NEW YORK, Sept 24 (Reuters) - Trina Solar Ltd (TSL.N: Quote, Profile, Research, Stock Buzz) expects its silicon costs to drop by as much as 20 percent in 2009, while the average selling price of its solar modules will fall by a more modest 5 to 6 percent, an executive said on Wednesday.
That decline in silicon costs versus the more modest selling price decline would lead to a "a significant margin expansion," Arturo Herrera, Trina's vice president of sales and marketing, told Reuters in an interview.
Trina, which earlier on Wednesday announced the largest single rooftop solar project in the United States, expects 30 percent of its sales would be to Germany, compared with about 35 percent in 2008, Herrera said. (Reporting by Matt Daily, editing by Gerald E. McCormick)
September 24, 2008
Trina sees 20 pct silicon cost drop in 2009
Trina Solar to Power North America's Largest Single Rooftop Installation
CHANGZHOU, China, Sept. 24 /Xinhua-PRNewswire-FirstCall/ -- Trina Solar Limited (NYSE: TSL; "Trina Solar" or the "Company"), a leading integrated manufacturer of solar photovoltaic products from the production of ingots, wafers and cells to the assembly of PV modules, founded in 1997, today announced that shipments began this month to provide more than 13,400 solar PV modules to power the Atlantic City Convention Center ("ACCC"). This supply comes as part of a signed agreement with general contractor American Capital Energy, who is managing project integration and installation for Pepco Energy Services and the Atlantic City Convention & Visitors Authority ("ACCVA"). The agreement provides for up to four additional megawatts ("MW") to be supplied during 2009.
Once complete, the ACCC project will be North America's largest single roof-mounted solar array, with approximately 185,000 square feet of solar panels for a system size of approximately 2.4 MW. The system is expected to generate over 2.8 million kilowatt-hours of energy per year, or enough to power 280 US homes. The system is being developed under a 20-year Power Purchase Agreement with Pepco Energy Services, a subsidiary of Pepco Holdings, Inc., and will provide the ACCC with energy savings of $4.4 million over 20 years.
"We are very pleased that Trina Solar modules were chosen for this landmark roof-mounted system," stated Jifan Gao, Trina Solar's Chairman and Chief Executive Officer. "We are delighted to work with a proven solar system developer such as American Capital Energy as we enter this key growth market to provide efficient, clean solar energy in the years ahead."
Tom Hunton, President of North Chelmsford, Massachusetts based American Capital Energy, remarked, "Trina Solar is our preferred provider on this project due to their ability to deliver a superior product on time and within budget. We look forward to working with them as a key partner on this and future projects as more large organizations recognize the quantifiable return on investment a commercial-scale solar implementation offers."
About Trina Solar Limited
Trina Solar Limited (NYSE: TSL - News) is a well recognized manufacturer of high quality modules and has a long history as a solar PV pioneer since it was founded in 1997 as a system installation company. Trina Solar is one of the few PV manufacturers that has developed a vertically integrated business model from the production of monocrystalline and multicrystalline ingots, wafers and cells to the assembly of high quality modules. Trina Solar's products provide reliable and environmentally-friendly electric power for a growing variety of end-user applications worldwide. For further information, please visit Trina Solar's website at http://www.trinasolar.com .
About American Capital Energy
American Capital Energy provides full-service solar energy project integration and installation for large commercial enterprises. The company is committed to furthering the utilization of solar energy by America's most forward-thinking companies by offering customized turnkey solar systems designed for long term performance and verifiable return on investment. Interested media may contact Richard Schineller at +1(941)780-8100 or rich@prmgt.com. For more info, visit http://www.americancapitalenergy.com .
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, Trina Solar's ability to raise additional capital to finance its activities; the effectiveness, profitability, and marketability of its products; the future trading of the securities of the Company; the ability of the Company to operate as a public company; the period of time for which its current liquidity will enable the Company to fund its operations; the Company's ability to protect its proprietary information; general economic and business conditions; the volatility of the Company's operating results and financial condition; the Company's ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the Company's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the companies and the industry. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.
For more information, please contact:
Trina Solar Limited
Terry Wang, CFO
Tel: +86-519-8548-2008 (Changzhou)
Thomas Young, Director of Investor Relations
Tel: +86-519-8548-2008 (Changzhou)
Email: ir@trinasolar.com
CCG Investor Relations
Crocker Coulson, President
Tel: +1-646-213-1915
Email: crocker.coulson@ccgir.com
Richard Micchelli, Financial Writer
Tel: +1-646-454-4516
Email: richard.micchelli@ccgir.com
September 19, 2008
Trina Solar and Gestamp Asetym Announce Inauguration of 26 MW PV Plant in Murcia, Spain
Friday September 19, 8:00 am ET
CHANGZHOU, China, Sept. 19 /Xinhua-PRNewswire-FirstCall/ -- Trina Solar Limited (NYSE: TSL; ''Trina Solar'' or the ''Company''), a leading integrated manufacturer of solar photovoltaic (PV) products from the production of ingots, wafers and cells to the assembly of PV modules, founded in 1997, today announced the inauguration of a 26 MW PV plant, consisting of an installation which uses primarily PV modules manufactured by Trina Solar, in Fuente Alamo, Murcia, in the south-east of Spain on August 7th, 2008. The project has been carried out by Gestamp Asetym Solar SA (''Gestamp Asetym''), a Spanish provider of solar system solutions.
Trina Solar supplied 20 MW of mono and multicrystalline solar modules of the total 26 MW required for this key project as part of the long-term arrangement between both companies. This PV plant consists of three phases: Fuente Alamo I, of 8MW; Fuente Alamo II, of 8MW; and Fuente Alamo III, of 10 MW, which are installed on a total of 62 sq ha of rural land.
"We are very pleased to have supplied 20 MW of high-quality modules for this large PV plant that Gestamp Asetym installed in the south of Spain, representing one of the largest PV plants so far in Europe," remarked Arturo Herrero, Trina Solar's Vice President of Sales & Marketing. "We are delighted to strengthen our business relationship with our key partner Gestamp Asetym, with whom we expect to continue to work closely in the future, not only in Spain but also in other countries in Europe as business expands.''
Gestamp Asetym hosted a one-day opening celebration onsite in Fuente Alamo. The event was attended by numerous government officials, customers and suppliers, including management members from Trina Solar.
This 26 MW PV system will produce 44,000 MW/h per year, which equals the electric consumption of 13,000 homes and will avoid 15,000 tons of CO2 emissions to the atmosphere.
About Trina Solar Limited
Trina Solar Limited (NYSE: TSL - News) is a well recognized manufacturer of high quality modules and has a long history as a solar PV pioneer since it was founded in 1997 as a system installation company. Trina Solar is one of the few PV manufacturers that has developed a vertically integrated business model from the production of monocrystalline and multicrystalline ingots, wafers and cells to the assembly of high quality modules. Trina Solar's products provide reliable and environmentally-friendly electric power for a growing variety of end-user applications worldwide. For further information, please visit Trina Solar's website at http://www.trinasolar.com .
About Gestamp Asetym
Gestamp Asetym is a Spanish solar system solutions provider that is part of Gestamp Corporation, an important industrial group whose core business is the design, processing and manufacturing of steel components for diverse industries. Gestamp Asetym has vertically integrated the entire PV plants process, from the design and manufacture of fixed structures and trackers, to the construction (turn-key solutions, including financial support) and operation. Gestamp Asetym has participated actively in the construction and development of 150 MW of PV plants in Spain since 2007, and is expanding its activities to other countries such as Italy, US, and Greece.
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, Trina Solar's ability to raise additional capital to finance its activities; the effectiveness, profitability, and marketability of its products; the future trading of the securities of the Company; the ability of the Company to operate as a public company; the period of time for which its current liquidity will enable the Company to fund its operations; the Company's ability to protect its proprietary information; general economic and business conditions; the volatility of the Company's operating results and financial condition; the Company's ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the Company's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the companies and the industry. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.
For more information, please contact:
Trina Solar Limited
Terry Wang, CFO
Tel: +86-519-8548-2008 (Changzhou)
Thomas Young, Director of Investor Relations
Tel: +86-519-8548-2008 (Changzhou)
Email: ir@trinasolar.com
CCG Investor Relations
Crocker Coulson, President
Tel: +1-646-213-1915
Email: crocker.coulson@ccgir.com
Richard Micchelli, Financial Writer
Tel: +1-646-454-4516
Email: richard.micchelli@ccgir.com
Source: Trina Solar Limited
Trina Solar sees 2009 sales doubling
By Fang Yan and David Lin
CHANGZHOU, China (Reuters) - Chinese solar product maker Trina Solar Ltd expects its revenue to double in 2009, reaching $1.7 billion to $1.8 billion as it ramps up capacity to meet strong demand for clean energy, its chief executive said on Thursday.
Solar module shipments next year will surge to 450 megawatts (MW) from this year's 210 MW to 220 MW, as the firm plans to double its capacity to 700 MW by the end of 2009 and boost it further to 1,000 MW in 2010, Gao Jifan said in an interview from the firm's headquarters in Changzhou, near Shanghai.
To fuel the expansion, Trina Solar's capital expenditure is expected to rise to $250 million in 2009 from $200 million this year and reach $350 million in 2010, with funding coming mostly from internal resources, he said.
"Our cash flow is enough to fund our expansion until 2009. I believe our operating cash flow will increase further in 2010, enough to supply our expansion needs," said Gao, who is also the firm's chairman.
He therefore did not expect the development plans of the New York-listed firm to be significantly constrained over the next two to three years by the U.S. credit crunch.
Trina Solar's cash reserve at the end of this year is estimated at $100 million, with operating cash flow generated in 2009 seen between $150 million and $200 million, he added.
POLYSILICON SUPPLIES
The firm has secured 70 percent of its sales target for 2009 and Gao expected to secure more orders, most likely in Europe, which now generates more than 90 percent of its total revenue.
Trina Solar makes solar modules in China and ships them overseas. Gao said he may consider building plants outside China in the future.
Trina Solar said in April that it had signed an eight-year polysilicon supply agreement with a unit of GCL Silicon Technology Holdings, sufficient to produce about 2,600 MW of solar modules.
Supply constraints in polysilicon, which turns sunlight into electricity inside solar cells, have driven prices higher, hurting profit margins for photovoltaic producers.
But the situation has started to improve in the second half of the year as polysilicon producers expand their output to meet demand from the solar industry.
Gao expected the company's profit margin, estimated at 23 to 25 percent this year, to improve in 2009, as it signed more long-term polysilicon supply contracts, with pricing levels significantly lower than in the spot market. He did not provide detailed figures.
Solar power stocks posted massive gains in 2007 as concerns about climate change and soaring prices of fossil fuels boosted investor interest in renewable energy sources.
But many shares fell sharply this year, reflecting a view that solar power valuations had got ahead of themselves.
Trina Solar's shares, traded on the New York Stock Exchange, closed at $25.02 on Wednesday, down sharply from $53.80 at the end of last year.
Gao said he believed his firm's share price was undervalued given the bright prospects of the solar industry, as more governments in developing countries such as China offer policy incentives to promote the development of solar power, following the lead of many European countries.
"There is no doubt that our share price is undervalued," he said. "It should be more than double the current level."
(Editing by Edmund Klamann)
September 18, 2008
Trina Solar Ltd. CEO: Expects FY09 Rev doubling to $1.7-1.8B v 1.29Be
- Notes that current stock price undervalues the company
http://www.tradethenews.com/stock-news/Energy/Trina-Solar-Ltd./TSL/460739
Trina Solar Limited: Zacks #1 Rank (Strong Buy)
hursday September 18, 1:00 am ET
By Tracey Ryniec
Company Description
Trina Solar Limited (NYSE: TSL - News) manufactures monocrystalline ingots and wafers for use in solar module production. The Chinese-based company's solar modules provide electric power for residential, commercial, industrial and other applications worldwide.
Trina Continues European Expansion
TSL continues to expand its market. On Sep 12, its subsidiary, Changzhou Trina Solar Energy Co. Ltd., entered into a two-year sales agreement with predetermined prices with Invictus NV, a Belgium company, expected to start in 2009.
Trina will supply Invictus with 20 MW and 30 MW for 2009 and 2010, respectively, with an option to purchase additional 10 MW during each year.
Under this two year agreement starting in 2009 with predetermined prices, Trina Solar will supply Invictus with 20 MW and 30 MW for 2009 and 2010, respectively, with an option for Invictus to purchase an additional 10 MW during each year.
Trina says it has now secured about 70% of its 2009 production target of 450 MW. 40% of that has been secured at predetermined prices.
Second Quarter Revenues Soar 171.1%
On Aug 18, Trina Solar reported second quarter earnings that missed Wall Street estimates by 3 cents. However, net income rose 25% to $17.1 million from $12.9 million. It included a one-time loss of $2 million. Earnings per share were 76 cents compared to analysts estimates of 79 cents per share.
Revenues surged 171.1% to $204.2 million from the year ago period. Total shipments grew to 47.57 MW, up from 20.33 MW in the second quarter of 2007. Average sales price ('ASP') was $4.03 in the second quarter, up from $3.95 in the first quarter of 2008 and $3.70 in the year ago quarter.
'In the second quarter we continued to demonstrate the strength of our fully integrated business model as well as our ability to efficiently expand our manufacturing capacity, technology platform, and brand awareness as we penetrate new emerging solar markets,' said Jifan Gao, Chairman and CEO.
'We are also pleased with the outcome of our recent convertible bond offering, which can provide funding for our remaining 2008 capacity expansion requirements, in addition to our long-term debt facilities under examination,' he said.
Consensus Estimates Rise for the Third Quarter and the Full Year
Covering analysts responded to the growth in the second quarter by raising estimates. Third quarter estimates moved up 10 cents to $1.08 from 98 cents in the last 30 days. For the full year, estimates jumped 15 cents to $3.37 from $3.22 during that same period.
Value Fundamentals
Trina Solar's forward P/E is only 6.12. Its price-to-book is 1.56. The company has a solid one year return on equity (ROE) of 14.61%.
September 12, 2008
Trina Solar Signs Sales Agreement with the Belgian Company Invictus NV
CHANGZHOU, China, Sept. 12 /Xinhua-PRNewswire-FirstCall/ -- Trina Solar Limited (NYSE: TSL; "Trina Solar" or the "Company"), a leading integrated manufacturer of solar photovoltaic products from the production of ingots, wafers and cells to the assembly of PV modules, founded in 1997, today announced that its subsidiary, Changzhou Trina Solar Energy Co., Ltd., has entered into a sales agreement with Invictus NV, a Belgium company (Invictus), member of the Benelux TEC-Servicegroup (former Group GACS).
Under this two year agreement starting in 2009 with predetermined prices, Trina Solar will supply Invictus with 20MW and 30MW for 2009 and 2010, respectively, with an option to purchase additional 10MW for each year. "We look forward to continue working with Invictus, which helps to strengthen our presence in the Benelux market," stated Arturo Herrero, Trina Solar's Vice President of Sales and Marketing. "This agreement further demonstrates our success in establishing commercial relationships with leading PV system integrators in emerging solar PV markets around the globe."
Jan Van der Henst, Chief Executive Officer of Invictus stated, "We are happy to enter into this sales agreement with a well established manufacturer like Trina Solar. Trina Solar has proven itself to be among the few vertically integrated companies in the industry, and we believe this agreement will strengthen our position in the Benelux."
After signing this sales agreement, Trina Solar has now secured the sale of approximately 70 percent of its estimated 2009 production target of 450MW. Approximately 40 percent of the 450MW target has been secured with predetermined prices.
About Trina Solar Limited
Trina Solar Limited (NYSE: TSL - News) is a well recognized manufacturer of high quality modules and has a long history as a solar PV pioneer since it was founded in 1997 as a system installation company. Trina Solar is one of the few PV manufacturers that has developed a vertically integrated business model from the production of monocrystalline and multicrystalline ingots, wafers and cells to the assembly of high quality modules. Trina Solar's products provide reliable and environmentally-friendly electric power for a growing variety of end-user applications worldwide. For further information, please visit Trina Solar's website at http://www.trinasolar.com .
About Invictus NV
Invictus NV is a Benelux based green project development company specialized in photovoltaic installations. After the acquisition by the TEC Servicegroup (former Group GACS) in May 2008, the company evolved to a total solution provider for PV projects, enabling them to become a reliable partner on a long term base. The present agreement provides Invictus and its customers the guarantee that the confirmed projects, for already 65 MW, will be executed according agreements.
TEC Servicegroup (former Group GACS) is a Benelux group in full expansion with the mission to provide full service solutions for technical building installations. The group has more than 800 employees.
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, Trina Solar's ability to raise additional capital to finance its activities; the effectiveness, profitability, and marketability of its products; the future trading of the securities of the Company; the ability of the Company to operate as a public company; the period of time for which its current liquidity will enable the Company to fund its operations; the Company's ability to protect its proprietary information; general economic and business conditions; the volatility of the Company's operating results and financial condition; the Company's ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the Company's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the companies and the industry. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.
For more information, please contact:
Trina Solar Limited
Terry Wang, CFO
Tel: +86-519-8548-2008 (Changzhou)
Thomas Young, Director of Investor Relations
Tel: +86-519-8548-2008 (Changzhou)
Email: ir@trinasolar.com
CCG Investor Relations
Crocker Coulson, President
Tel: +1-646-213-1915
Email: crocker.coulson@ccgir.com
Richard Micchelli, Financial Writer
Tel: +1-646-454-4516
Email: richard.micchelli@ccgir.com
Source: Trina Solar Limited
September 10, 2008
(TSL) plans to boost its sales in the U.S.
NEW YORK (Dow Jones) 11-09-08- China-based solar-panel maker Trina Solar Ltd. (TSL) plans to boost its sales in the U.S. next year to 8% of total revenue as it works to sign its first customer deals with local solar integrators, rather than distributors, the company's Chief Financial Officer Terry Wang told Clean Technology Insight.
This year, Trina expects close to 5% of its total revenue, projected at between $850 million and $900 million, to come from U.S. customers. So far, the company has been selling its modules, whose average price is $4, through wholesale distributors. But the company is interested in getting closer to the customer and in skipping the distributor part of the equation to sell directly to integrators.
One potential U.S. customers "asked for 60 megawatts per year," said Trina Solar Chief Executive Jifan Gao. "But we can't meet that demand," he added.
The company projects reaching capacity of 700 MW next year for solar cells and modules, and producing 500 MW of ingots and wafers, the executives said. It currently has 250 MW of capacity for each, and plans to reach 350 MW next year.
"Each 100 megawatts costs about $100 million" when spread across all four segments, i.e. ingots, wafers, cells and modules, said Thomas Young, head of investor relations at Trina. By directing the investment into cells and modules, the company is going to use the same $100 million to get an extra 100 MW available downstream to customers, he said. At the same time, the company will need to buy wafers from outside sources. It expects that wafer prices for deliveries in the second half of 2009 will be lower than they are currently, said Wang.
Although Trina, which has been particularly active in expanding the Italian market, expects to see enough demand for its products in Europe, the management is seeking to diversify its customer base. Spain, which will represent about 26% of its sales this year, will decline to 15% of total revenue in 2009, said Young. Other markets where Trina is actively looking for deals today are South Korea, Australia, Mongolia, Romania, India, South Africa, and Abu Dhabi, the executives said. Working with integrators directly helps Trina get into new markets quickly, said Young.
China is another market that should grow in the next two to three years, Wang said. While a renewable energy act in China has called for incentives for solar integrators for a couple of years, local rules are just beginning to catch up, according to Wang.
Trina will need capital to expand its manufacturing and to buy additional wafers and polysilicon. Wang said that, although a recent deal with GCL Silicon calls for many of the wafers that Trina expects to need, it's best to get another supplier on board so as not to depend on a single one. As far as polysilicon, the company has 80% of its projected 2009 output covered by long-term polysilicon contracts, compared with this year's situation when less than half of its output is coming from long-term supply agreements.
Although prices for polysilicon are strong, the downpayments that silicon suppliers require have decreased dramatically since the fourth quarter of last year, said Wang, when it wasn't uncommon to have 25% upfront payment requirements for eight-year deals. Now "prepayments are less than 5% and sometimes just 2%," Wang said.
"Assuming the current level of incentives stays the same, we'll have about 8%" of revenue from the U.S., said Wang. But it's possible that the federal investment tax credit, which is due to expire at the end of the year, will be revived with increased incentives for solar installations. "That would be an upside for us," said Wang. Of course, there is a chance that the tax credits will lapse, but Trina is counting on the tax credit extension, said Wang.
"We just started talking to system integrators, and there are a couple (of) candidates" for deals, said Wang. The contracts would be signed before the end of this year, he said.
The company's modules are priced competitively, with others such as those produced by SunPower Corp. (SPWR) selling for higher prices. While SunPower has talked about expected price declines of 10% to 20% next year, Trina sees much more modest declines. "Contracts we're working on now are 2% to 3% lower in price," said Wang. In the third quarter, which is currently underway, the company actually expects its average selling prices to increase.
Trina Solar off Goldman Sachs Conviction Sell list, but company suppliers a concern
NEW YORK (AP) -- Goldman Sachs removed Trina Solar Ltd. from its "Conviction Sell" list on Wednesday, but concerns about its suppliers and possible regulatory changes that could affect sales in some markets, kept the firm from recommending the stock.
Although Trina has secured all of the raw materials it needs for next year, its suppliers have production ramp-up risks, Goldman said in a note to clients. Trina's sales are highly concentrated in Italy and Spain, leaving the company vulnerable to changing government policies, the firm wrote.
But Trina's shares moved closer to Goldman's target price of $24 since it was added to the "Conviction Sell" list in late June. Trina shares fell $2.79 to $24.49 Tuesday.
Goldman maintained its sell rating, estimates and target price on the stock.
The company is based in Changzhou, China.
September 8, 2008
Solar Industry-Merill Lynch-2008-09
Further selling unwarranted as market rolling into ’09 growth
Uninspiring conference but further selling is unwarranted
Although investors have come away uninspired from the Spain Conference, we
believe that the lukewarm sentiment doesn’t warrant further short selling of solar
stocks. Given improved visibility in 09 demand and ASP, investors will soon slowly
roll into 09 growth multiples. Many Asian solar stocks still trade below 10x 09E
with 60%+ EPS growth and investors haven’t started to price in such growth, in
our view. We continue to favor Suntech, ReneSola and China Sunergy in Asia.
Multiple catalysts on the horizon
We see an attractive entry point emerging due to the absence of negative
catalysts in the near term and continued earnings momentum into 2H08. Germany
has largely settled its subsidy plan for 2009 and anything Spain announces
beyond its 300MW will be a positive surprise. We won’t revisit these two major
solar markets for another 6-9 months. Japan’s renewed interest in solar and the
upcoming US election bode well for the sector, and emerging markets such as
France, Greece, Korea, India and China will be new surprises in 2010.
Growth expectations in 2009 still intact, for now
Many solar cell/module vendors are fully sold out for 1H09; moreover, companies
also indicate healthy orders for the remainder of 2009. The market hasn’t formed
a consensus view on 2009 demand, but given the current signals we don’t see
any associated downward estimate revisions until early 2Q09.
It’s polysilicon, not subsidy
We will be entering a poly-price driven market dynamic soon. We believe that poly
price will start to drive down solar ASP in 2010, and slowly drive market dynamics
away from the subsidy dependence. With the poly shortage in the past 2-3 years,
limited cost reductions could be pulled from the supply side. As contract poly price
is set to decline 10-20% in 2009 and 10%+ thereafter, the margins of Asian
vendors should remain fairly stable as ASP should keep be tracking poly price
decline in the same magnitude or less.
What if demand is weak?
So if 2009 demand proves to be very weak, poly price will likely fall and margin
will expand – solar companies can still make up the top-line shortfall with
improving margin – hence EPS risk is somewhat reduced. Our view is that spot
poly price will remain firm in 2H08 due to robust demand and production hiccups,
but we remain bullish that spot will soften into 2009. However, since poly price is
highly correlated to solar demand, it’s unlikely that both solar demand will fall off
and poly prices remain high (hence, the risk of margin squeeze is minimal).
