Auriga on Renewable Technologies: Beyond Italy, Part 2
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Price: $15.71 +1.81%
Rating Summary:
12 Buy, 6 Hold, 1 Sell
Rating Trend:
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Today's Overall Ratings:
Up: 5 | Down: 11 | New: 27
Rating Summary:
12 Buy, 6 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 5 | Down: 11 | New: 27
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Auriga on Renewable Technologies: Beyond Italy, Part 2
Auriga analyst says, "As the second act of the Italian solar drama begins, we look at the bear argument of "too much 2012 capacity leading to uncontrollable price and margin declines." At the risk of starting a larger food fight, we provide our view on how industry capacity develops and show that actual shipments end up materially lower than stated capacity, and that installations are another step lower than shipments. This does not counter our view of continuing module price declines -- lower prices are required to open newer markets and soak up supply -- but we think a better understanding of shipments vs. capacity highlights an overcooked argument. We continue to focus on names that benefit from higher polysilicon prices and whose supply chain is minimally exposed to spot poly prices. Our top picks are Daqo (NYSE: DQ) and Renesola (NYSE: SOL), followed by Trina Solar (NYSE: TSL), Yingli (NYSE: YGE) and Suntech (NYSE: STP) (ALL BUY RATED)."
"Facilities are always underutilized - At the end of 2009, headlines were rife with fearful comments similar to "we only see 8GW demand in 2010, but industry capacity could approach 18GW," reflecting concern about the capacity announcements by major suppliers..."
"Channel inventory is significant. Comparing shipments to installations, we find a differential ranging from 10%-30%, indicating shipment into the channel accounting for the time delay between shipment and installation..."
"Prices should come down in a manageable fashion for low-cost suppliers - The general thesis on solar is that lower prices open more markets, allowing lower margins to be offset by higher volume. We continue to expect this scenario to play out and expect prices to come down over time. While there have been substantial announcements of capacity expansions capable of serving lower priced markets, there is also substantial legacy capacity that is not able to serve these lower priced markets..."
Auriga analyst says, "As the second act of the Italian solar drama begins, we look at the bear argument of "too much 2012 capacity leading to uncontrollable price and margin declines." At the risk of starting a larger food fight, we provide our view on how industry capacity develops and show that actual shipments end up materially lower than stated capacity, and that installations are another step lower than shipments. This does not counter our view of continuing module price declines -- lower prices are required to open newer markets and soak up supply -- but we think a better understanding of shipments vs. capacity highlights an overcooked argument. We continue to focus on names that benefit from higher polysilicon prices and whose supply chain is minimally exposed to spot poly prices. Our top picks are Daqo (NYSE: DQ) and Renesola (NYSE: SOL), followed by Trina Solar (NYSE: TSL), Yingli (NYSE: YGE) and Suntech (NYSE: STP) (ALL BUY RATED)."
"Facilities are always underutilized - At the end of 2009, headlines were rife with fearful comments similar to "we only see 8GW demand in 2010, but industry capacity could approach 18GW," reflecting concern about the capacity announcements by major suppliers..."
"Channel inventory is significant. Comparing shipments to installations, we find a differential ranging from 10%-30%, indicating shipment into the channel accounting for the time delay between shipment and installation..."
"Prices should come down in a manageable fashion for low-cost suppliers - The general thesis on solar is that lower prices open more markets, allowing lower margins to be offset by higher volume. We continue to expect this scenario to play out and expect prices to come down over time. While there have been substantial announcements of capacity expansions capable of serving lower priced markets, there is also substantial legacy capacity that is not able to serve these lower priced markets..."
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