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Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues

Envoy,

Regarding risk factors listed in their 20-F form, these companies are obligated by law to list anything that potentially is a risk, even with 1% of probability it would occur. It is the investors job to assess what is the probable possibility it will occur. It appears that you take it as a risk that likely will occur. You need to back up your speculation with numbers and analysis, not just because it is in 20-F form.

Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues

About Jesse Pichel's view:

he has price target on LDK at $28/share after LDK's first Q CC. LDK went up to $47/share 2 weeks ago before the market sell off. He has $60/share on YGE, now YGE is trading at $14 plus a change. It show the vote of no confidence in him by the investors.

Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues

Alpha,

the article you cited was dated 2/19/08. With the dynamics of the market it might not be relevant anymore. Furhter, Jesse Prichel was siiting in the panel, and I suppose he was negative about the solar market as well. However, after the German subsides policy was finalized a few weeks ago, he encouraged his clients to buy solar stocks. Isn't that ironic?

The link I provide here, shows Q-Cells is bullish on the market demand. Are they wrong? or the so called " analysts and investment bankers" are wrong?

www.sustainablebusines...

Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues

Jack,

Can you comment on today's article from Envoy Global:

seekingalpha.com/artic...

Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues

Rana,

I suppose you have a point there regarding the poly supply. However, I think what aqua said was silane is the feedstock for amorphous silicon thin film application, and for use of FBR technology. It is not used for Siemens traditional process which is the technology used by Chinese poly producers. REC's Moses lake plant will produce 9,000 MT of silane gas in q2 of 2009 according to the article, so the shortage may just go away by then. You are right about silane gas being short supply is affecting the poly output from a global poly supply perspective.

Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues

www.sustainablebusines...

2 messages from this article are relavent to note here:

1. Q-Cells is bullish on future solar power demand, otherewise it would not have planned EverQ IPO.
2. REC will supply poly to EverQ, that means the production problem it had in 2008 has been mitigated and back on track to produce poly, thereby supply crunch will be eased.

Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues

Thanks aqua. your article surely restores my confidence in poly-based solar companies in general as silane gas is not the feedstock for poly production. If REC's failure in its pilot plant is the cause for the rise of poly price in 2008, then it is logical to assume that poly price will come down in 2009, because REC will go back to traditional Siemens process.

Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues

Alpha,

Things are happening in all directions and in all dimensions. Please see the link below, to show how Germany and other EU countires stepping up to the plate to promote renewable energy.

www.iht.com/articles/2...

Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues

Envoy,

You stated "fail to distinguish between cash outflows due to capital expenditure requirements and cash-outflows due to working capital management. However, these are two entirely different issues."

From an investment point of view, both are the same issue. Cash on CAP-EX is to spend cash on something that will generate revenue later, such as purchase of equipment; cash spent on advance payment to secure longterm cheaper supply is to lower cost for future higher revenue. Therefore both are investment decisions. The question really is whether the supplier you pay advance payment to and the customers you receive revenue from have good standing financially. Plus whether the future market demand warrents the investment. It has some risk in this decision making for sure, but it is not unique to solar industry. You mentioned merger and consolidation will improve this risk, that is true, but that is an entirely different subject, don't confuse readers.