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As our solars continue to get hammered day by day, many friends have asked, "When will this all end?" I thought we might look at the theoretical prices investors might be facing in about six months from now. Just looking at the six solars below, four of the six could continue to sustain losses. The table is based on my current EPS estimates for 2011 and using a modest 6 times PE ratio. I will be presenting a full set of estimates for all solars early next week.

The six solars discussed in this article are listed below:

  • Jinko Solar Holding Company Limited (NYSE:JKS)
  • LDK Solar Co. Inc. (NYSE:LDK)
  • Renesola LTD (NYSE:SOL)
  • Suntech Power Holdings Co., Ltd. (NYSE:STP)
  • Trina Solar Limited (NYSE:TSL)
  • Yingli Green Energy Holding Co. Ltd. (NYSE:YGE)

Besides JKS, the numbers below look pretty dismal. Please keep in mind that the market is always forward looking. It is doubtful that LDK will hit 96 cents. Of course in the surreal world of solars, anything is possible. At the beginning of this year, I doubt that even the most negative analyst would have predicted the carnage we see before us today.

On a positive note, the Chinese solars are winning the big picture war. All around us, competitors are going out of business or closing plants. At some point, only the most efficient will be left standing.

Stock

2011 EPS

Current

12 Month

Potential

Street

Estimate

Stock Price

Target Price

% Gain

Target Price

JKS

6.08

7.03

36.49

419

29.33

LDK

0.16

4.70

0.96

-79

6.67

SOL

0.34

2.68

2.03

-24

4.56

STP

-0.53

3.40

1.70

-50

6.17

TSL

1.42

9.12

8.50

-7

20.91

YGE

0.76

3.51

4.55

30

9.89

* Current stock prices are as of noon, September 19th.

** STP could be lower since it may record a loss for 2011 (we have arbitrarily posted a 50% share price loss).

In the short term, our solars could continue to face fairly significant share price declines. The single star remains JKS. However, it would be hard for JKS to decouple from its peers. JKS today reached a forward PE ratio of about 1.2 times! I could not resist and purchased more shares of JKS this morning.

If we look at 2011 in isolation, the conclusion would be to pack up and look for other opportunities. In a month from now, I will present some 2012 estimates. Assuming ASPs stabilize around $1.10 for modules, 2012 should be a much better year. At that point, eight out of the eleven solars should be looking rising share prices.

A Short Note on JKS

JKS suffered a roughly 28% loss yesterday (September 19th). One of their plants has been shut down due to pollution problems. From the bits and pieces of news, it appears that they subcontracted out the disposal of toxic material to another firm. With rain storms, it appears that toxic material was washed into the river. They have apologized for the misstep and have indicated that production should resume in a few days. In the meantime, they will purchase cells (through tolling) to make up any deficiencies.

I feel that this is an acute problem and not a chronic problem. 28% seems a little overdone.

>>> Click here for Part 2

Source: A Look At Solar Stocks And How Much Lower They Will Go (Part 1)