Asian Solar Names to Raise Guidance for Q3, Q4

Last Thursday Collins Stewart raised Yingli Green's (YGE) price target based on strong demand in recent weeks. Yingli customers have indicated that the company has exhausted capacity which means new orders will pick up going forward. In the Q2 conference, Yingli also signaled that demand for the rest of 2009 is strong in both U.S. and Germany. China's domestic market is also picking up at a faster pace. Goldman Sachs also placed Renesola (SOL) on its "conviction buy list" 3 weeks ago, citing the new business model as generating more revenue. As China's central government indicated more policy support on solar energy over wind, and also with China's latest strong economy data (industrial output rose 12.3% versus 10.8 expectation), we would not be surprised to see a new wave of upward guidance from Yingli and some other solar names such as Renesola, Solarfun (SOLF), Suntech Power (STP) and Trina Solar (TSL) as these are strong players in the sector. Here are some upbeat comments from these companies recently:

Renesola: the company signed a 600MW deal with JIangsu province and in the recent conference call the CEO said demand is picking up for Q3 and Q4, and the previous guidance does not include revenue from domestic sales. Its Golden Sun project submitted to government is expected for approval in Q4. I expect earnings to surprise wall street to the upside.

Solarfun: the company is a late comer with a big win from inner Mongolia. The 650MW solar farm project should boost the bottom line in 2010 as the projects kick off. The company is also building a new 100MW facility to meet new demand from Germany. It is worth noticing that Solarfun has a strong position in the Japanese market together with Suntech.

Suntech Power: a leader in the sector, has signed 1.8 GW contracts with the Chinese government recently. CEO Shi also signaled to wall street that company profits were back in double digits in Q2, and to expect better quarters ahead.

Trina Solar: the company is a winner, but the stock price may have run ahead of itself. The CEO said the worst is over for the solar sector, and is seeking strong pacts with US companies to expand into the US market. An upward guidance is also expected from TSL.

Datang New Energy: the Chinese renewable company signed 1.5GW contracts with Baotou government. This is a sign that domestic solar companies will better benefit from the aggressive solar plan of the government.

First Solar (FSLR): this is a company that delivers over time. First solar was granted a 2GW contract by Chinese government.

Disclosure: Author is long FSLR and SOL

Comments

[oilsands:]

Kevin, thanks for the review. I was wondering about the statement about China signaling preference for solar. I remember a discussion of that a while back. Could you add some detail?
Thanks

Sep 14 10:42 AM