Combining two hot investing topics—solar energy and China—seems like a win-win proposition. But when it comes to China’s Solarfun Power Holdings Co., Ltd. (Nasdaq: SOLF), investors seem to have taken a dim view following a December 2006 offering in the U.S. markets.

Based in China’s Jiangsu province, Solarfun Power makes the photovoltaic (PV) cells and modules that are used to convert light into electricity, and provides services and supplies to make solar systems work. Founded in 2004, Solarfun sells its products primarily in China. Production capacity makes Solarfun the world’s sixth-largest PV cell manufacturer and is the second-largest U.S.-listed Chinese cell maker after global leader Suntech Power Holdings Co., Ltd. (NYSE: STP).

When Solarfun’s American Depository Receipts were offered on the Nasdaq Global Stocks market last Dec. 20, the IPO was priced at $12.50. Solarfun closed its first day of U.S. trading at $9.96—and has seemingly been treading water since then.

Despite some flickers of hope since the stock offering, including a 52-week high of $17.69 seen in April, analysts remain lukewarm about Solarfun: four analysts surveyed by Thomson Financial all have this relative newcomer at the equivalent of a “hold.” The stock closed at $12.27 on Monday.

Investors looking to jump into China or into solar are left wondering if Solarfun is a potential sleeping giant that could shine brightly, or if the company is something of a poorly lit bulb in their investment strategy.

There has been a gold rush of solar-related Chinese companies following the successful IPO of Suntech in December 2005, which has seen its share price nearly triple over the past two years.

Interest in solar overall has skyrocketed as prices for energy products derived from petroleum have risen dramatically in the last few years. In turn, the demand for polysilicon, a necessary component in solar energy technology, created a shortage that has driven up prices for the key material.

Solarfun competes with Suntech in an increasingly crowded marketplace for PV cells. On Thursday, Suntech reported its net income nearly doubled in the third quarter and said it’s expecting “extremely strong demand” for solar cells in 2008, according to a press release.

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