Despite Slide, Paradigm Capital Maintains its Bullishness on Timminco

Shares of high-profile silicon maker Timminco Ltd. (TIMNF.PK) are down nearly 90% over the last six months. But Paradigm Capital analyst J. Marvin Wolff remains extremely bullish on the company's prospects despite some causes for concern.

One of those concerns came yesterday from key Timminco customer Q-Cells SE, which said it is cutting its 2008 and 2009 guidance amid worries about credit availability for large solar projects. But Mr. Wolff wrote that Q-Cells is apparently committed to honouring its contract with Timminco and is willing to take additional amounts of solar-grade silicon above its contracted amount.

Mr. Wolff maintained a staggering one-year price target on Timminco of C$30 a share, which implies a return of more than 600% from current levels. He noted that Timminco's planned production of 14,400 metric tonnes a year is a "drop in the bucket" compared to worldwide silicon production, and thus the company can maintain its demand. Also, Timminco is the only solar-grade silicon producer that can produce and ship commercial volumes, he noted, and that is crucial for a solar industry that needs to reduce its cost per watt to the end consumer.

"We are also of the understanding that Timminco is having success moving up its output curve and its volume targets are in sight," he wrote in a note.