North Coast Solar Stocks

November 24, 2009

Yingli Slips As Broadpoint Downgrades

Filed under: YGE — Tags: , , , , , — Jason @ 10:58 am

By Eric Savitz

Yingli Green Energy (YGE) Shares are trading lower this morning after Broadpoint.Amtech analyst John Hardy cut his rating on the stock to Neutral from Buy.

Hardy says a beat-and-raise solar earnings season is now finished; with “big guidance for Q1,” he writes, the risk is now that the 2010 first half will disappoint.

In particular, he sees risks for Yingli as it gets ready to turn on significant polysilicon manufacturing capacity. “With commercial production expected to begin in Q4, we believe this will likely become an even bigger focus for investors,” he writes. Hardy notes that early cost targets are in line current spot poly pricing at $60/kg, creating risks to margins in the early stages of the project.

Hardy also says that the company’s balance sheet “remains an eyesore,” with $389 million in cash against $820 million in debt. But the stock nonetheless trades in line with other solar companies at about 17.5x 2010. He says paying more than 15x-16x is not warranted ahead of the poly ramp.

“Despite our view that the industry will enjoy a strong [2010 first half] and that YGE will benefit through volumes and firming ASPs, we do not see the risk/reward as favorable ahead of significant poly
manufacturing ramp coupled with current state of the balance sheet,” he writes.

YGE today is down 57 cents, or 4.1%, to $13.29.

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