Solarfun: The Only Asian Solar to Raise Guidance?

While China's President Hu is in the United States laying out the nation's ambition to tackle global warming, a tone that you can not find in other leaders' speeches, Premier Wen Jiabao is hosting a conference with the nation's top economists to pledge more investment in low-carbon industries, such as renewable energy, and next generation automobiles. China apparently is looking for a new spot to lead the world for the decades to come. These new industries include solar power, wind energy, nuclear power, and automotive, etc.

Wall St. didn't expect solar companies to raise guidance for Q3, however on last Thursday Solarfun came out, becoming the first Asian solar name to raise Q3 guidance, Q3 module shipment to exceed 100MW. The company expected a maximum 100MW in Q2 earnings report. It is no surprise if you look back at how many solar farm projects have been signed in the last 6 months in China. As I mentioned in my last article, Asian solar names are experiencing better sales in Q3 and Q4 in Asia and Europe, as a result, more upward guidances are expected from names with good management team, such as Solarfun, Renesola (SOL), JA Solar (JASO), Trina Solar (TSL) and Suntech power (STP).

The sales in Asia are simply not in Wall St. analysis model yet. In the Q2 conference call from Renesola, CEO Li clearly stated that sales in China were not included in the guidance at the time of the Q2 release. US solar companies however may face a tougher Q3 as they do not have sales penetration into Chinese and Japanese markets yet. Some Chinese solar makers have already established sales networks in Japan, such as Solarfun, Suntech and JA Solar. The only company that has sales in Asia is First Solar (FSLR), who recently signed a massive 2GW contract with the Chinese government. Sunpower (SPWRA) and ECD (ENER) seem to have a lack of activities recently. These companies simply do not have the edge to compete with Asian peers. On the technology side, China's JA Solar is leading the rest of the industry with an 18% efficiency on its inkprint thin film technology (First Solar achieved only 13% on its CdTe thin film PV).

Another reason why Asian solar names are having sequential sales growth quarter over quarter is because of the Chinese government policy favoring solar over wind power.

Disclosure: long FSLR, SOL

Comments

[Zenfar:]

What do you mean by lack of activity?

Sep 23 09:39 AM

[Zenfar:]

SPWRA had a great quarter and is on a roll.

Here is an article about their project in Italy:

www.pv-tech.org/news/_.../

Long SPWRA, ASTI, ENER and a bunch of battery stocks

Sep 23 09:42 AM

[jerrydd:]

ECD(ENER) will never have any activity because they have never made a profit from making anything.

The only money they have made in the various forms of the company is gov subsidies, ripping off customer and stockholders.

The only other thing they make is misleading press releases to con the above. Check out their history and you'll see.

Sep 23 11:20 AM

[traderyin:]

The company hired a new CEO and turned around and actually made profit prior to the crash in 2008. So prior to that, you were right about them not making a dime.


On Sep 23 11:20 AM jerrydd wrote:

>
> ECD(seekingalpha.com/symbo...) will never have any activity
> because they have never made a profit from making anything.
>
> The only money they have made in the various forms of the company
> is gov subsidies, ripping off customer and stockholders.
>
> The only other thing they make is misleading press releases to con
> the above. Check out their history and you'll see.

Sep 23 01:19 PM