North Coast Solar Stocks

December 8, 2009

Hoku sets payment dates with Solarfun, shares rise

Filed under: HOKU, SOLF — Tags: , , , , — Jason @ 1:10 pm

Hoku shares rise after setting payment plan with Solarfun for polysilicon supply deal

1:10 pm EST, Tuesday December 8, 2009

NEW YORK (AP) — Shares of solar products maker Hoku Scientific Inc. (HOKU) soared in morning trading after it said it set payment dates for a polysilicon supply deal it holds with Solarfun Power Holdings Co. Ltd (SOLF).

Shares of Hawaii-based Hoku jumped 42 cents, or 18 percent, to $2.77 in midday trading. Solarfun shares fell 15 cents to $7.32 per share.

In May 2008, Hoku’s subsidiary Hoku Materials Inc. agreed to supply polysilicon to Solarfun unit Solarfun Power Hong Kong Ltd. over a ten-year period. Polysilicon is a key material used in making solar energy products.

Hoku plans to supply the product once construction is completed at its Idaho polysilicon manufacturing plant. In September, Hoku said construction was scheduled to be completed two phases. A 2,500 metric tons of polysilicon production capacity should be completed by March 2010 and the full 4,000 metric tons of capacity should be completed by the end of 2010.

Under the agreement, Solarfun had paid $37 million as a prepayment for future polysilicon deliveries. As of last week Solarfun still held a $13 million past-due balance that was due between July and October. Hoku said last Friday Solarfun paid $8 million of its past-due balance and agreed to pay $4 million in March 2010 and $1 million when Hoku begins its shipment of polysilicon to the China-based solar cell maker.

Solarfun agreed to pay a remaining $5 million balance due January 2010 in $1 million monthly increments in each of the five subsequent months after the month of the first shipment.

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December 4, 2009

Solarfun Signs Agreement to Build 100MW Solar Power Plant in Jiayuguan City, Gansu Province

Filed under: SOLF — Tags: , , , , — Jason @ 4:00 am

4:00 am EST, Friday December 4, 2009

SHANGHAI, Dec. 4 /PRNewswire-FirstCall/ — Solarfun Power Holdings Co., Ltd. (“Solarfun” or “the Company”) (SOLF), a vertically integrated manufacturer of silicon ingots and photovoltaic cells and modules in China, today announced that Jiangsu Linyang Solarfun Co., Ltd., a wholly owned subsidiary of Solarfun, has signed an agreement with the government of Jiayuguan City, Gansu Province, under which Solarfun agreed to build a 100MW solar power plant. To support this project, Solarfun agreed to construct a module production facility in Jiayuguan City.

Jingchang Zhang, Vice Mayor of Jiayuguan City, commented, “Jiayuguan is a famous tourist attraction in western China. Its abundant sunshine makes it an attractive location for solar projects. We have interviewed many solar module suppliers in China and are confident that Solarfun will be a good partner for our development.”

Peter Xie, President of Solarfun, commented, “We continue to make progress in building a meaningful presence in the rapidly developing China market. We appreciate the opportunity to partner with Jiayuguan City towards their firm commitment to renewable energy development.”

The commencement of this project is subject to feasibility studies, financing and further government approval.

November 19, 2009

Shares of Solarfun jump after 3Q profit

Filed under: SOLF — Tags: , , , — Jason @ 1:46 pm

Shares of Solarfun jump after 3Q profit, upgrade by analyst on ‘underappreciated’ stock

1:46 pm EST, Thursday November 19, 2009

HARTFORD, Conn. (AP) — Shares of Solarfun Power Holdings Co. Ltd. (SOLF) jumped Thursday, a day after the Chinese solar cell maker posted a third-quarter profit.

Oppenheimer analyst Sam Dubinsky upgraded Solarfun Thursday to “Outperform” from “Perform,” saying its shares’ risk and reward are more favorable than most stocks in the sector. He said the company’s stock is “underappreciated.”

“Yesterday’s third-quarter results corroborate that turnaround efforts are bearing fruit,” he wrote in a client note.

Solarfun said rising demand pushed third-quarter shipments up 59 percent to a record high of 102.6 megawatts. Improved shipments and a 36 percent decline in the cost of revenue helped widen margins and outweigh the negative impact of declining selling prices, the company said.

Quarterly earnings rose to 136.6 million renminbi ($20 million), or 2.53 renminbi per American Depository Share (37 cents per ADS), compared with a loss of 44.3 million renminbi, or 0.86 renminbi per ADS, during the same period last year.

Dubinsky set a $10 price target, implying he expects the stock to rally 54 percent from Wednesday’s close.

Shares of Solarfun rose 38 cents, or 5.8 percent, to $6.86 in afternoon trading. Meanwhile, the broader markets declined in a sell-off triggered by a stronger dollar and weak economic data.

Oppenheimer raises Solarfun to outperform

Filed under: SOLF — Tags: , , , , — Jason @ 11:11 am

Thu Nov 19, 2009 11:11am EST

Nov 19 (Reuters) – Oppenheimer & Co raised Solarfun Power Holdings Co Ltd (SOLF) to “outperform” from “perform,” a day after the Chinese photovoltaic cell maker posted a strong third-quarter profit, saying the stock offered more favorable risk/reward than its peers. While solar companies have indicated a rise in shipments for photovoltaic solar modules, that turn sunlight into electricity, they are now worried about the extent to which the German government might cut its aid to the domestic solar industry, the world’s top market for solar products.

Analysts Sam Dubinsky and Adam Baumgarten, who have a price target of $10 on shares of the company, said Solarfun has adequate earnings power to keep its stock at about $6 if macro conditions worsen.

“We believe a revamped/improving cost structure will lead to attractive gross margins and share gain opportunities in 2010,” the analysts wrote in a note to clients.

Jefferies & Co raised its price target on the stock to $5.75 from $4.50 and re-iterated its “underperform” rating on the stock, saying the company’s outlook for 2010 lacked clear visibility in the face of the challenges in the German market.

Shares of the Shanghai-based company were trading up 7 percent at $6.91 late morning Thursday on Nasdaq.

(Reporting by Antonita Madonna Devotta in Bangalore; Editing by Jarshad Kakkrakandy)

November 18, 2009

Solarfun Q3 profit beats, sees higher Q4 shipments

Filed under: CSIQ, CSUN, SOLF — Tags: , , , , — Jason @ 11:36 am

Wed Nov 18, 2009 11:36am EST

* Q3 income/ADS $0.37

* Q3 revenue $144.6 mln

* Sees higher Q4 shipments

* Shares up 8 percent

By Arup Roychoudhury

BANGALORE, Nov 18 (Reuters) – Chinese photovoltaic cell maker Solarfun Power Holdings Co Ltd (SOLF) reported a third-quarter profit that beat analysts estimates, helped by higher shipment volumes, sending its shares up 8 percent.

Solarfun also forecast fourth-quarter shipments of about 110 megawatts (MW), up 7 percent sequentially. It expects module processing services to account for about 20 percent of the total shipments.

“It was a good quarter, aided by really strong margins… going forward they are guiding towards a pretty strong fourth quarter and first quarter,” Simmons and Co International analyst Burt Chao said by phone.

On a conference call with analysts, company executives said they had good visibility on the key German market for the quarter and that shipments were supposed to rise there too.

Demand for photovoltaic solar modules that turn sunlight into electricity has taken a hit because of the global financial crisis and an oversupply of cells and modules.

Another worry for solar companies is when and by how much will the Germany government cut aid to its solar industry, the world’s top market for solar products.

Analyst Chao said a lot of how Solarfun’s German business grew depended on government policies there.

“Other than that I would think their outlook is pretty positive right now and that they are expanding to other markets in case the German market is to slow down,” he added.

(more…)

Solarfun Reports Third Quarter 2009 Results

Filed under: SOLF — Tags: , , , , , , , — Jason @ 6:57 am

6:57 am EST, Wednesday November 18, 2009

SHANGHAI, Nov. 18 /PRNewswire-FirstCall/ — Solarfun Power Holdings Co., Ltd. ( “Solarfun” or the “Company”) (SOLF), a vertically integrated manufacturer of silicon ingots, wafers and photovoltaic (PV) cells and modules in China, today reported its unaudited financial results for the quarter ended September 30, 2009.

THIRD QUARTER 2009 RESULTS

* Total net revenues were RMB 986.8 million (US$144.6 million) in the third quarter of 2009, representing a decrease of 22.6% from RMB 1,274.8 million in the third quarter of 2008 and an increase of 15.5% from RMB 854.6 million in the second quarter of 2009. The sequential increase was primarily related to higher shipment volumes reflecting improved industry demand.
* PV module shipments reached 102.6 MW in the third quarter of 2009, an increase from 41.8 MW in the third quarter of 2008 and from 64.3 MW in the second quarter of 2009. The increase from the second quarter of 2009 was due to increases in both PV module shipments and PV module processing services. PV module processing services represented approximately 40% of the total PV module shipments in the third quarter of 2009. In the third quarter of 2009, excluding module processing, the Company recorded greater geographic diversity in its sales, with Germany accounting for 60% of the Company’s total PV module shipments, down from 83% in the previous quarter. The Czech Republic, a relatively new market for the Company, continued to grow to 9% of total shipments, and a rebound was seen in Portugal and Spain, representing 11% and 6% of total shipments, respectively. Australia, Italy and Korea combined for another 14% of total shipments.
* Average selling price, excluding module processing services, declined, as expected, to US$2.03 per watt in the third quarter of 2009 from US$2.66 per watt in the second quarter of 2009, primarily due to the decrease in the market prices of PV products.
* Gross profit was RMB 204.4 million (US$29.9 million) in the third quarter of 2009, compared to a gross profit of RMB 46.1 million in the third quarter of 2008 and a gross loss of RMB 53.0 million in the second quarter of 2009. Gross margin was 20.7% in the third quarter of 2009, compared to negative 6.2% in the second quarter 2009. No provision for pre-payments on supply agreements were made in the third quarter of 2009, compared to a provision of RMB 236.5 million in the second quarter of 2009. Gross margin in the third quarter of 2009 reflected lower raw material costs primarily as a result of renegotiated supply agreements and increased spot market purchases. Vertical integration to the ingot and wafer level also led to reduced costs from higher utilization and continued process improvements.
* Operating profit was RMB 129.4 million (US$19.0 million) in the third quarter of 2009, compared to an operating loss of RMB 25.9 million in the third quarter of 2008 and an operating loss of RMB 121.9 million in the second quarter of 2009. The operating margin for the third quarter 2009 was 13.1%. The Company continued to maintain tight discipline on operating expenses, which as a percent of revenues should trend lower as revenues grow.
* Interest expense was RMB 40.8 million (US$6.0 million) in the third quarter of 2009, an increase from RMB 21.6 million in the third quarter of 2008, and an increase from RMB 36.1 million in the second quarter of 2009.
* Fair value of the conversion feature of the Company’s convertible bonds increased by RMB 82.4 million (US$12.1 million) in the third quarter of 2009, due to a number of factors including changes in the Company’s ADS prices during the third quarter of 2009. This line item has fluctuated, and is expected to continue to fluctuate quarter-to-quarter in line with standardized accounting practices, of which the Company has no control.
* Net income attributable to shareholders was RMB 136.6 million (US$ 20.0 million) in the third quarter of 2009, compared to a net loss of RMB 44.3 million in the third quarter of 2008 and a net loss of 319.9 million in the second quarter of 2009. Net income per basic ADS was RMB 2.53 (US$0.37) in the third quarter of 2009, compared to a net loss per basic ADS of RMB 0.86 in the third quarter of 2008 and a net loss per basic ADS of RMB 5.95 in the second quarter of 2009.

Peter Xie, President of Solarfun, commented, “We are extremely pleased with the continued progress achieved in the third quarter of 2009. Of particular note were quarterly shipment volumes exceeding 100 MW for the first time in the Company’s history, gross margins reaching 20%, and a return to profitability. We also improved our capital structure by reducing short-term bank borrowings and raising additional equity capital.”

(more…)

October 20, 2009

Solarfun and Meridian Neue Energien GmbH Sign PV Modules Supply Agreement

Filed under: SOLF — Tags: , , — Jason @ 6:46 am

— Contract signed for 5MW of residential projects in Germany–

6:46 am EDT, Tuesday October 20, 2009

SHANGHAI, Oct. 20 /PRNewswire-FirstCall/ — Solarfun Power Holdings Co., Ltd. (“Solarfun” or “the Company”) (SOLF), a vertically integrated manufacturer of silicon ingots and photovoltaic (PV) cells and modules in China, today announced that is has signed a contract to deliver five megawatts (“MW”) of PV modules to Meridian Neue Energien GmbH, a leading new energy project developer in Germany. The PV modules will be applied to six roof top projects, which are expected to be completed and grid connected in December 2009.

Henry Bolz, Managing Director of Meridian Neue Energien, commented, “European, and in particular German, companies active in the PV market insist on extremely high quality production standards from their suppliers. Solarfun has demonstrated that it is more than capable of living up to these expectations. They have built a strong track record over the years and we are certain that their 25-year PV module limited warranty will support our anticipated power output and forecasted investment returns. As owner and operator of large PV projects, we insist on comprehensive tests and quality controls. We have found that these can only be passed by manufacturers with a long history in the market, and we certainly believe that Solarfun meets the level of excellence that we expect.”

Peter Xie, President of Solarfun, added, “We are pleased to sign this agreement with such a reputable and well established company. Meridian Neue Energien has stringent standards for the PV modules that they use and we are happy that they selected us for this project.”

This Report on Form 6-K is hereby incorporated by reference into Solarfun’s registration statement on Form F-3 (Registration No. 333-152005) filed on July 14, 2008.

About Meridian Neue Energien GmbH

Since 1996, meridian Neue Energien GmbH uses its know-how for the installation of a sustainable energy supply. Therefore the company group develops, realizes and operates indicatory projects for the generation and the utilization of renewable energies. In the center of the business activities are wind power and especially big photovoltaic roof top installations in Germany, France, Italy and Czech Republic.

The meridian company group covers the entire value chain of the realization of the projects, starting from the acquisition of the locations and the project development up to planning of the projects and the realization. The corporate objective is to hold the projects in the company group and to develop an energy supplier of renewable energies.

September 25, 2009

Watch Out: Solar Stocks Might Sink

Filed under: ENER, FSLR, JASO, LDK, SOL, SOLF, STP, YGE — Tags: , , , , , , — Jason @ 8:52 am

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.

(more…)

September 21, 2009

4Q solar growth outlook driven by Germany-analyst

Filed under: FSLR, SOLF, SPWR, TSL — Tags: , , , — Jason @ 3:46 pm

Analyst attributes 4Q solar shipment growth outlook to German market, raises estimates

Monday September 21, 2009, 3:46 pm EDT

NEW YORK (AP) — Fourth-quarter solar shipments could rise from third-quarter levels, despite typical seasonal weakness, driven mainly by German shipments, said an analyst on Monday as he held to his ratings for First Solar Inc. (FSLR) and SunPower Corp. (SPWRA, SPWRB), while maintaining a “Neutral” rating for the sector.

Barclays analyst Vishal Shah said that overall German shipments could potentially reach between 2.5 gigawatts and 3.4 GW, up from his earlier expectations of about 2 GW.

Shah maintained his “Equal Weight” rating for First Solar Inc. and SunPower Corp. and said he expects their relative outperformance to continue into third-quarter earnings.

Shares of First Solar rose 54 cents to $156.69 in afternoon trading. SunPower shares fell 61 cents to $32.48.

Elsewhere in the sector Solarfun Power Holdings Co. Ltd. (SOLF) shares rose 34 cents, or 5.3 percent, to $6.77. Trina Solar Ltd. (TSL) shares climbed $1.50, or 4.7 percent, to $32.94.

September 17, 2009

Solarfun sees sequential rise in Q3 revenue, shares up

Filed under: SOLF — Tags: , , , , — Jason @ 12:25 pm

Thu Sep 17, 2009 12:25pm EDT

* Sees Q3 rev RMB 918 mln to RMB 984 mln

* Sees Q3 gross margin of 17 pct

* Still expects Q3 shipment to exceed 100 MW

* Shares rise as much as 13 pct

By Arup Roychoudhury

BANGALORE, Sept 17 (Reuters) – Chinese photovoltaic cell maker Solarfun Power Holdings Co Ltd (SOLF) forecast sequentially higher third-quarter revenue, and said it was seeing an improvement in end-market demand, sending its shares up 13 percent.

For the third quarter, the company expects revenue of 918 million yuan ($134.5 million) to 984 million yuan ($144.1 million).

The lower end of the range is 7.5 percent higher than its second-quarter revenue of 854.6 million yuan ($125.1 million), Solarfun said.

“While there can be some positive conclusions derived from today’s release for shipment strength in the third quarter, aggressive pricing declines are worrisome for the quarter and even more so for the fourth quarter of 2009 and the first quarter of 2010,” Simmons and Co analyst Burt Chao said.

Lack of financing, coupled with a pullback in incentives in Spain, has led to a global glut of solar panels, pushing down prices.

In August, Solarfun had warned that average selling prices would fall further.

On Thursday, the company reiterated its total module shipment outlook for the quarter, which it expects to exceed 100 megawatts (MW), and forecast gross margin of about 17 percent.

Chao said the revenue outlook was below his estimate of $153.8 million. Analysts on average were expecting Solarfun to report revenue of $165.5 million in the third quarter, according to Reuters Estimates.

Solarfun said efforts to realign supply costs and increase in production capacity at its ingot and wafer manufacturing facilities should enable it to achieve healthy margins in the third quarter.

“We continue to face a highly competitive pricing environment, but we remain fully confident in our ability to win business as market demand recovers,” the company, which reported a gross margin of 21.5 percent in the second quarter, said.

Shares of the company were up 5 percent at $6.53 in midday trade Thursday on Nasdaq. They touched a high of $7 earlier in the session.

($1=6.826 Yuan)

Solarfun Provides Updated 3Q 2009 Business Outlook

Filed under: SOLF — Tags: , , , , — Jason @ 8:56 am

Thursday September 17, 2009, 8:56 am EDT

SHANGHAI, Sept. 17 /PRNewswire-FirstCall/ — Solarfun Power Holdings Co., Ltd. (“Solarfun” or “the Company”) (SOLF), a vertically integrated manufacturer of silicon ingots and photovoltaic (PV) cells and modules in China, today provided an update on its outlook for the third quarter of 2009.

For the third quarter of 2009, Solarfun estimates:

* Total module shipments will exceed 100 MW
* Total revenues will be between RMB918 million and RMB984 million
* Gross margin will be approximately 17%

Peter Xie, President of Solarfun, commented, “The third quarter of 2009 is progressing well. Our order patterns are strong as we are seeing an improvement in end market demand. Our efforts to realign supply costs to reflect current market pricing combined with our increase in production capacity at our in-house ingot and wafer manufacturing facilities should allow us to achieve healthy margins in the third quarter. We continue to face a highly competitive pricing environment, but we remain fully confident in our ability to win business as market demand recovers.”

The selected estimated results mentioned above for the third quarter of 2009 are preliminary and are subject to the completion of the Company’s normal quarter-end review process. The Company’s actual results may differ from these estimates.

September 8, 2009

First Solar to build huge Chinese solar plant

Filed under: CSIQ, FSLR, JASO, SOLF, STP, TSL, YGE — Tags: , , , , — Jason @ 1:30 pm

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.”

(more…)

Solarfun Signs Letter of Intent With Hohhot City Government for PV Projects of 600MW

Filed under: SOLF — Tags: , , , — Jason @ 5:52 am

Tuesday September 8, 2009, 5:52 am EDT

SHANGHAI, Sept. 8 /PRNewswire-FirstCall/ — Solarfun Power Holdings Co., Ltd. (“Solarfun” or “the Company”) (SOLF), a vertically integrated manufacturer of silicon ingots and photovoltaic (PV) cells and modules in China, today announced that Jiangsu Linyang Solarfun Co., Ltd., a wholly owned subsidiary of Solarfun, has signed a letter of intent with the government of Hohhot City, the capital city of the Inner Mongolia Autonomous Region in China, to develop two solar projects with an aggregate capacity of 600MW. In support of these two projects, Solarfun also intends to construct a 100MW PV module production facility.

Vice Mayor of Hohhot City, Wu Wenyuan, commented, “Hohhot City has a number of advantages in developing PV projects, including abundant sunshine and national support. After discussing with and inspecting a number of major PV manufactures in China, we selected Solarfun as a major supplier for these projects. We are excited to partner with Solarfun.”

Peter Xie, President of Solarfun, commented, “We are pleased to have signed this strategic agreement with the government of Hohhot City. This agreement demonstrates our solid market position in China and our commitment to the development of China’s PV market. Hohhot City has been approved to be one of the pioneer cities for using PV systems by the National Development and Reform Commission and it is a key junction that connects to the North China grid. Hohhot City currently has the largest wind power generation capacity in China and is generally known for its extensive sunshine and commitment to renewable energy projects. We are delighted to supply Hohhot City with our high quality products and expect to further grow our business by taking advantage of the opportunities presented by the new PV incentive policies in China.”

This project is subject to feasibility studies, financing and further government approval.

September 3, 2009

Solarfun unit secures near $60 mln credit facility

Filed under: SOLF — Tags: , , , — Jason @ 10:16 am

Thu Sep 3, 2009 10:16am EDT

* Unit gets $58.6 mln credit facility from Bank of Shanghai

* Says three-quarters will be in the form of a 3 yr loan

* Shares rise as much as 5 pct

BANGALORE, Sept 3 (Reuters) – Chinese photovoltaic cell maker Solarfun Power Holdings Co Ltd (SOLF) said its unit, Jiangsu Linyang Solarfun Co Ltd, secured a 400 million yuan ($58.57 million) credit facility from the Bank of Shanghai.

Three-quarters of the total amount, 300 million yuan, will be in the form of a three-year loan, the company said.

Simmons & Co analyst Burt Chao said the news was a positive, but not necessarily a “game changer.”

“They do not have liquidity issues — which is a good thing — so this is not as transformational as it could have been. We have not turned decidedly positive on the company, and think it is more of a neutral at this point,” the analyst said.

Chao, however, said the financing afforded Solarfun the ability to deliver on corporate goals.

This news comes even as the solar sector grapples with frozen credit markets that have dried up access to project financing and choked off demand.

Chao, who expects markets to thaw by the first or the second quarters of 2010, said a recovery in the solar markets will lag the general market a bit.

Lack of financing coupled with a pullback in incentives in Spain, has led to a global glut of solar panels, pushing down prices and eroding companies’ profits.

In August, Solarfun warned that average selling prices could fall further still. [ID:nBNG508528]

A lot of companies are moving to find a plan to access project financing, which in itself has been frozen.

Shares of the company rose as much as 5 percent to a high of $5.04, before paring some gains to trade up 7 cents at $4.86 Thursday morning on Nasdaq.

The stock, which has more than doubled from a March year-low, is off more than 70 percent from a September 2008 year-high.

($1=6.829 YUAN)

(Reporting by Adveith Nair in Bangalore; Editing by Jarshad Kakkrakandy)

Solarfun Secures RMB400 Million Credit Facility With Bank of Shanghai

Filed under: SOLF — Tags: , , — Jason @ 4:35 am

Thursday September 3, 2009, 4:35 am EDT

SHANGHAI, Sept. 3 /PRNewswire-FirstCall/ — Solarfun Power Holdings Co., Ltd. (“Solarfun” or “the Company”) (SOLF), a vertically integrated manufacturer of silicon ingots and photovoltaic (PV) cells and modules in China, today announced that Jiangsu Linyang Solarfun Co., Ltd., a wholly owned subsidiary of Solarfun, has secured a credit facility in the amount of RMB400 million from Bank of Shanghai, of which RMB300 million will be in the form of a 3-year loan.

Peter Xie, President of Solarfun, commented, “The additional credit facility provided by Bank of Shanghai gives us greater flexibility as we continue to execute on our growth strategy and will also allow us to utilize our resources to support our customers’ in terms of project financing. We are pleased to partner with Bank of Shanghai, especially during a time when many companies are facing difficulties in securing access to credit, and greatly appreciate Bank of Shanghai’s confidence in the future of Solarfun.”

About Bank of Shanghai

Bank of Shanghai is a commercial bank based in Shanghai, China that was established on December 29, 1995.

August 21, 2009

Jefferies Turns Cautious; Downgrades Many Stocks

Filed under: ASTI, CSUN, ENER, ESLR, FSLR, SOLF, SPWR, STP, WFR — Tags: , , , , — Jason @ 9:31 am

Posted by Eric Savitz
barrons.com

Jefferies & Co. analyst Paul Clegg this morning turned cautious on the solar sector, slicing his ratings on many companies in the sector.

A key issue, Clegg writes in a research note, is that the downward spiral in pricing is likely to continue. “While accompanied by reduced production costs, we believe this could lead to weaker-than-expected 2010 ests and concerns about value destruction in the sector,” he writes. ” In our view, liberal Chinese lending practices encourage over-production and capacity expansions in a market that needs rationalization.”

Clegg concedes that falling prices bring the market closer to grid parity, but he adds that the slide could also trigger political backlash to government incentives, as European PV makers get hurt by Chinese competition with the help of European tax-payer and rate-payer money. While end markets are showing signs of improvement, he adds, “they are slow and do not appear ready to support the levels of volume production being planned for 2010.”

Clegg adds that even if falling silicon prices help solar companies maintain unit gross margins, “lower ASPs make them more dependent on chasing volumes to support the marketing and distribution networks necessary to drive growth.”

The Jefferies analyst sees ASPs down 20%-25% by Q4 from Q2, with another 15%-20% drop by Q4 2010.

Here’s a rundown on his downgrades today:

* Ascent Solar (ASTI): To Underperform from Hold.
* China Sunergy (CSUN): To Underperform from Hold.
* Energy Conversion Devices (ENER): To Underperform from Hold.
* Evergreen Solar (ESLR): To Underperform from Buy.
* First Solar (FSLR): To Hold from Buy.
* Solarfun (SOLF): To Underperform from Hold.
* SunPower (SPWRA, SPWRB): To Hold from Buy.
* Suntech (STP): To Underperform from Hold.
* MEMC Electronic Materials (WFR): Maintains Buy rating.

Jefferies downgrades 8 solar companies on pricing, other concerns

Filed under: ASTI, CSUN, ENER, ESLR, FSLR, SOLF, SPWR, STP, WFR — Tags: , , , , — Jason @ 8:47 am

Friday August 21, 2009, 8:47 am EDT

HOUSTON (AP) — Jefferies & Co. lowered its ratings on eight solar companies Friday, citing numerous risks that could play out in the coming months, including a continuation of falling prices.

In reports to clients, Jefferies noted that a continued downward spiral in pricing, while accompanied by lower production costs, may lead to weaker-than-expected estimates for 2010 and concerns about value destruction in the solar sector.

“Liberal Chinese lending practices encourage overproduction and capacity expansions in a market that needs rationalization, in our view,” Jefferies analyst Paul Clegg said.

Evergreen Solar Inc. (ESLR) was downgraded to “Underperform” from “Buy.” Jefferies also lowered its price target to $1 from $3. Jefferies said Evergreen’s low silicon usage advantage has been obscured by high manufacturing costs and pricey silicon contracts.

First Solar Inc. (FSLR) was downgraded to “Hold” from “Buy.” Jefferies also lowered its price target to $130 from $200. It noted, however, that it expects First Solar’s cost structure to remain the lowest in the industry even if silicon prices continue to decline.

Solarfun Power Holdings Co. (SOLF) was downgraded to “Underperform” from “Hold” and the price target was cut to $4 from $6.

Energy Conversion Devices Inc. (ENER) was downgraded to “Underperform” from “Hold” and the firm set a price target of $8. Jefferies noted Energy Conversion has a unique product and market niche, but analysts remain concerned about weak demand.

Ascent Solar Technologies Inc. (ASTI) was downgraded to “Underperform” from “Hold.” Jefferies’ said its $4 price target reflects increased investor risk tolerance.

China Sunenergy Co. Ltd. (CSUN) was downgraded to “Underperform” from “Hold” and trimmed its price target to $3.50 from $4. “Despite strong cell technology and a stable liquidity position, we believe CSUN’s strategic position in only one segment of the value chain could become a more notable disadvantage in an increasingly competitive environment,” Jefferies noted.

SunPower Corp. (SPWRA, SPWRB) was downgraded to “Hold” from “Buy” and its price target was lowered to $30 from $35. Jefferies said SunPower’s diverse and flexible business model bodes well for its market-share prospects in a recovery.

Suntech Power Holdings (STP) was downgraded to “Underperform” from “Hold” and its price target was trimmed to $12 from $14. “STP is positioned to generate rapid growth in key (markets) and to remain a leader on cost and quality,” Jefferies said.

In another report, Jefferies maintained its “Buy” rating on MEMC Electronic Materials (WFR). The company’s “very strong balance sheet” positions it well “as a survivor and potential consolidator,” analysts said.

August 20, 2009

Suntech trims shipment forecast, shares fall

Filed under: FSLR, SOLF, SPWR, STP, YGE — Tags: , , , , , , — Jason @ 2:35 pm

Thu Aug 20, 2009 2:35pm EDT

* Q2 profit of 6 cts/ADS tops Wall St view of 3 cts

* Revenue falls one-third to $321 million

* Shipments seen at low end of pvs range

* Shares down 3 percent

NEW YORK/LOS ANGELES, Aug 20 (Reuters) – Suntech Power Holdings Co Ltd (STP) posted a higher-than-expected second-quarter profit on Thursday but trimmed its full-year forecast for shipments and said prices on solar panels were still falling sharply, sending shares down 3 percent.

Suntech, which like other solar companies has been hurt by a dearth of financing for new projects, said prices for its solar panels fell 8 percent in the quarter and would likely drop another 15 percent to 20 percent in the current quarter.

Prices of solar panels have dropped dramatically this year because a lack of funding for renewable energy projects and a pullback in solar incentives in Spain have led to an oversupply of panels in the market.

Suntech, as China’s top panel maker, enjoys a stronger position in the market than many of its peers, but Simmons and Co analyst Burt Chao said investors are concerned about whether it can keep selling panels at higher prices.

“If Suntech currently enjoys a pricing premium over their Chinese competitors, a lot of people are wondering how long they can maintain that pricing premium given the significant downward pressure being placed in the market today,” said Chao, who has a neutral rating on Suntech shares.

Suntech cut its forecast for cell shipments to about 600 megawatts, down from the previous range of 600 MW to 700 MW it had issued in May. That was the second time this year that Wuxi, China-based Suntech has pared its shipment forecast from the original figure of more than 800 MW.

(more…)

August 18, 2009

Solarfun shares fall as pricing concerns weigh

Filed under: SOLF — Tags: , , , , , — Jason @ 1:40 pm

Tue Aug 18, 2009 1:40pm EDT

* Posts surprise Q2 profit; rev down 37 pct

* Sees average selling prices falling to $2/watt by yr end

* Sees Q3 shipments exceeding 100 MW, Q4 at about 80 MW

* Shares fall as much as 9 percent

By Adveith Nair

BANGALORE, Aug 18 (Reuters) – Chinese photovoltaic cell maker Solarfun Power Holdings Co Ltd (SOLF) posted a surprise quarterly profit, but warned that average selling prices could fall further, sending its shares down as much as 9 percent.

The credit crisis and a pullback in incentives in Spain have led to a global glut of solar panels, driving down prices and eroding most solar companies’ profits.

Average selling prices for the latest second quarter fell 4 percent sequentially to $2.66 per watt as market prices of PV products dipped. Prices could decline to $2.00 per watt or below by the end of 2009, the company said.

“Investors are a bit spooked. Average selling prices at $2 per watt are very low compared to levels they have been at in the past,” Simmons & Co analyst Burt Chao said.

While a fall in prices might be bad for component companies, customers benefit as the lower prices bring progress towards so-called “grid parity”, the point at which renewables cost the same as fossil fuel-based forms of power generation.

Chao also said there may be some concerns regarding the health of the agreement between Q-Cells and Solarfun given the recent developments at Q-Cells.

In August last year, Solarfun had signed a supply agreement with Q-Cells International, a unit of Germany’s Q-Cells AG.

Earlier this month, Q-Cells, one of the world’s largest maker of solar cells, said it would slash nearly a fifth of its workforce, as it reported a first-half loss hit by the price slump.

“Q-Cells has had difficulties in the last couple of quarters. They are going through a major restructuring right now, and they happen to be a major customer for the company. Investors are a bit shaken on that as well,” Chao said.

Excluding items, Solarfun posted a second-quarter profit of 8 cents per American Depositary Share, as shipments rose. Analysts expected a loss of 3 cents a share, before items, according to Reuters Estimates.

Solarfun shares were trading down 54 cents at $5.78 Tuesday afternoon on Nasdaq. They had touched a low of $5.75 earlier.

Excluding Tuesday’s fall, the stock has so far almost tripled from a March year-low, but is still off 70 percent from an August 2008 year-high.

(Additional reporting by Arup Roychoudhury in Bangalore; Editing by Anil D’Silva, Pradeep Kurup)

Shares of Chinese solar cell maker Solarfun Power decline on 2nd-quarter loss

Filed under: SOLF — Tags: , , , , — Jason @ 1:33 pm

Tuesday August 18, 2009, 1:33 pm EDT

NEW YORK (AP) — Shares of Solarfun Power Holdings Co. (SOLF) fell Tuesday after the Chinese solar cell maker posted a second-quarter loss on declining sales prices.

Shares dropped 53 cents, or 8.4 percent, to $5.79 in afternoon trading. The stock has ranged from $2.27 to $21.26 over the past year.

Solarfun’s adjusted results beat analyst estimates. But the company warned that average selling prices will decline further to $2 per watt, or below, by the end of 2009.

Lazard Capital Markets analyst Sanjay Shrestha said Solarfun shares are fairly valued. He maintained his “Hold” rating, citing an ongoing decline in polysilicon prices, which “should translate into an improving margin profile, despite anticipated average selling price reduction.”

Solarfun Reports Second Quarter 2009 Results

Filed under: SOLF — Tags: , , , , , — Jason @ 8:00 am

Tuesday August 18, 2009, 8:00 am EDT

SHANGHAI, Aug. 18 /PRNewswire-FirstCall/ — Solarfun Power Holdings Co., Ltd. ( “Solarfun” or the “Company”) (SOLF), a vertically integrated manufacturer of silicon ingots, wafers and photovoltaic (PV) cells and modules in China, today reported its unaudited financial results for the quarter ended June 30, 2009.

SECOND QUARTER 2009 RESULTS

* Total net revenues were RMB 854.6 million (US$125.1 million) in the second quarter of 2009, representing a decrease of 36.8% from RMB 1,352.2 million in the second quarter of 2008, but an increase of 24.9% from RMB 684.2 million in the first quarter of 2009.

* PV module shipments reached 64.3 MW in the second quarter of 2009, an increase from 43.1 MW in the second quarter of 2008 and 35.7 MW in the first quarter of 2009. The increase from the first quarter of 2009 was due to increases in PV module shipments and PV module processing services, which represented approximately 36% of the total PV module shipments in the second quarter of 2009. In the second quarter of 2009, excluding module processing, Germany accounted for 83% of the Company’s total PV module shipments. The Czech Republic, a new market for the Company, Australia, Korea and Spain accounted for 6%, 5%, 3% and 2% of the Company’s total module shipments, respectively.

* Average selling price further declined, as expected, to US$2.66 per watt in the second quarter of 2009 from US$2.78 per watt in the first quarter of 2009, primarily due to the decrease in the market prices of PV products.

* The Company’s management determined that a provision of RMB 236.5 million (US$34.6 million) in the second quarter of 2009 was required for pre-payments already made on certain existing supply agreements because the continued performance of these contracts would not be in the best long term economic interest of the Company in view of current prevailing market prices.

* On a U.S. GAAP basis, gross loss was RMB 53.0 million (US$7.8 million) in the second quarter of 2009, compared to a gross profit of RMB 185.6 million in the second quarter of 2008 and a gross profit of RMB 49.4 million in the first quarter of 2009. Excluding the provision for pre-payments, on a non-GAAP basis, gross profit was RMB 183.5 million (US$26.8 million) and gross margin was 21.5% in the second quarter of 2009. This compares to a gross margin of 7.2% in the first quarter of 2009 and 13.7% in the second quarter of 2008, both of which were calculated on a U.S. GAAP basis. The sequential and year-over-year increase was primarily due to the Company’s ability to renegotiate the majority of its existing silicon-based raw material supply agreements to obtain reduced prices and its ability to source these materials in many cases on the spot market, as well as the vertical integration to the ingot and wafer level.

* On a U.S. GAAP basis, operating loss was RMB 121.9 million (US$17.8 million) in the second quarter of 2009, compared to an operating profit of RMB 116.4 million in the second quarter of 2008 and an operating loss of RMB 15.3 million in the first quarter of 2009. Excluding the provision for pre-payments, on a non-GAAP basis, operating profit was RMB 114.6 million (US$16.8 million) and the operating margin was 13.4% in the second quarter of 2009. This compares to an operating profit of RMB 116.4 million in the second quarter of 2008 and an operating loss of RMB 15.3 million in the first quarter of 2009, both of which were calculated on a U.S. GAAP basis. The increase in operating profit from the first quarter of 2009 reflects the Company’s continuing focus on managing its operating expenses.

* Interest expense was RMB 36.1 million (US$5.3 million) in the second quarter of 2009, an increase from RMB 28.1 million in the second quarter of 2008, but a decrease from RMB 41.4 million in the first quarter of 2009.

* Fair value of the conversion feature of the Company’s convertible bonds increased by RMB 113.4 million (US$16.6 million) in the second quarter of 2009, as a result of the increase of the Company’s ADS prices during the second quarter of 2009.

* On a U.S. GAAP basis, net loss attributable to shareholders was RMB 319.9 million (US$ 46.8 million) in the second quarter of 2009, compared to net income attributable to shareholders of RMB 78.1 million in the second quarter of 2008 and net income of 27.4 million in the first quarter of 2009. Net loss per basic ADS was RMB 5.95 (US$0.87) in the second quarter of 2009, compared to net income per basic ADS of RMB 1.62 in the second quarter of 2008 and net income per basic ADS of RMB 0.51 in the first quarter of 2009. Excluding the provision for pre-payments and the increase in fair value of the conversion feature of the Company’s convertible bonds, on a non-GAAP basis, net income attributable to shareholders was RMB 30.0 million (US$4.4 million) and net income per basic ADS was RMB 0.55 (US$0.08) in the second quarter of 2009.

Peter Xie, President of Solarfun, commented, “We are quite pleased with our operating performance during the second quarter. These results reflect the significant progress we have made in reducing our raw material costs and returning the Company to profitability prior to the one-time, non-cash provision. This positions us well to aggressively compete for business going forward, and to do so profitably. We are determined to capture an increasing market share if demand for PV products recovers in the second half of 2009. The first shipments to Q-Cells as part of our multi-year manufacturing services agreement occurred during the second quarter and we look forward to higher volumes going forward.”

(more…)

August 14, 2009

Spotlight on Solar Stocks

Filed under: FSLR, SOLF, STP, TSL, YGE — Tags: , , , , , — Jason @ 12:42 pm

By Billy Fisher

As the Clean Energy Summit winds down in Las Vegas this week, a number of solar companies will be gearing up to release their earnings next week. Several are expected to report profits. This trend could help build the argument that there are in fact clean, economical energy sources out there. Here’s what to look for next week.

Healthy Margins

China-based Trina Solar (TSL) has been off to the races so far in 2009. Year-to-date the stock has risen a staggering 215%. The company produces and sells photovoltaic (PV) modules to a global base of customers, and that base has been growing. When the company reports its Q2 results on Monday, Trina is expecting net revenue to be down a little more than 25% compared to a year ago, but gross margins to be up 14.3%. The company recently offered up full year guidance that calls for a 74-99% increase in PV modules shipments compared to 2008. Analysts are expecting EPS to be down 37.5% at Trina this year and total revenue to fall by 15.7%. The company has been experiencing lower selling prices for its modules, but this trend has been partially offset by lower material costs and Trina’s success in pushing down its other manufacturing costs.

Solarfun Power Holdings (SOLF) is another player in the PV module space that has been encountering some of the same challenges as Trina. Also based in China, Solarfun has seen its stock price climb 50% so far this year. Analysts are expecting the company to post a net loss of 4 cents per share when the company reports earnings on Tuesday, but gross margins continue to improve on sharply reduced input costs.

Growing Capacity

Another solar company out of China that has seen its stock price more than double this year is Yingli Green Energy (YGE). When the company announces its quarterly results on Wednesday, analysts will be expecting the company to report a 26.3% decline in sales, but still finish in the black. The consensus is 4 cents per share. Yingli is considerably smaller in size when compared to First Solar (FSLR), a company that many regard as the industry leader, but has encouraging growth prospects. Yingli is mapping out expansion plans that will greatly increase the company’s current capacity. By the fall of last year, Yingli had reached an annual production capacity of 400 megawatts (MW). The company is setting up to hit 600MW this year. Yingli also recently entered into a joint venture with a state-owned enterprise in China where it will work to build manufacturing facilities with an annual production capacity of 100MW.

Suntech Power Holdings (STP) is likely to eke out a profit when it reports its results late next week. The story should be similar to that of its peers – year-over-year revenue will take a hit, but margins have been improving. With 80% of the company’s Q1 revenue coming from its European operations, the company is now looking to diversify its portfolio by expanding its existing presence in the U.S. and China.

The Bottom Line
Market conditions have been less than ideal for solar companies, but the industry is continuing to evolve. Raw material and production costs are coming down across the board and gross margins are improving. I am expecting these names to hold their ground after a challenging Q2, and be well-positioned to capitalize on future upticks in demand for solar power

July 29, 2009

Solarfun to Supply Nobility Solar Projects With 14.2MW of High Efficiency Modules

Filed under: SOLF — Tags: , , — Jason @ 5:18 am

Wednesday July 29, 2009, 5:18 am EDT

SHANGHAI, July 29 /PRNewswire-FirstCall/ — Solarfun Power Holdings Co., Ltd. (“Solarfun” or “the Company”) (SOLF), an established vertically-integrated manufacturer of silicon ingots and photovoltaic (PV) cells and modules in China, today announced that Nobility Solar Projects a.s. (“Nobility”) has agreed to purchase 14.2MW of high efficiency PV modules from Solarfun during the second half of 2009. Nobility, a leading distributor of solar products in Eastern Europe, is Solarfun’s distribution partner in the region.

Peter Xie, President of Solarfun, commented, “Eastern Europe, and specifically the Czech Republic, is a good new developing market for solar products. Our agreement with Nobility demonstrates our ability to not only penetrate new markets, but also quickly increase high quality, high efficiency PV module shipment volumes. Nobility is the leading distributor of solar products in Eastern Europe and we are pleased to be a part of this growing business relationship. This agreement also reflects an improvement in demand that we see for our business in the second half of the year.”

Lubomir Bures, Vice President of Nobility, declared, “This agreement secures Nobility a strong bankable partner for module deliveries. Through this partnership, Solarfun gains a significant market share in the Czech Republic and other Eastern European countries, which would be very hard to achieve without a strong local partner.”

About Nobility Solar Projects

Nobility Solar Projects a.s. is a leading PV installer and system integrator in Eastern Europe. The Company offers complete construction of photovoltaic power plants on a turnkey basis including its own construction of steel supporting structures, electro assembly and the servicing and monitoring of photovoltaic power plants. The Company is headquartered in the Czech Republic.

http://www.nobility.cz

July 24, 2009

China Sunergy sees reporting Q2 profit, shares soar

Filed under: CSIQ, CSUN, LDK, SOLF, SPWR — Tags: , , , , , , — Jason @ 5:30 pm

Fri Jul 24, 2009 5:30pm EDT

* Sees returning to qtrly profitability in Q2

* Sees Q2 shipments slightly exceeding prior view

* Sees Q2 margins about 9 pct

* Shares up nearly 15 pct

By Adveith Nair

BANGALORE, July 24 (Reuters) – Chinese solar cell products maker China Sunergy Co Ltd (CSUN) on Friday said it expects to return to profitability in the second quarter, sending its shares up as much as 15 percent.

The company said quarterly solar-cell shipments “slightly” exceeded its prior view of 35 megawatt (MW) to 40MW, with margins coming at about 9 percent.

Cowen and Co analyst Robert Stone said second-quarter shipments likely came in at about 41 MW, while average selling prices were down about 12 percent, compared with the company’s forecast of a 15 percent decline.

The analyst currently expects the company to just about break-even on an operating basis, and to earn 2 cents to 3 cents a share on a non-operating basis, with revenue coming in at about $59.5 million.

“That’s a huge improvement versus consensus estimates. What we’ll have to see is the trend on volumes and prices in the second half. I suspect that the trend, at least on shipments, will be higher based on the second-quarter results.”

Analysts on average currently expect China Sunergy to post a loss of 15 cents a share, before items, on revenue of about $49 million, according to Reuters Estimates.

The company’s bright outlook comes a day after SunPower Corp (SPWRA, SPWRB) reported second-quarter results that blew past estimates, while China’s LDK Solar Co Ltd (LDK) raised second-quarter forecasts for both shipments and revenue.

(more…)

June 20, 2009

Partial Eclipse for Solar Shares?

Filed under: CSIQ, CSUN, DUK, ENER, ESLR, EXC, FPL, FSLR, JASO, LDK, SOLF, SPWR, STP, TSL, YGE — Tags: , , , , , — Jason @ 6:00 pm

By MIKE HOGAN
barrons.com

Mostly sunny skies for solar — but tread carefully.

INVESTORS IN SOLAR STOCKS TEND TO LOOK on the bright side of things. The result: some industry shares have risen to dizzying heights.

Share prices of Trina Solar (TSL), Canadian Solar (CSIQ), Yingli Green Energy (YGE), Suntech Power (STP), Solarfun (SOLF), JA Solar (JASO) and China Sunergy (CSUN) have logged triple-digit percentage gains over the past quarter, according to Barclays Capital (www.barclayscapital.com). LDK Solar (LDK), First Solar (FSLR) and Evergreen Solar (ESLR) have posted high-double-digit returns.

We will get to what we would do with the shares in a minute, but first let’s see how this relatively small industry came back after crashing harder than most when the bottom fell out of the stock market. One propellant has been resurgent oil prices, which tend to reinforce the need for alternatives. Of course, the overall market’s revival has helped a lot, too.

Also important, solar stocks have a halo of political favor that helped them avoid a capital-deprivation-induced coma a few months ago. Instead, they will spend the next eight years protected by the government with a generous allowance of federal, state and local tax incentives, reports the Solar Energy Industries Association (www.seia.org/cs/solar_tax_policy). This protection comes courtesy of the American Recovery and Reinvestment Act of 2009.

SUBSIDIES ARE REQUIRED — for the time being, at least — because even with a free supply of sunshine, solar is the costliest way to generate electricity by a sizable margin, notes global energy researcher New Energy Finance (www.weforum.org/pdf/climate/Green.pdf). It faces significant technology hurdles before it can take its place alongside baseload energy sources on the national power grid. On the other hand, solar is uniquely equipped to be a low-cost answer to the peak-demand problems that bedevil utilities.

“We feel that, within three years, solar will achieve price parity with natural gas and other sources during afternoon and summer peak-load hours,” says Barclays Capital Analyst Vishal Shah.

Delivering a fraction of 1% of America’s electricity at present, solar won’t command much more than a couple of percentage points 20 years from now, says the U.S. Energy Information Administration (www.eia.doe.gov/cneaf/alternate/page/renew_energy_consump/rea_prereport.html).

But of more relevance to investors is that this narrow slice of a very large energy pie is growing at an astounding rate, says Merrill Lynch researcher Steven Milunovich. Pre-eminent energy auditor British Petroleum (www.bp.com) reported a 69% increase in solar installations in 2008, of which the U.S. has about one gigawatt of the world’s 14 gigawatt capacity (www.bp.com/sectiongenericarticle.do?categoryId=9023789&contentId=7044135). A megawatt (MW) is one million watts and a gigawatt (GW) is 1,000 megawatts.

By Shah’s count, projects already in the pipeline should add more than three GW of new generating capacity by 2012 to each of two relatively untapped markets — utilities and large-scale commercial businesses. The recovery and reinvestment legislation lets businesses get cash back from the U.S. Treasury Department for 30% of the cost of a solar project (www.treas.gov/recovery/programs.shtml). That and low-interest loan guarantees, notes Shah, are adding jumbo solar arrays to the roofs of big-box stores like Wal-mart (WMT) (http://walmartstores.com/FactsNews/NewsRoom/ 9100.aspx) and multi-megawatt solar farms to the portfolios of utilities that need to offset carbon emissions.

Major coal user Duke Energy (DUK) will buy all 16 MW of capacity from a new SunEdison (www.sundedison.com) facility, and build 10 MW of its own capacity (www.duke-energy.com). Florida Power & Light (FPL), the nation’s largest solar operator, plans another 110 MW, including a 10 MW solar array at NASA’s Kennedy Space Center (www.fpl.com/news/ 2009/52709.shtml). Even nuclear powerhouse Exelon (EXC) is developing a new 10 MW facility with SunPower (www.sunpowercorp.com) in downtown Chicago (www.exeloncorp.com/aboutus/news/pressrelease/corporate/ 04232009_1Q+Earnings.htm).

The new tax regime helps defray what can be $30,000 in up-front costs for residential solar systems that now account for most American capacity (www.nrel.gov/docs/fy09osti/44853.pdf). EIA anticipates another 1.6 million installations by 2016 (www.eia.doe.gov/oiaf/aeo/demand.html) from consumers who can find which local, state and federal programs apply to their locales in the National Renewable Energy Laboratory (www.nrel.gov) database at DSIRE (www.dsireusa.org).

The real catalysts for share appreciation, though, will be the megawatt-sized utility and commercial installations, says Shah. Government pump priming has restarted the flow of private capital, adds New Energy Finance (www.newenergyfinance.com): “Already in the second quarter, investment in clean energy companies via the public markets has rallied sharply with well over $2 billion of completed secondary issues.”

SO WHAT SHOULD INVESTORS DO? Chinese solar companies sell at a median multiple of 55 times 2009 earnings, a heady bounce from their median nine times just before China announced its stimulus plans in March. Meanwhile, their American cousins have climbed to a median multiple of 27 times — led by a 74% run-up in U.S. technology leader First Solar.

Depending on the price you paid, Shah suggests you might want to lighten up on Canadian Solar and Solarfun based on valuation. But don’t abandon the sector altogether. As high as they are, valuations aren’t that rich in terms of projected 2010 earnings, says Shah. He and Milunovich agree this could be a breakout year, in which select companies — leading Chinese crystalline-silicon panel makers like Yingli, JA and Suntech, and U.S. thin-film innovators like First Solar, SunPower (SPWRA, SPWRB) and Energy Conversion Devices (ENER) — will be able to support a 20-plus multiple.

While small solar companies have more headroom for share-price gains than do larger energy companies, their shares come with more risk and volatility. Don’t be blind to the downside.

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