Tag - Solar

www.gtsolar.com
(Nasdaq:SOLR)
Scheduled for week of July 21
$500 million estimated proceeds
$2432 million estimated post-money valuation

I’m starting to think that solar power deals are on par with special-purpose acquisition companies (or SPACs) and dry bulk shipping this year. After all, there have been two others to date: Real Goods Solar (Nasdaq:RSOL), which raised $55 million in May, and ReneSola (NYSE:SOL), which brought in $130 million in January. In a year with only 35 IPOs, that makes solar power a bona fide hot spot.

GT Solar makes equipment used to fabricate photovoltaic cells, which collect sunlight and convert it into electricity. These are big machines needed to produce solar cells but sold to only a handful of buyers worldwide. For the fiscal year ended March 31, 2008, 62% of the company’s revenue came from just one customer. In years past, the customer base has been more diversified, but just barely. In fiscal 2007, for example, three customers contributed 70% of revenue. No matter how big the solar power industry becomes, GT Solar will always face a concentrated customer base. A good analogy is semiconductors, which are in everything these days but are fabricated by just a few companies.

The company made $36.1 million in net income on $244.1 million in revenue for the March 31, 2008 fiscal year, its first profit ever. The year before, it had a net loss of $18.4 million on revenue of $60.1 million. The outlook for fiscal 2009 is good; the company has an order backlog of about $1.3 billion and deferred revenue from equipment shipped but not yet billed of $164.2 million. Profits should stay . . .

China is one of the world's fastest-growing but most polluted economies, second only to the United States in harmful greenhouse gas emissions. In the face of record crude prices, its ever-growing demand for energy, and domestic and international pressure to clean up its environmental act, Beijing's plan to reduce foreign oil imports, increase alternative energy production and curb pollution is in full swing.

One company with plans to capitalize on the country's efforts to harness the power of the sun and diversify its energy mix is Nanjing photovoltaic (PV) solar cell maker China Sunergy Co., Ltd. (Nasdaq:CSUN). 

Government officials have pledged to have renewable energy make up a tenth of China's total energy consumption by 2010. And this isn't just political posturing. On the solar front, the country has emerged as a global hotspot for the industry, eclipsing the United States in solar electricity production in 2007 and becoming the second-largest solar cell-producing nation after Japan. Over the past two years, China's PV solar cell production — a process that uses silicon wafers to convert sunlight directly into electricity — has increased more than six fold.
 
Indeed, China's solar energy industry has been on a tear, and it is not difficult to find examples of the national push toward sun power. One need only look at the roof of the newly erected National Indoor Stadium (for the 2008 Olympics) in Beijing that is home to 1,124 solar panels. Look further and one will see panels on roofs, walls, traffic signals and street lights in Rizhao, a coastal city on the Shandong Peninsula in northeastern China, and on new construction in the city of Shenzhen, across the border from Hong Kong, which has mandated that all new buildings 12 stories . . .

Although solar power is a developing area with commensurate risk, triple-digit oil prices (as well as increased attention by politicians and the media) have helped move alternative energy to the forefront of investor attention.

Today, we examine a pair of small-cap firms that are involved in developing solar technologies. (For those seeking more conservative, larger-cap plays on the sector, I’ve compiled a 35-page report on alternative energy, available for free to all SmallCapInvestor.com readers.)

First up, The Real Nanotech Investor editor Gregg Early chooses Spire Corporation (Nasdaq:SPIR), which specializes equipment in the production of terrestrial photovoltaic modules from solar cells, as his favorite pick.

Despite its small market cap of $114 million, it is a well-diversified firm with additional operations in biomedical and biophotonic research as well as semiconductor and opto-electronic technologies.

Early says that Spire has received a purchase order for its solar cell modules from U.S. Dept of Energy's National Renewable Energy Laboratory.

"Spire continues to credentialize its solar division and expand operations," he says. Indeed, after building its first solar panel production in Portugal, Early says that in recent weeks the firm also announced an order for a turnkey solar panel production line from its Spanish client Fluitecnik SA. The firm also announced a . . .

Hoku Materials, Inc., a subsidiary of Hoku Scientific, Inc. (Nasdaq: HOKU), said this morning that it will amend its polysilicon supply agreement with SANYO Electric Co., Ltd. (OTC: SANYY) to extend the date for Hoku to complete the financing for its planned polysilicon plant.

Under the terms of the amendment, Hoku or SANYO may now terminate the supply agreement if Hoku has not secured financing for its polysilicon plant by Feb. 15, 2008, a six week extension from the previous deadline of Dec. 31, 2007.

In December, Hoku Scientific announced that it had signed a non-binding term sheet with Merrill Lynch Pierce Fenner & Smith Inc. for Hoku Materials to borrow up to approximately $185 million for the construction, procurement and start-up of its planned polysilicon production plant in Pocatello, Idaho.

Hoku manufactures and sells polysilicon for the solar market.

Shares of Hoku Scientific (HOKU) gained $0.35, or 3.07%, to $11.75 in pre-market trading. Shares of Hoku Scientific have been trading in the range of $2.52 to $14.55 for the past 52 weeks.

Neil George is well known as the senior editor of Personal Finance, one of the longest-running and most reputable newsletters in the advisor industry. In addition, he publishes a specialized service — Inner Circle — for sophisticated traders willing to buy lesser-known stocks that offer a combination of higher risk, but also higher potential rewards.

One sector he currently favors in Inner Circle is solar power, and here he looks at a pair of small-cap solar stocks that are currently on his “buy” list.

George says that AeroVironment, Inc. (Nasdaq: AVAV), with a market cap of $511 million, has been on the vanguard of wind, solar and electric conversion equipment for over three decades.

"Thirty years ago this year the company's Gossamer Condor became the first vehicle to achieve successful human-powered flight,” he says. “The company built the GM-backed winner of the first solar land race, the Sunnyracer. It set the world record for manned solar-powered flight in 1981.”

George says the company has been expanding our understanding of alternative technologies for a long time.

“After all these years it looks like it's now focusing on making some money — as opposed to headlines — as a visionary company,” he says. “Its product lines now have to do with micro unmanned aerial vehicles for combat forces in remote locations, its PosiCharge power system and its power management division."

Although he says that AeroVironment doesn't build solar cells, George points out that the company is a leading force in managing the electricity derived from wind and solar sources. 

Clean energy products provider Hoku Scientific, Inc. (Nasdaq: HOKU), said it will sell polysilicon to Solarfun Power Hong Kong Ltd., a subsidiary of Solarfun Power Holdings Co., Ltd. (Nasdaq: SOLF), over an eight-year period beginning in mid-2009.

News of the deal sent shares soaring 36.68%, or $2.17, to $8.09 in pre-market trading. Shares of Hoku Scientific have been trading in the range of $2.52 to $14.55 for the past 52 weeks.

Under the terms of the agreement, Solarfun will pay Hoku up to approximately $306 million during the eight-year period, subject to product deliveries and other conditions. The contract provides for the delivery of predetermined volumes of polysilicon each year, with the first shipment in the second half of 2009. Hoku said prices will decline throughout the term of the agreement.

Additioanlly, Hoku said it will grant Solarfun a security interest in its polysilicon assets to secure Hoku's (HOKU) obligation to repay $55 million to Solarfun as a credit against product shipments over time.

Solarfun (SOLF) manufactures of photovoltaic cells and modules in China. 

Hoku Materials, Inc., a subsidiary of Hoku Scientific, Inc. (Nasdaq: HOKU), a seller of polysilicon to the solar market, and Dynamic Engineering, Inc., a process technology and engineering firm, said this morning that they have entered into an Engineering Services & Technology Transfer Agreement.

Under the agreement, Dynamic Engineering will provide design and engineering services, and a technology license to allow Hoku Materials to build a trichlorosilane production and purification unit at its polysilicon production plant in Pocatello, Idaho.

Trichlorosilane, or TCS, is produced through the chlorination and purification of metallurgical-grade silicon and is the primary material used to produce polysilicon in a Siemens reactor.

Shares of Hoku Scientific (HOKU) jumped 21.38%, or $1.93, to $10.98 in pre-market trading. Shares of Hoku Scientific have traded in the range of $2.52 to $14.55 for the past 52 weeks.

Shares of Spire Corp. (Nasdaq: SPIR) have been inspired to a 52-week high on news before the opening that the maker of solar equipment, biomedical and optoelectronics has received a manufacturing order.

Spire received a contract to provide a fully automated turnkey 50 megawatt module manufacturing line, the Bedford, Mass.-based company announced. The order was placed by Martifer Solar S.A., a Portuguese provider of solar parks and a division of holding company Martifer Group. When completed, the project will be the first automated module line installed in Portugal.

“We are proud to be selected by Martifer Solar to lead their first expansion into the solar photovoltaics manufacturing industry, and we are excited about providing this first fully automated 50MW module manufacturing line,” said Spire’s CEO Roger Little in a press release.

The financial parameters of the deal were not publicized.

At 11:23 a.m. ET, Spire’s (SPIR) shares were up $2.43, or 20%, to a new 52-week high of $14.60. The previous high was $12.37, set on Sept. 21.

Kevin Kennedy’s Coolcat Explosive Small Cap Growth Stock Report, launched in October 1997, has been ranked America’s No. 1 investment newsletter by independent rating service The Hulbert Financial Digest. And no wonder: the newsletter’s portfolios have posted an overall gain for the eight years ending in 2006 of a whopping 440%, or 23.5% on an annualized basis.

Kennedy, a veteran of more than 20 years in newspaper journalism, recently shared his investing philosophy and opinions in an interview with SmallCapInvestor.com, and named his three top small-cap picks--Lifeway Foods Inc. (Nasdaq: LWAY), Hoku Scientific (Nasdaq: HOKU) and TOP Tankers (Nasdaq: TOPT).  

Explain your investment process and criteria for investments.

My focus is finding the strongest stocks in the strongest market conditions and using money management approaches to maximize gains and cut losses short.

The strength of the market can represent up to 50% of the reason for a stock’s gains, so it’s very important to be in sync with the market. I focus on the Nasdaq Composite and look for it to be trading above its 50-day moving average as a basic measure of market strength.

If the market is strong, I will be more aggressive; if the market is weak, I will retreat to mostly cash.

In a strong market I look for the strongest stocks. I am talking primarily about technical price strength as opposed to fundamentals. I look for high relative strength, recent new 52-week highs and strong volume on up days.

I then look under the hood. What is the fundamental story that is driving the price higher? It could be strong recent earnings. It could be in a sector that has been strong. It could have new product news or announcements of new contracts.

I look to buy stocks like this on a modest pullback and then use money management rules to take profits and cut losses. I go into more depth on this process in The Coolcat Guide to Winning Stocks on our CoolcatReport.com website.

Semiconductor and solar cell company Amtech Systems, Inc. (Nasadq: ASYS), announced Monday that it received a $4.9 million follow-on solar order for diffusion processing systems from the solar cell industry.

The company says the follow-on order of $4.9 million is from a recent new customer in Asia and is on top of a $4.4 million solar order from earlier this month. This is the fourth order Amtech has had over the last two months.

For its fiscal 2007 year-to-date, Amtech has received approximately $19 million of solar orders, including this most recent order.

Shares of Amtech climbed 11.5%, or $1.24, to $12.02 mid-morning Monday.

Shares of China Sunergy Co., Ltd. (Nasdaq: CSUN) tumbled 12.96% or $1.81 to $12.17 in Tuesday morning trading after the specialized solar cell manufacturer announced before the opening bell that it continued to experience tight polysilicon supplies in China's solar market in the second quarter ended June 30, 2007.

The Chinese company said that even though the situation improved from a year ago, the relatively tight supply of polysilicon affected the quality, quantity and delivery of wafers. The tight supply situation ratcheted up overall wafer prices in the spot market, which increased pressure on China Sunergy’s margins, according to the company.

“To address the supply challenges, we continue to work on expanding our existing key supplier relationships and sourcing new suppliers,” said CEO Tingxiu Lu. “As a result of the new supply agreements we reached during the second quarter we are now confident that we will be able to secure our wafer supply requirements for the second half of 2007 and 2008.”

In June, China Sunergy entered into three supply contracts and framework agreements with LDK Solar Co., Ltd, Konca Solar Cell (Wuxi) Company Limited and Changzhou Xiandai Communications Optic Fiber Co., Ltd for a net supply of a total of approximately 11.9 million and 4.4 million monocrystalline 125-millimeter and multicrystalline 156-millimeter wafers for the second half of 2007 and 2008 respectively.

Also in June, China Sunergy entered into a 10MW sales contract with a German solar module manufacturing company Solarwatt AG for the second half of 2007 valued at approximately 21.7 million euros.

China’s solar energy industry is growing, but not everyone will profit. In fact, there will be many losers, most likely the late entrants and smaller players.

For sure, the country’s photovoltaic (PV) sector is booming, with the industry now the world’s third largest producer of solar-energy technology. Production capacity of the PV cells – the plates that absorb the sun’s rays and convert them to electricity – in 2005 rose almost 375%, to 250 MW, from 52.8 MW in 2004, while production capacity of modules—the panels comprised of the PV cells—grew 350%, to 400 MW, from 88.8 MW.

International demand for the clean-energy technology, fueled in large part by higher gasoline prices, has resulted in annual growth of around 15%. Some analysts predict that the sector could generate global revenues of up to $40 billion by 2010. China, with its low-cost manufacturing advantages, could seize up to one-forth of the bounty and become the world’s number one producer by the end of the decade. The country itself is projected to increase its install PV-electricity production capacity up to 0.3 GW in 2010 and 1.8 GW in 2020.

Such bright prospects have led to an investment frenzy on Chinese solar stocks. The leader of the pack is Suntech Power Holdings Co. Ltd. (NYSE: STP), the country’s largest PV manufacturer whose IPO listing on the New York Stock Exchange in December 2005 was the largest for the year for a technology company. Smaller cap companies include Trina Solar Limited (NYSE: TSL), Canadian Solar Inc. (Nasdaq: CSIQ) Solarfun Power Holdings Co. Ltd. (Nasdaq: SOLF), and China Sunergy Co. Ltd. (Nasdaq: CSUN). The newest to join the crowd is LDK Solar Co. Ltd. (NYSE: LDK), which had its IPO on June 1.