Leading solar panel maker Suntech (NYSE: STP) has put out a broadly positive pre-earnings announcement, showing the struggling market may be nearing bottom in its current downcycle as the company also took major moves to control costs. Investors seemed to like what they saw, bidding up Suntech shares more than 8 percent in Friday trading after the news came out, even though shares are still at about a quarter of their levels from 2 years ago. In its earnings pre-announcement, Suntech said its shipments declined 10 percent in the fourth quarter from the third, a bit better than the 20 percent decline it originally expected. (company announcement) At the same time, its shipments for all of 2011 came in at 2.09 gigawatts, also a bit better than its previous forecast for 2 gigawatts. On the cost side, the company said it made major progress in reducing its debt and accounts receivable in the fourth quarter, both of which should help strengthen its balance sheet and make it more efficient. Investors seem to have focused on the better-than-expected revenue numbers that may reflect a broader industry rebound, with solar shares all logging sharp gains on Friday. Leading the pack was Canadian Solar (Nasdaq: CSIQ), which jumped 17 percent, while JA Solar (Nasdaq: JASO) was up 9 percent. Trina (NYSE: TSL) and Yingli (NYSE: YGE) also both logged nice gains of more than 5 percent. Of course, all of these stocks are still at a fraction of their level from 2 years ago, as the industry struggles with a big supply glut resulting from its rapid expansion over the last few years. In another positive sign for the industry, Trina has announced a new $100 million loan facility from Britain’s Standard Chartered (London: STAN) in what looks like a clear signal to the markets that private commercial banks are still confident enough to lend to these stronger solar companies even though most are now currently losing money. (previous post) By comparison, some of the weaker players like LDK Solar (NYSE: LDK) have had to resort to funding from Chinese banks and other local investors, which often provide funds for reasons that more political than commercial. Recent media reports indicate the sector is cautiously optimistic that demand will pick up later this year, with many companies hoping to restart idle capacity if prices rise above a certain level. Despite the upbeat signs, one of the big question marks in all this the current US anti-dumping investigation into Chinese solar panels, which could result in punitive tariffs in the near future. (previous post) But China has made recent signs that it is willing to discuss the issue and its broader subsidies for exporters in general, meaning the trade war might be short lived, perhaps being resolved after upcoming US presidential elections in November. If that happens and signs of stabilization continue, look for a rebound in both the sector and company share prices starting around the middle of the year.
Bottom line: The latest results from Suntech and broader industry comments point to a fledgling rebound for the solar battered sector starting around the middle of the year.
Related postings 相关文章:
◙ Solar: New Tie-Ups as US Ruling Looms 光伏产品倾销裁决临近 中国企业忙于外联公关
◙ Sany and Yingli Take Different German Tacks 三一重工和英利的德国交易或前景迥异
◙ LDK’s German Buy: Two Losers Combine 赛维LDK收购Sunways将使前者境况雪上加霜
I’ll start off today with a couple of news bits from Germany, one from the industrial equipment sector where Sany Heavy Industry (Shanghai: 600031) has made a major acquisition, and the other from the solar sector where Yingli (NYSE: YGE) has made a major sale. These 2 deals don’t really have much in common beyond the fact that both are in Germany, but for me the former illustrates a dubious approach for Chinese firms that want to enter Europe’s largest market, while the latter looks much more prudent. The first deal will see Sany acquire Putzmeister Holding, a concrete pump maker, in a purchase both companies say is the largest ever for a Chinese firm in Germany. (
The Year of the Dragon is off to a dubious start for China’s alternate energy sector, with solar panel makers facing stiff resistance in both the US and Germany, 2 of the world’s biggest markets, and now wind power equipment makers coming under similar fire. The solar story in the US is actually an old one by now, following the launch of an investigation into unfair subsidies by Beijing for its solar panel makers last summer. (
You know your industry is starting to mature when a big player like Hon Hai (Taipei: 2317), the massive Taiwanese electronics maker of everything from PCs to iPhones, steps in to the picture, a move that should come as both a relief but also a worrisome development for the troubled solar cell sector. Foreign media are reporting that Hon Hai unit Foxconn Technology (Taipei: 2354) is building a massive new solar cell plant in China’s Jiangsu province, adding a major player to a sector already struggling with large overcapacity that has caused prices to tumble by more than 60 percent this year alone and driven nearly every company into the red as their stocks hover near all-time lows. (
The solar world is all abuzz this morning with news that billionaire Warren Buffett is taking a big bet on solar energy with his decision to buy a $2 billion solar power plant in California, a 550-megawatt project called Topaz, and what it might mean for the embattled sector. (
China’s solar sector is sending mixed signals as it faces a potentially crippling anti-dumping investigation in the US, with major player Yingli (NYSE: YGE) sending out what looks like a conciliatory message even as China itself puts forth a plan that looks more defiant. First Yingli, which announced a new tie-up with CIT Group (NYSE: CIT), a US-based financial services firm, aimed at providing financing for sale of Yingli’s solar cells in the US. (
The last few days have seen an overwhelming flood of new chatter in the war of words between Chinese and Western solar cell makers, with China’s commerce ministry also voicing its views on this case that looks set to become a major battleground in the free trade debate. After US solar firms filed a formal anti-dumping complaint in the US last week against their Chinese rivals, China’s commerce ministry quickly and predictably fired back that the complaint was groundless, and warned that any punitive action could result in a damaging trade war that could hurt the global economy. (
