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Solars still interesting

November 27th, 2008 · No Comments

We previously showed how France has taken the alternative energy (especially solar) bull by the horns, other markets are following, like the US and Italy. Prices in solar companies are still close to rock bottom, but they won’t remain for long we think. Now is the time to take advantage. There will be some rough quarters and a lot of volatility, but picking stocks up after pullbacks is a smart thing because disaster has already been priced in, we feel.

UPDATE 4-Sharp, Enel to invest in $2.6 bln Italy solar venture

  • By Mayumi Negishi
  • TOKYO, Nov 27 (Reuters) – Japan’s Sharp Corp (6753.T: Quote, Profile, Research, Stock Buzz), Italy’s Enel SpA (ENEI.MI: Quote, Profile, Research, Stock Buzz) and a third partner are likely to invest more than $2.6 billion in Italian solar power ventures to tap growing demand for cleaner energy despite a global economic slowdown.
  • Top solar power firms are hurrying to expand capacity even as the sector smarts from a worsening global economy, which is drying up financing for new ventures, forcing smaller solar power firms to push back capex plans and putting pressure on big players to recoup their investments faster.
  • Sharp, the world’s No.2 maker of solar cells, said on Thursday it and Italy’s largest power company Enel planned to spend about 100 billion yen ($1.05 billion) to set up solar power generating plants in Italy with a total generating capacity of 189 megawatts by the end of 2012.
  • The two and another manufacturer also plan to build a factory in Italy to produce thin-film solar cells, with an initial investment of at least 72 billion yen, it said. That could grow to more than 150 billion yen when the factory reaches full capacity of about 1 gigawatts.
  • Sharp is stepping up investment and overhauling its business model in an effort to retake market share from No.1 solar cell maker Q-Cells (QCEG.DE: Quote, Profile, Research, Stock Buzz) of Germany, whose aggressive capital spending plans outstrip those of its rivals.
  • The consumer electronics maker is reinventing itself as a device maker, supplying or planning to supply liquid crystal display panels to Japanese TV makers such as Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz), Pioneer Corp (6773.T: Quote, Profile, Research, Stock Buzz) and Toshiba Corp (6502.T: Quote, Profile, Research, Stock Buzz).
  • It will now sell equipment to the joint venture and charge fees for its technology and solar operations know-how, in a step towards becoming an all-rounder in the solar power industry, its Executive Vice President Toshishige Hamano told a news conference.
  • Sharp, which cut its annual profit outlook by one-third in October, could boost its sales in the short-term by selling its technology and any equipment it develops in a joint venture with semiconductor equipment maker Tokyo Electron Ltd (8035.T: Quote, Profile, Research, Stock Buzz).
  • But that could hurt its brand and deplete its technological edge in the long-run, an analyst said.
  • “With LCD prices sliding, Sharp is under more pressure to recover its initial investment quickly, and the temptation for a quick fix is understandable,” said Yoshihisa Toyosaki, President of J-Star Global Inc, an IT consultancy in Japan.
  • “But this raises the cost performance of rivals with lower personnel costs and government backing. It is not a strategy for a company with decades of experience and an established brand,” he said.
  • In the future, Sharp also plans to step up production of silicon wafers and tie-up with a major U.S. polysilicon supplier to help it secure a steady supply of silicon starting in 2010.
  • Sharp previously said it would take a 34 percent in the solar power generating venture, with Enel holding the rest, but it later retracted the statement to say that nothing has been decided, other than that Sharp will take a minority stake.
  • Sharp will also take a minority stake in the solar cell venture, which will have an initial output of 480 megawatts.
  • Capex at Sharp, which also plans a solar plant in Japan at a cost of 72 billion yen with an initial output of 480 megawatts by March 2010, still lags Q-Cells, which has said it plans to raise capacity to 1,000 megawatts in 2009 and 2,500 megawatts in 2010.
  • The global downturn is beginning to hurt the industry, though. No.3 solar cell maker Suntech Power Holdings Co (STP.N: Quote, Profile, Research, Stock Buzz) of China cut its sales forecast last week.
  • Shares of Sharp ended up 3.7 percent, outperforming the Tokyo bourse’s electrical machinery index , which rose 0.9 percent. ($1=95.20 Yen) (Reporting by Mayumi Negishi, Nathan Layne and Taiga Uranaka; Editing by Hugh Lawson)

The US will follow as well:

Sector Snap: Solar stocks rise with broader market
Associated Press, 11.24.08, 02:33 PM EST

  • Shares of solar companies rose on Monday along with the broader market and after analysts predicted strong future demand for the industry in the U.S.
  • Shares of SunPower Corp. rose $7.45, or 36.2 percent, to $28.04. Raymond James analyst Pavel Molchanov said the solar cell and panel maker is well positioned to capitalize on strong long-term demand for photovoltaic modules in the U.S. utility market.
  • “In our view, SunPower’s track record for successfully developing and executing some of the world’s largest photovoltaic projects gives it a major edge when competing for utility contracts,” he said, adding that he reaffirms SunPower’s rating of “Strong Buy.”
  • Molchanov said the near-term global photovoltaic module demand is facing mounting macroeconomic challenges due to volatile currency swings, namely, the depreciation of the euro, and a tighter credit market, which is driving down average selling prices and squeezing gross margins across the industry.
  • Nonetheless, he said, “We take this opportunity to highlight a bright spot against the tough backdrop: one of the more durable sources of photovoltaic demand – the U.S. utility market.”
  • Molchanov rated other solar companies positively, including GT Solar International Inc. and JA Solar Holdings Co., which he rated at “Strong Buy,” and First Solar Inc. and Trina Solar Ltd., which he rated at “Outperform.”
  • GT Solar shares rose 32 cents, or 12.9 percent, to $2.81. Shares of JA Solar gained 70 cents, or 33.3 percent, to $2.80.
  • Shares of First Solar climbed $14.59, or 15.7 percent, to $107.25. Trina Solar shares lifted $1.32, or 20.8 percent, to $7.68.
  • Meanwhile, on Wall St., the Dow Jones industrial average and Nasdaq climbed more than 4 percent while the Standard & Poor’s 500 gained more than 5 percent in afternoon trading.

Tags: Solar sector · TSL