Solarfun Power Should Again Provide Earnings Upside Surprise

Solarfun power (SOLF) has been beating Street consensus estimates for three continous quarters now, and this time is no exception. Based on the events and news releases of the last few months, this company likely easily beats the Street by huge margin, and continues to see its stock price soar higher.

There are a few things investors need to pay attention to. Tuesday Morgan Stanley (MS) took an offer from solarfun in the form of an at-the-market equity offering. Investors welcomed this event with a stock price 7% move up Wednesday. Keep in mind, back in June 2008, Morgan Stanley bought 8M shares of Solarfun at the price of $20 after the market close. The I-bank apparently has full confidence in this company.

What makes Solarfun power unique is that the company has entered into the silicon ingot production business through the acquisition of a 52% equity interest in Yangguang Solar, an ingot plant that commenced operations in October 2007. This gives SOLF an extreme profit margin advantage over its peers. The company will benefit from this and margins will continue to improve in the current quarter. This puts SOLF at a tremendous advantage over other solar panel makers, such as CSIQ, TSL, YGE, ESLR and ENER.

On the other hand, Solarfun has entered the US in a big way, through AltSys Solar in California. SOLF was selected as the only solar panel provider in California.

Solarfun will again lead the solar sector rally with a surprise upbeat earning release. All news points to an astonishing quarter. With two big contracts recently signed, Solarfun definitely has a bright future and has placed itself as a solar industry leader in terms of earnings.

Disclosure: Long SOLF and ENER.

Comments

[gebby:]

lets hope

2008 Aug 14 09:25 AM

[stockfan1:]

CSIQ is better positioned than SOLF. Compare the outstanding shares for CSIQ v/s SOLF. Also look at the contracts for CSIQ v/s SOLF. Also CSIQ is a very well run company witha top notch management. And the under appreciated fact is it is ramping up its UMG production. Also, e-module 's low cost is analoguous to thin film and it ha sstrong supply agreements and backlog.

2008 Aug 15 05:31 PM

[User 226214:]

Investors don't realize that SOLF is shipping more tham 250 MW products this year. They only guided 160 to 180mw, however if you look carefully, you will find out that they are out of capacity for this year which is 250mw on Q4 2007 report to mid 2008, and 360mw after the mid 2008 which makes it about 290mw to 300mw capacity this year. And SOLF announced two contracts and all of these 2 contracts starting to ship on the beginning of 2009. If you think about it, why don't they ship immediately and wait until 2009 for these 2 new contracts?

Only one answer is they are sold out for this year.

I expect to see $25 for this stock very soon.

2008 Aug 15 06:07 PM