Renesola - Chinese Solar Panel/Silicon Recycling

russ,

Thanks for your very helpful post claryfing matters relating to lemming's note.

I know that you and others had quite detailed discussions with JT about assumptions, so your observations are reliable and much appreciated.


A few questions

1) you say "18MW / 2.4W per wafer = 7.5m wafers."

Do you know what percent energy conversion was used to arrive at 2.4W per wafer?

Is this an industry standard energy conversion ratio or one particular to SOLA?

In fact, each cell manufacturer obtains different efficiency ratios with their cells and, as I have posted previously, Mono based wafers achieve significantly higher efficiency than Multis.

To further complicate matters, with the passage of time efficiency ratios are improving - especially with cells based on Mono wafers.

For the sake of consistency from one period to another one would need, I think, to stick one standard efficiency ratio otherwise it becomes impossible to compare MW output for one period with another?

2) You say "There were 5 wire saws installed in Q3 and 19 being 25 installed in Q4"

However, SOLA's "Capacity Expansion" slide shows 14 Mono slicing machines installed in 2006, with the balance of the original batch of 24 i.e. 10 more installed in Jan 2007.

SOLA's slide also shows an additional 25 Mono slicers to be installed in 2007:
Feb 3; Mar 4; April 8; May 7; and June 3.

SOLA's slide also shows another 24 Multi slicing machines to be installed in 2007: Mar 1; April 2; May 3; June 4; July 2; Sep 4; Nov 4; and Dec 4.

So according to SOLA's slide we would have 10 Mono silcers in 2006 increasing to a total of 49 by Q2 2007.

Additionally we would have a total of 24 Multi slicers coming on stream during 2007.

That would make a total of 73 Mono and Multi slicers by the end of 2007.

What would be interesting would be to try to work how many wafers each Mono and Multi slicer does each month?

The main impact of the 40c per wafer additional profit would fall in 2007.

3) You refer to Gross profit per wafer rather than Net Profit?

However gross profit includes operating costs. I can't see much additional overhead/admin costs associated with slicing although there may be some financing and possibily amortisation cost, this could be negligable given the apparently huge profitability of these slicing machines.

What would be interesting to try and work out would be the payback time in terms of profit for the slicing machines?

6) You say "Have to say I am assuming the eps will be worked out on the full 100m shares but that isn't the weighted average for the year as the bulk of the shares have only been in existence since, I think, May or some time? clarification on how this might affect the no. of shares used for 06 would be helpful?"

EPS is normally worked out on the basis of the number of shares outstanding at the end of each period.

If new shares are issued then this dilutes the EPS.

On the other hand if old shares are split, for example 10:1, then the EPS for the previous period are normally restated, to give comparative consistency.

However, in the case of SOLA, IMO it is largely irrelevant. The key metric will be EPS growth from the time it went public, and notional EPS in the prior period is more or less meaningless, especially when the company's growth is so dramatic, that it is now producing several times more profit each quarter than it did in the entire previous year 2005.

mbad