Suntech CEO Pins Hopes on Chinese Growth to Drive Sales
Suntech Corp.’s (NYSE:STP) CEO Zhengrong Shi said that China’s Solar market could almost double in 2012 to 4 GW helping absorb excess industry capacity. [1] In a recent interview, Mr. Shi hoped that installations in the country would pick up to help the industry absorb a possible fall in demand from Europe because of impending subsidy cuts. Although China is home to seven of the eight largest module manufacturers in the world, it is still a minor market for solar energy. The Chinese government is looking to spur local solar installations to increase the share of renewable power. Competitor Trina Solar‘s (NYSE:TSL) Chief Executive also held an optimistic view of the Chinese solar market.
We have a $4.50 price estimate for Suntech, which is at a 30% premium to its current market price.
Click here for our analysis of Suntech Power.
- Is Silver the Cure for Silver Prices?
- Will Import Taxes on Solar Panels hamper Silvers ability to rally?
- Gold, Silver And The Mining Sector: Prepare For A Severe Fall
- NYSE To Suspend Trading Of Suntech Power’s ADS, Begin Delisting Procedure
- Suntech Agrees To Sell Core Manufacturing Assets, Likely To Reorganize As Panel Distributor
- Suntech Power Expected To Sell Its Primary Manufacturing Subsidiary
Chinese market
China accounted for less than 3% of the PV market in 2010 with only 490 MW of solar capacity. (ref:1)) The market expanded more than 400% to touch 2 GW in 2011, helped by falling PV prices and the introduction of incentive schemes from the government. Suntech’s CEO estimated that the market would continue to grow and could add as much as 4 GW in 2012. Trina Solar’s CEO Jifan Gao painted an even more promising picture, saying that he expected 5 GW of installations in the country. This compares to 7.5 GW of capacity added in 2011 in Germany – the world’s largest PV market. Falling panel prices are lowering the cost of producing solar energy, helping the industry expand in emerging markets such as China, India and the Middle East.
Grid Parity
Industry participants are also expecting that solar power will start becoming competitive at retail electricity prices in the next few years across major markets. Mr. Gao of Trina Solar said that he expected grid parity in China over the next three to four years. Places in Australia are expected to reach parity in 2012 itself. Italy will also reach grid parity by 2013 according to Mr. Gao. Grid parity is a major milestone for the solar sector, which is being hit by subsidy cuts in almost all major markets.
Understand how a company’s products impact its stock price on Trefis.
Notes: