Renesola - Chinese Solar Panel/Silicon Recycling

Hi Ollie,

Good to see you back.

I feared you had got the chop! I'm glad your absence was just a cold! Perhaps it was the cold coming on which made you a bit tetchy with the LORD OF THE SOLA SHORT RING...LOL.

Yet again you have ferreted out some good research in your Posts No.s 18272 and 18273. As you say HARD FACTS - unlike the derampers' one liner TOSH.

BTW you forgot to post the links...must be the effects of the cold....LOL

Jack Uldrich writing about Suntech missed the main reason why thin filmed PV cell systems are not much of a threat to conventional polysilicon wafer based systems, which is that thin film systems are 2 to 4 times less efficient at converting solar energy to electricity. So they need 2 to 4 times the roof area and so are unsuitable and cannot compete in urban environments on or around buildings.

Also thin filmed systems are largely untried and untested in the real world. Of particular concern are doubts about their durability and longevity. Most, if not all, are known to lose energy conversion efficiency with the passage of time. Conventional polysilicon wafer based systems have been installed for up to 40 years and show no loss of efficiency for at least 20 years or more. Investing in thin film technology is high risk both for backers of the companies and for potential customers.

Also, thin filmed makers tend to hype up the cheaper costs of the PV cells themselves but don't give data about the entire system cost once assembly into panels, modules, transportation and installation costs are taken into account for systems which need 2 to 4 times the area!

Also, conventional polysilicon wafer based systems are driving down costs towards the Holy Grail of parity with grid costs - Moores law, but more slowly. However Sunpower, who produce the highest 22% efficiency conventional polysilicon PV cells have a road map to reach grid cost parity by 2012 and others like Suntech, will follow them. The shortage and high price of polysilicon raw material is slowing this process towards the Holy Grail - but they will eventually get there - and then the entire $1 trillion a year generating market opens up!

Look at that number again $1,000,000,000,000 dollar a year market! Its mind boggling…LOL

Another advantage is that it is a lot cheaper, with high efficiency conventional polysilicon wafer systems than low efficiency thin filmed systems, to mount them on rotating systems which follow the sun. Moving arrays can increase electricity production by 35% or more. This is particularly applicable to large scale, out of town generating systems. See

The way I see the market developing , for the foreseeable future, is that conventional polysilicon wafer based systems will continue to dominate the urban market with systems on or around residential, office, factory and commercial buildings, where any surplus electricity generated can be sold back to the grid, with no expensive power lines. This is where most of the subsidies are concentrated e.g. California’s 3,000 MW roof installation plan

In out of town, large scale generating plants conventional polysilicon wafer based systems will still be competitive, with energy conversion efficiency, mounted on sun following arrays, up to 5 times or more than that of thin filmed systems. Experimental thin filmed and concentrator systems will be built with governments taking the durability/longevity risk.

By the time any successful experimental thin filmed and concentrator systems have proved their long term viability, conventional polysilicon wafer based systems will have reached the Holy Grail of grid cost parity.

By around 2015 to 2020 PV solar systems will become the norm dominating new generating plants in sunny areas (where the vast majority of the world’s population live). Solar PV will displace most new conventional power plants using oil, gas and nuclear energy. By then Peak Oil will have kicked in and oil and gas prices will be much higher than now. As for nuclear, it is already expensive and extremely unpopular with environmentalists and I can see little long term future for it. Coal too is dirty.

By then the only real competition PV systems will face will be from other forms of alternative energy. Most hydro-electric opportunities have already been exploited. Wind farms are ugly and unpopular. Sea wave and current generation opportunities are limited and also cause environmental concerns. Fuel cells look promising – but are based on hydrocarbons – so are really just a more efficient way of using an increasingly expensive and finite resource.

Only PV solar energy seems to have none of the disadvantages of conventional and other alternative forms of power generation. It is 100% clean. The sun’s energy is infinite in practical terms. It has none of the environmental objections of conventional and other forms of alternative energy generation. It is unobtrusive in an urban environment – see

So as grid cost parity approaches the PV solar market will accelerate rapidly above the long term trend growth of 40% pa to meet the huge demand in a $ trillion dollar a year market.

SOLA are absolutely in the sweet spot to take advantage of the polysilicon shortage stretching out to 2010 or beyond. They also enjoy a huge competitive advantage relying on cheaper scrap for their raw material. Even when polysilicon prices do start to come down they will still enjoy an advantage, because scrap prices are always at a discount to raw PV quality polysilicon.

In the longer term, if they run up against a shortage of scrap (which is still over the horizon) I see SOLA diversifying upstream to setting up its own raw polysilicon plants. They can use this high quality polysilicon to blend with their processed scrap to meet the demand for Monocrystataline wafers, which is where I see the greatest future demand, because of the crucial advantage which higher energy conversion Mono based wafers enjoy (22% Mono as against 15% for Multi – as against 6% to 9% for thin filmed, with Nanothechnology claiming a possible 12% efficiency ).

The economics of a raw polysicon plant are very attractive. $200 million (and 2 years) buys a plant producing 3,000 tonnes a year, which is profitable at $20 a kg – as against present polysilicon prices of $80 to $100 a kg. SOLA can soon easily afford $200 million spread over 2 years – so hopefully management are laying plans for this!

Having researched widely in the entire energy market, and especially recently in the PV solar market, I see no ceiling to SOLA’s rapid growth for the foreseeable future, with huge growing and accelerating demand for their products for many years to come.

SOLA’s stated ambition is to become a $2 billion market cap company. They are already well on the way to achieving that in 2007 and I can see nothing preventing them from being 10 times bigger than that in a very short timescale.

I advise everybody to DYOR – especially the sceptics and the hopelessly ill-informed de-rampers and the sadly misled SOLA SHEEP SHORTERS who are like lambs to the slaughter. I welcome contrarian views, provided they are reasoned and based on real facts and research – not the silly one line de-ramping rubbish reasons given by de-rampers!

If you DYOR you will find that SOLA is a truly exceptional company with outstanding medium to long term growth prospects.

The SP is presently ridiculously cheap given its growth.

Every experienced investor knows that there are two things almost guaranteed to drive up a company’s share price: BEATING MARKET EXPECTATIONS and ANALYST UPGRADES.

SOLA is set to do BOTH repeatedly during 2007 and beyond

Merryl Lynch, Credit Suisse, Evolution, Hanson Westhouse and other analysts base their valuations on their SOLA’s OUSTANDING GROWTH of revenue, net profits and EPS over the next few years – which results in exceptionally low forward PEs.

We happy band of “moron” and “loony” LONGS (as the LORD OF THE SOLA SHORT RING dubs us) have done our research. We believe that the analysts have significantly UNDERESTIMATED SOLAs growth of net profits and EPS for 2007 and 2008 and beyond.

We believe that SOLA will is much more likely to achieve what JTCod , busraker1 and others, (whose research I and other have checked and double checked), are forecasting, which are significantly higher EPS growth than MARKET EXPECTATIONS.


(PE based on 445 pence/share)

2006

Merril Lynch: EPS forecast: 12.0 pence; PE = 37.1; 12 Month Share Price Target 800 pence

JTCod: EPS forecast 14.1 pence; Forward PE = 31.6


2007

Merril Lynch: EPS forecast: 39.0 pence; EPS YonY Growth = 225%; Forward PE = 11.4

JTCod, busraker1 and others: EPS forecast 64.1 pence; EPS YonY Growth = 251%; Forward PE = 6.9

2008

Merril Lynch: EPS forecast: 65.0 pence; EPS YonY Growth = 225%; EPS YonY Growth = 67%; Forward PE = 6.8

JTCod, busraker1 and others: EPS forecast 100.0 pence; EPS YonY Growth = 54%; Forward PE = 4.5




PEG RATIO

Merril Lynch = 0.28

JTCod, busraker & others: = 0.19

For those unfamiliar with PEG ratios, this is a measure commonly used to value companies based on forward growth rates. For example a company growing at 15% per annum and a PE ratio of 15 would result in a PEG ratio of 1.0 (Fair Value).

Motley Fool reckon PEG of:
0.50 or less = Undervalued;
0.50 to 1.00 = Fairly Valued;
1.00 to 1.30 = Richly Valued;
1.30 or over = Potentially Overvalued.

As can be seen from the above SOLA IS VERY UNDERVALUED at its present share price of 438 pence!

For those interesting in understanding more about PEG, Motley Fool give a good explanation on this link

REASONS WHY SOLA IS EXPECTED TO BEAT MARKET EXPECTIONS