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After some anticipation, we were rather pleased to see the IPO go forward too for thepure-play
solar PV maker SunTech Power (STP) late in the Fourth Quarter of 2005. Like SPWR, this is another
opportunity to add to the Index another unique PV equity and one that helps to capture daily
movement of solar stocks.
SunTech is based in China: they make relatively lower-cost polycrystalline and mono-crystalline
PV products. On the day of their IPO, shares in STP increased about 41%, which by coincidence
was about the same that SunPower saw on its first day of trading. Much like a recent initial offering
for SPWR, this indicates there may be some investor interest in solar. Being a foreign firm,their shares
trade as American Depository Shares: hence adding this non-U.S. company to the WilderHill Index
(ECO) might to some limited extent help also mitigate (U.S.) country-specific risk and further the
non-correlation of ECO with majorindexes.
We’re mindful too that modern portfolio theory holds that diversification beyond just one nation can
reduce risk and assist long-term performance. But most importantly, we’re interested in STP mainly
for its Indexing value in the solar sector.
SunTech is based in the Jiangsu Province of China and although it’s a young company,their growth to
date is strong: in the first nine months of 2005, net revenues increased to $137 million (nearly tripling)
from the year prior. They aim to use IPO proceeds to expand research, manufacturing and to lower
costs. They expect to spend about $100 million from the IPO proceeds to prepay for raw materials
such as silicon, $40 million to expand manufacturing, and $20 million on research and development.
At present their cost per watt is fairly good at $2.30 and they’re especially notable as a PV maker
that has been profitable annually since 2003 (almost since start-up).They’re able to make use of
China’s relatively inexpensive materials and labor, and hope to reduce cost per watt significantly further.
They presently have sizable sales into Germany (and Japan where high retail costs being paid per watt
to utilities have been a boon to PV sales, but government PV subsidies in Japan are going to end).
To some extent,a lack of history contributes to dearth of knowledge about particulars of this company
and their technologies specifically. SunTech was founded in 2001, by Dr. Zhengrong Shi and he has a
scientific background in solar research.The newer holding company “Suntech Power Holdings Co.,Ltd.”
was recently incorporated in the Cayman Islands and it has become the ultimate holding company of
Suntech. One drawback to be sure, is they’re clearly a far less transparent business than say, a
U.S.-based solar manufacturer; there’s real differences stemming from China’s nascent business
regulatory environment, language difficulties, distance, etc. Perhaps to some extent that uncertainty
and hence the greater risk is factored into their stock pricing, yet they have met particular thresholds
to be listed here on U.S. exchanges.
A core question we ask ourselves as an Index provider, is whether STP shares help tocapture and
track clean energy. They should be in a business that stands to benefit substantially from any societal
transition toward cleaner energy and conservation, they should be a significant company for clean
energy, have some technological influence, and be relevant to preventing pollution in the first place.
We’re satisfied that SunTech meets these criteria, though we note issues of transparency, etc.
They’re now a top-10 producer of solar cells — around the fifth largest by capacity — although growth
seems almost the norm lately for many PV makers(chart source: Photon International,and Piper Jaffray).
The company claims its average conversion efficiency rates are 16.5% for its monocrystalline cells, and
15% for its polycrystalline cells. Those rates aren’t as high as those at SunPower for example, but they
are respectable and STP may hold growing promise as a low-cost and high volume pure-play producer,
especially going into the important Japanese, German, and Chinese markets. The company claims it
increased manufacturing capacity by 12-fold the past three years (from a base very near-zero,however)
and that they’re planning to double capacity again by the end of 2006.
A ‘role’ too for SunTech for the Index, is that being a fast-growing PV pure-play, its share price should
(pessimistically) drop robustly — should government solar subsidies be pared back unexpectedly,
oil prices drop dramatically, or other big negative news hit PV. We seek to capture sharp decline,
just as fully as upwards movements. On the other hand, we note that fast-growing China is increasing
its silicon capacity. In Q4 for example, a 100-unit order was placed to purchase DSS multi-crystal silicon
ingot wafer growth furnaces from GT Equipment Technologies.
That will allow ‘LDK Solar Hi-Tech’ based in Jiangxi, China to swiftly ramp their annual wafer fabrication
capacity from 75 MW at present, to 200 MW. LDK aims to expand up to 400 MW by 2008. This
follows on the prior furnace orders from Chinese companies, such as from Baoding.
Finally we note SunTech purports to be a major supplier of PV for China’s government
— a domestic market which may one day conceivably grow much larger than Japan or Germany.
SunTech is involved in China’s ‘Light the West” Program and is PV provider for their foreign aid
program. China has made ambitious claims about their desire to build smart energy-savings,
to grow renewables, and about clean energy in general
[ 本帖最后由 the_top 于 2006-4-4 16:15 编辑 ] |
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发表于 2006-4-4 10:34
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