) – China’s Suntech Power Holdings Co Ltd (STP) will overtake Germany’s Q-Cells AG as the world’s largest producer of solar panels this year, according to a report issued on Monday by industry research firm iSuppli.

Suntech, Japan’s Sharp Corp, and China’s Yingli Green Energy Holding Co Ltd (YGE) and JA Solar Holdings Co Ltd (JASO) are defending their market positions by continuing to increase production “as if a recession had never occurred,” iSuppli analyst Henning Wicht said in a statement.

Meanwhile, producers including Q-Cells, U.S.-based SunPower Corp (SPWRA, SPWRB) and Britain’s BP Solar have cut output or expansion plans in response to a massive oversupply of solar panels and cells that is driving down prices.

“Those suppliers that have reduced or made adjustments to their production of cells and panels as a result of the softening demand have seen their short- and mid-term strategies falter,” the report said.

Nearly half of all solar panels made in 2009 will not be sold this year due to the solar supply glut, iSuppli said.

Total solar panel production will rise to 7.5 gigawatts (GW) this year, up 14.3 percent from last year, the report said. However, only 3.9 GW of solar installations will take place in 2009.

“This inventory glut will have a long-term impact on the solar business, with panels set to remain in a state of oversupply until 2012,” Wicht said.

The group blamed the supply glut on the decision by Spain, which accounted for half of all solar installations in 2008, to roll back government incentives for solar power.

iSuppli cut its solar panel production forecasts for 2009 through 2012. After that, Wicht said “fast-growing demand for solar installations will be able to absorb global panel production and inventory.”

(Reporting by Nichola Groom; Editing by Steve Orlofsky)

First Solar down on competition, exec share sales (OFFICIAL)-UPDATE

Thu Aug 6, 2009 2:13pm EDT

* First Solar stock falls about 5 pct

* Market expects aggressive price moves from China

* First Solar executives report share sales

LOS ANGELES, Aug 4 (Reuters) – Shares of First Solar Inc (FSLR) fell almost 5 percent on Tuesday as investors fretted about share sales by company executives and aggressive pricing from Chinese rivals.

The stock closed down $7.60 at $147.98 on the Nasdaq after earlier falling to $146.86, while the majority of U.S.-listed solar stocks were up for most of the day. Shares of Chinese competitor Canadian Solar (CSIQ), which is slated to report results on Thursday, and Suntech Power Holdings Co (STP), closed up about 1 percent and more than 5 percent, respectively.

Last Thursday, industry bellwether First Solar reported blowout earnings but announced it would offer rebates to defend its position in the German market — its largest market — against sharp price cuts from competitors. The company’s stock has dropped 14 percent since that announcement.

First Solar has weathered the global recession better than many of its peers because its cadmium telluride panels are cheaper to produce than the silicon-based panels that dominate the market. However, a dearth of financing for renewable energy projects has contributed to a global glut of solar panels that has driven prices on silicon-based panels closer to those of First Solar’s, chipping away at its competitive edge.

ThinkEquity analyst Colin Rusch said that investors are still looking for more details on the Tempe, Arizona company’s new rebate program.

“Investors are expecting some pretty aggressive pricing numbers from the Chinese companies, and First Solar has indicated it will sell at a discount to key low-cost Asian competitors,” Rusch said in an interview.

“Investors are not getting real clarity on (First Solar’s) rebate program and there are expectations that the Chinese are going to come out and be very aggressive about pricing,” Rusch added.

In addition to Canadian Solar and Suntech, Chinese solar companies JA Solar Holdings Co Ltd (JASO), Trina Solar Ltd (TSL), Yingli Green Energy Holding Co Ltd (YGE) and LDK Solar Co Ltd (LDK) are all scheduled to report quarterly results this month.

Meanwhile, Kaufman Bros. analyst Theodore O’Neill attributed the drop in First Solar’s stock to company executives’ selling shares. First Solar announced the sales in filings with the U.S. Securities and Exchange Commission late on Monday.

According to the filings, Chief Executive Mike Ahearn was issued 5,000 shares, Chief Financial Officer Jens Meyerhoff was issued 3,500 shares, and President Bruce Sohn was issued 4,000 shares.

Related to those vestings, the company withheld 1,997 of Ahearn’s shares at $173.55 each, 1,435 of Meyerhoff’s shares at $173.55 each, and 1,388 of Sohn’s shares at $173.55 each to cover the executives’ taxes on the restricted stock.

First Solar spokeswoman Lisa Morse said the withholdings by the company were compulsory for the executives.

But O’Neill said that the “conventional thinking is that if the people who run the business are selling stock, that must be a bad thing.”

O’Neill added that if Chinese solar companies were aggressively pricing panels in Europe, it would drive down the stock of First Solar’s U.S. rivals like Sunpower Corp (SPWRA, SPWRB), which closed down about half a percent on Tuesday.

(Reporting by Laura Isensee, editing by Bernard Orr)

China’s Solar Ambitions Heat Up

By Aaron Levitt

China is becoming a solar leader by expanding its programs in the area. The nation recently announced its Golden Sun Stimulus Package, with the goal of installing 500 megawatts of solar farms across the country in the next two to three years. Through the Chinese Ministry of Finance, the government would subsidize 50% of the costs of building a solar power project, including transmission and distribution costs. The subsidy would increase to 70% for solar farms in remote areas without connections to the grid. This latest round of subsidies for solar continues China’s commitment to generation targets of 10 gigawatts by 2020. Analysts predict that nearly two gigawatts of new production could be added to the grid by 2011. In March, the Ministry offered a program to subsidize rooftop and building-integrated solar power projects with as much as 20 Chinese yuan per watt.

To qualify for the estimated $10 billion in aid, the projects must have a generating capacity of at least 300 kilowatts, with construction being completed in one year and operations lasting at least 20 years. In addition, each province can only have a total of 20 subsidized projects. The Golden Sun plan comes at a perfect time, as China tries to reduce its rapidly expanding demand for imported oil and gas and reduce its carbon footprint. The plan is meant to develop the solar industry as a new source of economic growth.

A Few Shining Picks
Beijing gave no indication that the Golden Sun project would benefit Chinese-only solar firms. However, the European Chamber of Commerce’s China branch has received complaints about China’s recent massive economic stimulus plan. It cited that European wind turbine producers were shut out of the $5 billion earmarked for Chinese wind projects. With that in mind, it is probably best to stick to Chinese solar companies if you want to play the Golden Sun project.

Recently, both ReneSola (SOL) and Suntech Power (STP) inked deals ahead of the Ministry’s announcement to provide 2.3 gigawatts for provincial and city governments for 2009/2010. Additional deals should continue to flow as the plan unfolds.

Yingli Green Energy (YGE) is one of the largest producers of photovoltaic (PV) products in China. As one of the few vertically integrated Chinese solar companies, Yingli has the ability to produce the wafers, cells and modules, and then apply them to create sun farms. As such, the company should be eligible for a number of subsidies. The company recently announced a joint venture with SDIC Huajing Power Holding Co. to produce a 10 megawatt, on-grid solar farm in Dunhuang, Gansu Province.

JA Solar Holdings (JASO) and China Sunergy (CSUN) offer investors a way to play the manufacturing of PV cells, step three in the solar value chain. Like any semiconductor product, PV cells go through periods of oversupply. Thanks to oil’s rise to $150, which was followed by the current economic downturn, there is a glut of supply. However, the cells are a pivotal piece of the solar pie and have a high barrier to entry; they should provide nice returns once the world’s economies return to “normal”.

Bottom Line
With the Golden Sun Solar plan, China has made it very clear that it intends to be a worldwide solar leader. As the projects begin to take shape, the Chinese will gain valuable energy and well as economic benefits. One of the main growth stories within the solar sector has always been China and this plan is the first step toward that. Until the full details of the plan are known, investors who want to play the stimulus plan should stick to Chinese solar stocks. The picks we’ve examined here are good entry points into that market.