Solar Weekly Notes: Yingli, First Solar, SunPower

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The solar industry had a relatively eventful week, which began with Yingli Green Energy‘s (NYSE:YGE) stock falling by over 45% after the company noted in its 2014 annual report that there was “substantial doubt” about its ability to remain a going concern. In other news, First Solar (NASDAQ:FSLR) formed a new a joint venture for large-scale PV project development in the Philippines. The Guggenheim Solar ETF, a popular exchange traded fund comprising of solar stocks, fell by about 7% through Thursday. Here’s a brief look at some of the recent developments in the solar industry.

See Our Complete Analysis For Solar Stocks Trina SolarYingli Green Energy |First SolarSunPower

Yingli Green Energy’s Stock Plummets On Debt Concerns

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Yingli Green Energy (NYSE:YGE), the world’s second-largest solar panel manufacturer, saw its stock price plummet by over 45% earlier this week, after it said in its 2014 annual report, which was filed after the close last Friday, there was “substantial doubt” about its ability to continue as a going concern. The company cited recurring losses, negative working capital, net cash outflows and doubts related to its ability to service debt as reasons for the uncertainty. Yingli hasn’t posted a quarterly profit since Q2 2011 and remains one of the most highly leveraged firms in the solar industry with about $2.3 billion in debt.  However, the company moved to quickly to reassure investors that it was taking steps to secure more funds. The company said that it had repaid RMB 1.2 billion in notes due earlier this month, and was working to meet other payments on schedule. Even so, the recent developments cast a shadow on the company’s future at a time when the outlook for the broader solar sector remains largely positive, with global installation growth expected to come in at over 20% for 2015.

  • Trefis has a $2 price estimate for Yingli, which is significantly above the market price. We are currently revisiting our price estimate for the company. We are forecasting $2.68 billion in revenue for 2015, with an adjusted loss per share of $0.16.
  • Yingli stock declined by a total of 45% over Monday and Tuesday, although it recovered slightly on Wednesday after the company moved to calm investor concerns.

First Solar Forms JV To Tap The Philippines Market

First Solar, the largest U.S. solar company, formed a joint venture called FSO Energy Solutions, with Washington-based engineering and construction firm, OrionGroup International to target commercial and industrial photovoltaic projects in the Philippines. The two companies will jointly focus on constructing and developing solar PV installations across the country and providing power to large commercial and industrial customers via long-term power purchase agreements. The prospects for the solar industry in the Philippines appear to be bright, given the country’s electrical infrastructure challenges and supply shortages, which are leading to rising power prices. A number of large solar companies are betting big on the Philippines market . For instance, Conergy and SunEdison recently announced an agreement to develop and operate about 300 MW of utility-scale solar in the country through 2017. [1]

  • Trefis has a $65 price estimate for First Solar, which is about 15% ahead of the current market price. We project the company’s CY2015 revenues at about $3.45 billion, with an adjusted EPS of about $2.83. This compares to a consensus EPS estimate of about $2.74 according to Reuters.

SunPower’s Storage-focused Partnership

SunPower (NASDAQ:SPWR) has partnered with the battery systems and services provider Stem to offer behind-the-meter battery systems to commercial customers in the United States. According to GreenTech Media, SunPower has been reselling Stem’s behind-the-meter battery systems to commercial customers across the U.S over the last five months. While most solar companies, including SunPower, have been discussing integrating solar systems with storage over the last few years, the trend hasn’t really scaled up, particularly in residential applications, likely due to high prices and the availability of net metering options. However, SunPower notes that early interest in Stem’s commercial batteries has been high and the company is expecting the storage solutions to help increase its commercial-sector business, based on early activity. [2]

  • Trefis has a $35 price estimate for SunPower, which is about 10% ahead of the current market price. We project the company’s CY 2015 revenues at about $2.83 billion, with an adjusted EPS of about $1.40. This compares to a consensus EPS estimate of about $1.17 according to Reuters.

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Notes:
  1. First Solar announces JV for large-scale solar development in Philippines, PV Magazine, May 2015 []
  2. SunPower Broadens Its Commercial Reach by Offering Battery Services From Stem, Greentech Media, May 2015 []