North Coast Solar Stocks

March 26, 2009

Solarfun downgraded on forecast

Filed under: SOLF — Tags: , , — Jason @ 8:51 am

Solarfun downgraded to ‘Sell’ on weak forecast for the first half

Thursday March 26, 2009, 8:51 am EDT

NEW YORK (AP) — Chinese solar cell maker Solarfun Power Holdings Co. (SOLF) will likely face losses in the first half of the year as falling module prices, inventory costs and lack of scale will pressure margins, said one analyst as he downgraded the company’s rating.

Collins Stewart analyst Dan Ries lowered his rating for Solarfun to “Sell” from “Hold,” and gave its stock a $2 price target.

Ries said his decision was influenced by the company’s warning that the first half of the year will face challenges, including a decrease in first-quarter shipments, gross margins pressured by high-cost inventory and falling module prices. In addition, the company said for 2009 it has signed contracts for 200 megawatts worth of solar products, but the contracts mainly apply to the second-half of the year.

He also warned that the company’s balance sheet “remains a source of risk and concern, as net cash is negative $291 million and the company indicates that it expects to raise an additional $50 million of debt during 2009.”

Ries lowered his 2009 profit forecast for Solarfun to 14 cents per share, compared with an earlier estimate of 17 cents per share.

Analysts polled by Thomson Reuters estimated a profit of 1.59 Renminbi per American Depository Share (23 cents per ADS), on average.

Shares of Solarfun closed at $3.57 Wednesday.

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