Stock Market News & Stocks to Watch from StraightStocks » Ldk Solar

Towards a Better Solar Business Model

Small Cap Pulse — Fri, 28 Aug 2009 17:18:00 +0000

August 27, 2009 ndash; LDK Solar (NYSE:LDK) announced an agreement with Yancheng City of Jiangsu Province for the development of a number of PV projects (ground-mount, roof and BIPV) totaling up to 500MW over the next five years. And Canadian Solar (Nasdaq:CSIQ) said it has signed a LOI with the Administration Committee of Baotou National Rare Earth Hi-Tech Industrial Development Zone in Baotou, Inner Mongolia, for rights to design, install, operate and maintain a 500MW solar facilitynbsp; in Baotou. The three-phase project is expected to start in September 2009 and run through December 2011 (phase 1: 100MW; phase 2 and 3: 200MW). These announcements mark an important trend in the solar markets and one that we have been commentating on a lot lately ndash; the further move by midstream solar firms to vertically integrate downstream and even moving into operations of solar facilities. Cowenrsquo;s Raj Seth this morning commented on the LDK announcement stating that it is a positive for the stock (100MW if 6% of 2010 shipment estimate for LDK), but he emphasized that the company remains challenged by falling ASPs, uncertainty about internal poly production and a weak balance sheet. Massive oversupply in the upstream and midstream channels exacerbated by tight credit markets and project delays have been a thorn in the side of solar manufacturing firms and have driven ASPs down ndash; pressures persist. As a means of reacting to these pressures, firms like LDK and Energy Conversion Devices (Nasdaq:ENER) have made moves to acquire ownership in integrators. The primary rationale being that this will create further project opportunities, sales channels, and potentially provide some extra operating leverage. The strategy makes sense and the risk is largely going to be in execution. But vertically integrating system development and installation will likely not be a silver bullet. Just look at the pure play downstream players like Real Goods Solar (Nasdaq:RSOL), Akeena (Nasdaq:AKNS) and Solar Power (SOPW.OB) who have all struggled with their business models to achieve profitability and operating efficiencies. The biggest problems that we see with downstream business is that margins are hard to control/expand (cap intensive and labor intensive) and it is basically a one-off business. Some downstream players are trying to move upstream into manufacturing to create operational leverage of their own (pace Akeena and Solar Power) but it is difficult to compete with the kind of scale that established midstream solar manufacturers have already established, and in the current environment it is no recipe for margin expansion. Frankly, it just adds another layer of execution risk. The model that we think is best suited to survive, and thrive, in the current environment is one that newcomer EPOD Solar (EPDS.OB) is implementing. EPOD is totally vertically integrated. It manufacturers amorphous thin film solar product and it pushes that product into solar parks that it designs, engineers, develops and operates. Its projects create the demand for the solar panels that it is making. The challenge to this model is in the financing of projects but EPOD is mitigating that issue through developing projects with partners that can help capitalize them in part, or in certain cases in full (where it sells 100% of the facility). Canadian Solarrsquo;s announced LOI above reflects a move to this model, and First Solarrsquo;s (Nasdaq:FSLR) purchase of Optisolarrsquo;s projects does as well (note that EPOD purchased Optisolarrsquo;s manufacturing and Ramp;D facilities). And there are variations on this model ndash; pace French utilityrsquo;s EDF who recently announced a venture with First Solar to build a 100MW thin film manufacturing facility in France whereby it has rights to the facilityrsquo;s entire output for the first 10 years. EDF had 20MW installed at the end of 2008 but has plans to ramp its solar project developments. From our perspective, in the current environment where feed in tariffs and long-term PPAs are available, it makes more sense to pursue a strategy in solar to sell electricity instead of panels. Panels will continue to get commoditized and prices will continue to trend lower. Competition will only get more stiff and there will be a shakeout amongst manufacturers. The low cost producers will survive. Attrition will displace the rest. This is good news for solar, because lower panel prices translate into lower system costs and the ability to compete on a non-subsidized basis with conventional energy sources. And manufacturing firms that achieve economies of scale and continue to advance their technologies will make up for the lower pricing with greater efficiency. The Energy Information Association projects that electricity demand will increase by 26 percent from 2007 to 2030, or by an average of 1.0 percent per year. The largest increase is in the commercial sector (38 percent), where service industries continue to lead demand growth, followed by the residential sector (20 percent) and the industrial sector (7nbsp;percent). Population growth and rising disposable incomes increase the demand for products, services, and floorspace, and ongoing population shifts to warmer regions increase the use of electricity for space cooling.nbsp; The EIA expects real retail electricity prices to rise to 10.4 cents per kWh in its 2030 reference case. So with electricity prices expected to remain stable, and with the availability of feed-in-tariffs, which require electricity utilities to buy renewable energy at above market rates (set by the government) from anyone that wishes to produce renewable electricity, the economic advantage of a solar manufacturing firm moving into development and operation of solar parks ndash; electricity sales ndash; is undeniable. Under this model, lower panel costs which translate into lower system costs ultimately result in higher internal rates of return on the solar parkrsquo;s performance. The Street may have a difficult time, initially, coming up with a way to value companies moving towards the manufacturer/independent power producer (IPP) model. Under this model, declining ASPs are meaningless. On the other hand, cost-per-watt and system installed costs are critical, as are the net capacity yield of a solar park and energy system paybacks. At the end of the day, what matters is profitability, and in our opinion, solar manufacturers that take advantage of current market conditions to build, own and operate solar parks that house their panels will gain an advantage. Important Disclosure: SCPEditor is managing partner of Aspire Communications whichnbsp;is engaged by EPOD Solar, and Todd Pitcher has investments in EPOD, LDK and First Solar.

SmallCapSentinel.com: Obama Beckons the Sun

Stuart T. Smith — Thu, 25 Jun 2009 13:41:37 +0000

LAS VEGAS, June 24, 2009 (GLOBE NEWSWIRE) — President Obama held a nationally televised press conference in which he enthusiastically pledged his support for clean energy, specifically citing solar as a prime example. The president also stated that he would be in support of legislation that would greatly assist clean energy providers. We intend to [...]

SmallCapSentinel.com: Obama Beckons the Sun

Stuart T. Smith — Wed, 24 Jun 2009 14:31:40 +0000

LDK Solar (NYSE:LDK) Outlook – Our Take

Small Cap Pulse — Wed, 04 Mar 2009 22:37:00 +0000

March 4, 2009 ndash; As an unabashed advocate, and shareholder of LDK Solar (NYSE:LDK), have been asked lately by readers, friends and fellow investors about whether I am still positive on the company, given recent changes in the companyrsquo;s underlying fundamentals. Here is my take: The changes with LDK are not exclusive to it, but rather, pressures the whole industry is experiencing. That being said, it needs to demonstrate execution through the current tough patch and near term. The tight credit conditions are creating delays on projects and lower volume for the group. That exacerbates the amount of supply there is out there which has created some significant margin pressure as firms eat through inventory. That is a dynamic which should persist through 2009 and heading into 2010 expectations are widely that the supply imbalances are worked out of the system. In the meanwhile, LDK, et. al. have been writing down inventory and taking one-time charges which will negatively impact earnings. LDK is a low cost producer, which has 11% market share of the wafer market. This is a strong position to be in. Moreover, it is getting into the poly production business in a big way and this will enable it to enjoy greater elasticity than practically all of its peers. At this point, the growth has all but been priced out of the solar sector, and LDK. My outlook for solar in the mid-to-long term remains really bullish. The legislative environment has never been better, with support coming on a local, state, regional and national level ndash; not to mention the international commitment to alt energy, and solar. We will likely be getting a national renewable energy standard this year (right now28 states have an RPS and 5 are setting goals to have one). Pacific Crest, who has some of the smarter solar analysts, wrote a report suggesting conservatively, that estimated just over 25GW of PV would be needed to reach a 20% RES mandate, which would drive an additional $50 billion in revenues into the solar industry. Lux forecasts that the solar industry is going to expand from just under 6GW installed in 2008 to 18GW by 2013. On an international scale, The IEA estimates that between now and 2030, if we are going to limit CO2 concentrations to 450 parts per million, (limiting average increase in global temperatures to 2deg;C (a number which many experts think is already unsafe), we will need to see $550 billion invested in alt energy and energy efficiency each year. New Energy Finance estimates an average level of $515 billion is needed.nbsp; A significant amount of this investment is going to find its way into solar. Another challenge in solar has been to get the costs down per installed watt. Factors that are under way now that are contributing to achieving that goal are in many cases, exactly the factors that are causing economic pains for solar firms ndash; declining poly prices, declining module/wafer/cell prices, and lower ASPs. The key for companies to have longevity in this market are that they can establish low cost producer status, increase efficiencies and scale. First Solar is an obvious leader here, having arguably priced a system at US grid parity (pace Pacific Crest). LDK will also be a leader ndash; again, low cost wafer producer which will benefit from economies of scale driven by increase in production/capacity. It is also developing more efficient wafers with 180-micron and 200-micron wafers in production. I mentioned LDK is moving upstream to add poly production (targeting 16,000MT by the end of 2009), and help buoy its wafer business margins. It continues to report progress in yield improvement and other production advantages. All of this is key to enabling LDK to remain a market leader in a long-term growth cycle for solar. Its backlog should be seen as a point of relative stability for the business as well ndash; management reported this month it has a backlog of more than 14GW through 2018 with down payments and an additional 6GW of processing orders. So while LDK has had to reduce guidance, I donrsquo;t see this as being a significant cause for criticism and concern about LDKrsquo;s model, as I would about the industry in general ndash; and in my opinion, LDK remains one of the best positioned in the industry to emerge from the current challenges of a tight credit market and an industry faced with near-term oversupply. Most recent management guidance: On February 19, LDKrsquo;s management said it estimates Q4 revenue in the range of $415 to $425 million with wafer shipments between 245MW and 255MW. It expects write downs of $210 to $220 million against declines in inventory value, which will negatively impact GM, resulting in a Q4 loss between $135 to $145 million. For the FY08, it expects revenue to be in a range of $1.63 to $1.64 billion, net income of $145 to $155 million, with wafer shipments between 810MW to 820MW. At $5.34 this morning the stock is trading 0.38x FY08E revenues of $1.63 billion and 4.27x FYE income of $142 million. It is trading at 0.3x our FY09E revenues of $2 billion and 2.44x our FYE income of $250 million. These multiples are not representative, in my opinion, of a leading company operating in a growth industry that has long-term backlog visibility and forecasting strong revenue and earnings growth going forward. At this level, it just seems that growth is totally priced out of the stock, and in my opinion, it looks incredibly oversold. LDK will release its financial results on March 11 before the open. I donrsquo;t think the stock moves too much higher between now and then, in large part because the broader markets lack conviction heading into the nonfarm payrolls report on Friday and in part because traders will be taking a wait-and-see approach to the stock until they get a chance to see the numbers and get managementrsquo;s take and outlook going forward. That being said, in my opinion, the downside, relative to the upside here is negligible and accumulating at the current level makes sense for investors with a mid-to-long term horizon. I wouldnrsquo;t be surprised to see a near-term upside in the stock either, but in this market and economy, forecasting the near-term is like trying to catch the wind. Important Disclosure: SCPEditor is LONG LDK. The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance.

Guest Article: Green – The Secret to Resurrecting Your Nest Egg in 2009

Fred Fuld — Tue, 03 Feb 2009 16:07:00 +0000

Green: The Secret to Resurrecting Your Nest Egg in 2009. br /By Natalie Pace, author of a href="http://www.amazon.com/gp/product/1593154917?ie=UTF8tag=antiquestocka-20linkCode=as2camp=1789creative=9325creativeASIN=1593154917"Put Your Money Where Your Heart Is: Investment Strategies for Lifetime Wealth from a #1 Wall Street Stock Picker/aimg src="http://www.assoc-amazon.com/e/ir?t=antiquestocka-20l=as2o=1a=1593154917" width="1" height="1" border="0" alt="" style="border:none !important; margin:0px !important;" /br /Date: January 27, 2009br /br /Did you know that clean energy was the top performing industry in 2007, returning almost sixty cents on the dollar for investors? That was almost double the returns of the 2nd highest performing industry -- oil and gas -- at 32 cents for each dollar invested. And, thanks to President Obama’s American Reinvestment and Recovery Plan, clean energy is poised to be the top performer again in 2009. br /br /In his first White House blog, dated January 24, 2009, President Obama wrote that his Recovery and Reinvestment Plan will “invest in our most important priorities like energy and education.” The details of the plan, which President Obama is currently lobbying with Congressional members, is available online at WhiteHouse.gov and includes the following target expenditures:br /br /Recovery and Reinvestment Plan of 2009br /1. Create or save three to four million jobs over the next two years “in a range of industries from clean energy to health care”br /2. Launch a Clean Energy Finance Initiative to leverage $100 billion in private sector clean energy investments over three yearsbr /3. Double renewable energy generating capacity over three yearsbr /4. Modernize “more than 75% of federal building space, saving taxpayers $2 billion per year in lower federal energy bills”br /5. Modernize 10,000 schoolsbr /br /Now, for those who are skeptical of Washington’s ability to get anything done before the next Ice Age, returns on green investing are not just dependent upon the President’s ability to win votes with Congress. There is a worldwide push for clean energy. In fact, Europe, Eastern Europe and China are far more proactive about greening their grid than the U.S. br /br /Germany was one of the first countries to embrace solar energy with its “family program.” Solar panels were installed on many homes in that country over the last five years. Germany’s team, Technische Universität Darmstadt, even won the U.S. Department of Energy’s Solar Decathlon competition in 2007! The next Solar Decathlon will be held on the Washington Mall in Washington D.C. October 9 through 18, 2009, where 20 international teams will compete to design and build the most attractive, energy-efficient solar-powered house.br /br /Link:br /a href="http://www.solardecathlon.org/"http://www.solardecathlon.org//abr /br /China launched a new clean energy initiative, “Electric Vehicles for Ten Cities,” on January 6, 2009, which will put 1000 electric cars per year for three years in each of ten target cities. (Now if those were Tesla Roadsters, I might just move to one of those cities myself!) On Monday, January 26, 2009, the Chinese Academy of Sciences announced a plan to achieve solar energy as China’s dominant energy source by 2050. Other European and Eastern European countries are modeling Germany’s incentives to jumpstart their own clean energy plan and are committed to powering their grid with renewable energy with large-scale solar harvesting projects.br /br /Europe, Eastern Europe and China are the biggest clean energy customers to date, accounting for the strongest sales growth in any industry on Wall Street over the past three years. Solar giants, like Suntech Power Holdings, MEMC Electronics and LDK Solar are profitable, with a strong backlog of orders and high profit margins, at 12%, 20% and 24% respectively. MEMC Electronics (a silicon manufacturer) sales were $2 billion in 2008, up from $1.5 billion in 2006. Suntech’s 2008 sales were $1.8 billion, compared to $600 million in 2006. LDK Solar’s sales have exploded from $105 million in 2007 to a projected $750 million in 2008. br /br /On January 5, 2009, Xiaofeng Peng, Chairman and CEO of LDK Solar, reported, “Our operations remain at full capacity, with contract backlog remaining strong for 2009." The LDK Solar sales expectations for 2009 are $2.3 to $2.5 billion. br /br /So, while most industries worldwide are contracting, and many, like real estate and banks, are showing catastrophic losses, solar energy is profitable, growing – largely on worldwide government incentives and investment -- and healthy. Electric cars and component industries, like lithium mining and lithium ion battery makers, aren’t profitable yet, but the winds are favorable for growth and government incentives worldwide as well.br /br /There is one trick to investing green, however. As I outline in my new book, Put Your Money Where Your Heart Is, the challenge of investing in an industry that is exploding with potential and new technology innovations, is that when innovation is occurring rapidly, it’s difficult to predict a clear winner because tomorrow’s invention could create a new breakout technology. Additionally, clean energy has been around since the 1970s and some legacy corporations are carrying too much debt to compete with the new stalwarts, many of which are based out of China. For these reasons, a clean energy Exchange Traded Fund (ETF), which owns a basket of clean energy companies, is a better policy for most investors than picking an individual stock. br /br /4 Key Steps to Adding Green to your Nest Egg:br /br /1. Include a Green ETF as one of 10 diversified Exchange Traded Funds in your nest egg. br /2. Keep a percent equal to your age, plus 15-20%, SAFE, i.e. not invested in the stock market, since we’re in a recession.br /3. The safest place for your money in 2009 is Treasury bills and high rated bonds. br /4. Rebalance twice a year to capture gains and buy into underperforming ETFs.br /br /Remember to “overweight” 20% safe in 2009, since we’re in a recession, keeping 70% safe if you are 50, and 50% safe if you are 30, etc.br /br /For more nest egg strategies that work in bull and bear markets, buy and read my new book, Put Your Money Where Your Heart Is.br / br /span style="font-weight:bold;"span style="font-style:italic;"About Natalie Pace:/span/spanbr /Natalie Pace, is the author of a href="http://www.amazon.com/gp/product/1593154917?ie=UTF8tag=antiquestocka-20linkCode=as2camp=1789creative=9325creativeASIN=1593154917"Put Your Money Where Your Heart Is: Investment Strategies for Lifetime Wealth from a #1 Wall Street Stock Picker/aimg src="http://www.assoc-amazon.com/e/ir?t=antiquestocka-20l=as2o=1a=1593154917" width="1" height="1" border="0" alt="" style="border:none !important; margin:0px !important;" /, a featured teacher in the movie, Spiritual Liberation, and CEO of one of the most respected, independently owned financial news corporations in the U.S. She has been ranked as a #1 stock picker from TipsTraders.com and has partnered content with Forbes.com, Sohu.com, Kiplinger’s Personal Finance and more. She has appeared on Fox News, Good Morning America, Time Magazine, More Magazine, USA Today, NPR and national radio shows. For more information please visit, http://www.nataliepace.com.br /span style="font-style:italic;"Published with the permission of the publicist./spandiv class="blogger-post-footer"div class='adsense' style='text-align:center; padding: 0px 3px 0.5em 3px;' script type="text/javascript"!-- google_ad_client="ca-pub-2427831169011625"; google_ad_width=300; google_ad_height=250; google_ad_format="300x250_as"; google_ad_type="text"; google_ad_channel ="8681602088"; google_color_border="FFF3DB"; google_color_bg="FFF3DB"; google_color_link="1B0431"; google_color_url="1B0431"; google_color_text="29303B"; //--/script script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js" /script /div

Suntech (NYSE:STP) Still Looks Expensive, We Like LDK (NYSE:LDK) and SunPower (Nasdaq:SPWRA)

Small Cap Pulse — Mon, 26 Jan 2009 20:26:00 +0000

January 26, 2009 ndash; Suntech Power (NYSE:STP) has seen its stock decline to $8.87 on Fridayrsquo;s close from $11.80 at the outset of this yearrsquo;s trading session and from the $50 level this time last year. In the past couple months the stock has been seemingly downgraded by the world, which has been warranted in light of erosion in the companyrsquo;s near term outlook. On Friday, although management said revenues for the Q4 would come in higher than previously guided, the Street focused on downbeat margin guidance of -1% to 2% for the period due to an inventory and impairment charge resulting in one-time charges of about $100 million. The question at this point is whether all of the bad news has been priced into the stock. Our FY08 revenue expectations for the company are on the low end of guidance at $1.91 billion, and our income expectations are $86.9 million. At $8.87 the stock is trading 0.86x FY08 revenue and about 19x FY09 earnings. We think that on a multiple of earnings the stock still looks a bit expensive relative to its peers. For example, LDK Solar (NYSE:LDK), is trading at 4.51x FY08 forecasted earnings. Trina Solar (NYSE:TSL) is trading at about 4x FY08 earnings. Granted, SunPower (Nasdaq:SPWRA) is trading at about 14.4x FY08 forecasted earnings and First Solar (Nasdaq:FSLR) is trading at a staggering 35.8x FY08 forecasted earnings, but the latter two are getting heavy premiums for being perceived by the Street as lsquo;best in classrsquo; (First Solar as the low-cost manufacturer of thin-film, a market which it dominates, and SunPower because its vertically integrated model and brand are second to none). In our opinion, even SunPower and First Solar are probably getting too lofty a valuation, all things being equal. That being said, we think LDK is significantly undervalued, given its size and scale, and the fact that it is soon going to be benefitting from the vertical integration of its poly manufacturing facility coming online. But if LDK and Trina are only getting 4x FY08 earnings multiples, then in our opinion, Suntech should be in the same range ndash; at best ndash; given its recent guidance. At a 4x FY08 multiple of earnings, Suntechrsquo;s stock would be closer to $2 than its closing price of $8.87 on Friday. We hope it doesnrsquo;t find its way to that level, but we think there is certainly reason to pause and think twice about owning the stock at $8 to $9. Here is what the analysts are saying: middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; On 1/23/09 Jesup amp; Lamont rates at HOLD. middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; On 1/21/09 Merriman Curhan Ford rates at SELL. middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; On 1/14/09 AmTech Research rates at NEUTRAL. middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; On 1/14/09 Friedman Billings rates at UNDERPEFORM with $4 price target. middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; On 11/24/08 Jefferies rates at HOLD with $6 price target. middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; On 11/21/08 Ardour Capital rates at ACCUMULATE with $8 price target. middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; On 1/20/08 Collins Stewart rates at SELL. middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; On 1/10/08 Deutsche Securities rates at SELL. Note also that this morning Cowenrsquo;s Rob Stone released an industry outlook note this morning commenting that the stimulus package looks ldquo;less potentrdquo; for solar than he had expected as a catalyst for stocks in the near term, and ultimately as a revenue driver. He noted the tax package looks more favorable to wind. Stonersquo;s recommendation was to be selective in picking names in solar to accumulate on weakness and we agree. Our favorite name is LDK Solar (NYSE:LDK) which we think has more than been discounted against lower revised guidance and it will benefit tremendously in 2009 amidst declining poly prices and ASP erosion as it begins producing more of its own polysilicon. As with Stone, we like First Solar (Nasdaq:FSLR), but not at current prices. We would be buyers of the stock below $110. The current multiple of 35x FY08 earnings is just too much for us to pay in this environment. At $137, it is trading about 22x FY09 earnings expectations. Contrast that with LDK, which is trading at about 3x our forecasted earnings for FY09 (while we expect earnings growth to be 48%). SunPower (Nasdaq:SPWRA) is another name we would accumulate on weakness, below the $25 level. At present, it is trading about 10x forecasted earnings for FY09. Important Disclosure: SCPEditor is LONG LDK. The information provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. For more information about Small Cap Pulse, Aspire Clean Tech Communications or any of the companies we write about in our commentaries, please call 760-798-4936. pa href="http://feeds.feedburner.com/~a/smallcappulse/feed?a=AgykUZ"img src="http://feeds.feedburner.com/~a/smallcappulse/feed?i=AgykUZ" border="0"/img/a/p

December 30,2008 – Yingil Green Energy (NYSE:YGE) Still Well Positioned Going into 2009

Small Cap Pulse — Wed, 31 Dec 2008 00:28:00 +0000

nbsp;nbsp;nbsp;December 30, 2008 - Yingli Green Energy (NYSE: YGE) is one of the midstream solar companies we touted in 2008, and continue to think is well-positioned in the group. That being said, the stock has been hammered, along with all of the other midstream solar firms. The stock opened on January 2, 2008 at $39.01. Yesterday, the stock closed at $5.34, trading at 0.66x our forecasted sales for 2008 of $1.05 billion (which would represent 88% Y/Y revenue growth, and at about 6x our forecasted 2008 income for YGE at $115.5 million (which would represent 116% Y/Y income growth). So the question is whether the stock is oversold at current levels, and whether it is timely now.nbsp;The current stock price reflects a relatively downbeat Q3 earnings report (see below), concern about declining ASPs (management estimates that ASPs will decline by about 15% to 20% in the Q4, and by about 30% in 2009 from 2008 levels) and whether the business will have sufficient cash flow and capital on hand to cover its cap ex requirements in 2009 and planned expansion of capacity to 600MW. Management has iterated that its current cash flow and credit facility, as well as its expected cashflow will be sufficient. The December 23 announcement helps create some confidence that the business will be able to meet its expected $90 million in expected cap ex expenditures in 2009 (which will take capacity from 400MW to 600MW).nbsp;On the positive side, polysilicon prices are also declining and this should help lower Yingli's blended poly costs, and unit cost per watt. Management expects this to decline by 12% to 17% in the fourth quarter and in 2009 by 40% to 45% from 2008 levels (which will provide nbsp;leverage on gross margins). Yingli intends to move upstream through the purchase of Cyber Power, which owns a poly manufacturing business - a vertically integrated model which is being pursued by other midstream firms like LDK Solar. The question here is whether the timing is right, in light of the fact that poly prices are expected to decline from the current $200 to $250 a kilo range to $100 in the next 12 months.nbsp;On paper the move makes sense, and we certainly think companies like LDK will benefit from reduction of material costs and manufacturing costs associated with adding poly manufacturing to its portfolio - integrating the entire PV value chain, and gaining control over all critical aspects ot the production, and even in improving quality through tighter quality controls. Yingli can benefit in all of these manners, and the risks as we see it, are execution, getting the facility integrated efficiently and controlling costs in the process - in addition to ensuring it has sufficient capital on hand operate the integrated business. If it can, then the benefits should far outweigh the margin pressure poly is going to experience over the next 12 months or so.nbsp;Recent Announcementsnbsp;December 23- Secured $70 million loan agreement with China Development Bank to fund its planned 100MW expansion, which will bring annual prodcution capacity in Q3 2009 to 600MW.nbsp;December 19 - Signed sales agreements for 35MW and up to 65MW to two German integrators (20MW to City Solar, w/ option to purchase additional 30MW in 2009; and 15MW of modules to Wirsol w/ option to purchase additional 20MW in 2009).nbsp;December 5 - Signed sales agreements with Germany-based IBC Solar for 91MW of modules (through Dec 2009).nbsp;December 5 - Reaffirmed 2009 shipment forecast of 550 to 600MW of modules, and GM for 2009 of 24% (or better).Recent quarterly financial results (Q3)nbsp;* Net revenues of $325.5 million, an increase from $289.6 million sequentially and $188 milllion from the same period last year.nbsp;* ASPs were $4.04 per watt, down 3.8% from $4.20 per what in the Q2, 2008 (driven by depreciation of the euro against the RMB)* Total PV module shipments were up 17.3% to 80MW on a sequential basis.nbsp;* Gross margin was 22.3%, down from 25.8% the prior quarter.nbsp;* Op ex was basically flat on a sequential basis at $17 million, and represented about 5.2% of net revenue.nbsp;* Operating income was $55.5 million, down 4.7% from the prior quarter.nbsp;* Net income was $22.2 million, down from $30.2 million in the prior quarter.Our Takenbsp;We mentioned at the outset the $5.34 represents a 0.6x multiple of our forecasted sales this year, and a 6x multiple of our forecasted income for YGE this year. If we look at the stock in a vacuum relative to its peers and against its most recent quarterly report, we don't think the stock is too oversold. If we look at the midstream solar sector (its peers) relative to the growth prospects of the industry and strong underlying growth drivers, we think the whole group is tremendously oversold, including YGE.nbsp;For example, LDK Solar (NYSE: LDK) is trading at 0.77x our forecasted 2008 sales, and 4.25 our forecasted 2008 earnings. Relative to LDK, which continues to outperform all companies in its group, YGE still looks a bit expensive. On the other hand, we think that LDK's current valuation takes into consideration only the risk in the sector (module oversupply, ASP erosion, tight credit markets) and none of the upside (strong secular growth drivers driven by domestic and global legislation, increasing cell efficiencies and the fact that declining prices ultimately bode well for increased end demand).nbsp;Our forecasted top-line sales number for YGE in 2009 is $1.45 billion, and our forecasted income is $159 million. We believe that these are conservative and defensible estimates, assuming 550MW of modules (the low end of YGE's guidance) shipped at ASPs per watt of about $2.65, well below industry estimates. Based on these assumptions, the stock is currently trading at 0.48x FY09 estimated sales and 4.33x FY09 estimated income.nbsp;Our near term stock price target range for YGE is $8 to $9, a 49% to 68% increase from current levels, which would represent a 1x sales multiple of 2008, and a 0.72x sales multiple of 2009; and a 10x earnings multiple of 2008, and a 7.24x earnings multiple of 2009.Here is what other analysts are saying:nbsp;middot; nbsp; nbsp; nbsp; nbsp; Jesup amp; Lamont rates at BUY with $11 price target (12/1/08)nbsp;middot; nbsp; nbsp; nbsp; nbsp; AmTech Research rates at BUY with $6 price target (11/13/08)Important Disclosure: The SCPEditor is does not hold any position (Long or Short) in YGE. The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance.nbsp;nbsp;nbsp;nbsp;nbsp; pa href="http://feeds.feedburner.com/~a/smallcappulse/feed?a=EuXhUa"img src="http://feeds.feedburner.com/~a/smallcappulse/feed?i=EuXhUa" border="0"/img/a/p

Yingli Green Energy (NYSE:YGE) – Our Take

Small Cap Pulse — Tue, 30 Dec 2008 22:03:00 +0000

December 30, 2008 ndash; Yingli Green Energy (NYSE:YGE) is one of the midstream solar companies we touted in 2008, and continue to think is well-positioned in the group. That being said, the stock has been hammered, along with all of the other midstream solar firms. The stock opened on January 2, 2008 at $39.01. Yesterday, the stock closed at $5.34, trading at 0.66x our forecasted sales for 2008 of $1.05 billion (which would represent 88% Y/Y revenue growth, and at about 6x our forecasted 2008 income for YGE at $115.5 million (which would represent 116% Y/Y income growth). So the question is whether the stock is oversold at current levels, and whether it is timely now. The current stock price reflects a relatively downbeat Q3 earnings report (see below), concern about declining ASPs (management estimates that ASPs will decline by about 15% to 20% in the Q4, and by about 30% in 2009 from 2008 levels) and whether the business will have sufficient cash flow and capital on hand to cover its cap ex requirements in 2009 and planned expansion of capacity to 600MW. Management has iterated that its current cash flow and credit facility, as well as its expected cashflow will be sufficient. The December 23 announcement helps create some confidence that the business will be able to meet its expected $90 million in expected cap ex expenditures in 2009 (which will take capacity from 400MW to 600MW). On the positive side, polysilicon prices are also declining and this should help lower Yingli's blended poly costs, and unit cost per watt. Management expects this to decline by 12% to 17% in the fourth quarter and in 2009 by 40% to 45% from 2008 levels (which will providenbsp; leverage on gross margins). Yingli intends to move upstream through the purchase of Cyber Power, which owns a poly manufacturing business - a vertically integrated model which is being pursued by other midstream firms like LDK Solar. The question here is whether the timing is right, in light of the fact tha poly prices are expected to decline from the current $200 to $250 a kilo range to $100 in the next 12 months. On paper the move makes sense, and we certainly think companies like LDK will benefit from reduction of material costs and manufacturing costs associated with adding poly manufacturing to its portfolio - integrating the entire PV value chain, and gaining control over all critical aspects ot the production, and even in improving quality through tighter quality controls. Yingli can benefit in all of these manners, and the risks as we see it, are execution, getting the facility integrated efficiently and controlling costs in the process - in addition to ensuring it has sufficient capital on hand operate the integrated business. If it can, then the benefits should far outweigh the margin pressure poly is going to experience over the next 12 months or so.nbsp; Recent Announcements December 23 - Secured $70 million loan agreement with China Development Bank to fund its planned 100MW expansion, which will bring annual prodcution capacity in Q3 2009 to 600MW. December 19 - Signed sales agreements for 35MW and up to 65MW to two German integrators (20MW to City Solar, w/ option to purchase additional 30MW in 2009; and 15MW of modules to Wirsol w/ option to purchase additional 20MW in 2009). December 5 - Signed sales agreements with Germany-based IBC Solar for 91MW of modules (through Dec 2009). December 5 - Reaffirmed 2009 shipment forecast of 550 to 600MW of modules, and GM for 2009 of 24% (or better). Recent quarterly financial results (Q3) * Net revenues of $325.5 million, an increase from $289.6 million sequentially and $188 milllion from the same period last year. * ASPs were $4.04 per watt, down 3.8% from $4.20 per what in the Q2, 2008 (driven by depreciation of the euro against the RMB) * Total PV module shipments were up 17.3% to 80MW on a sequential basis. * Gross margin was 22.3%, down from 25.8% the prior quarter. * Op ex was basically flat on a sequential basis at $17 million, and represented about 5.2% of net revenue. * Operating income was $55.5 million, down 4.7% from the prior quarter. * Net income was $22.2 million, down from $30.2 million in the prior quarter. Our Take We mentioned at the outset the $5.34 represents a 0.6x multiple of our forecasted sales this year, and a 6x multiple of our forecasted income for YGE this year. If we look at the stock in a vacuum relative to its peers and against its most recent quarterly report, we donrsquo;t think the stock is too oversold. If we look at the midstream solar sector (its peers) relative to the growth prospects of the industry and strong underlying growth drivers, we think the whole group is tremendously oversold, including YGE. For example, LDK Solar (NYSE:LDK) is trading at 0.77x our forecasted 2008 sales, and 4.25 our forecasted 2008 earnings. Relative to LDK, which continues to outperform all companies in its group, YGE still looks a bit expensive. On the other hand, we think that LDKrsquo;s current valuation takes into consideration only the risk in the sector (module oversupply, ASP erosion, tight credit markets) and none of the upside (strong secular growth drivers driven by domestic and global legislation, increasing cell efficiencies and the fact that declining prices ultimately bode well for increased end demand). Our forecasted top-line sales number for YGE in 2009 is $1.45 billion, and our forecasted income is $159 million. We believe that these are conservative and defensible estimates, assuming 550MW of modules (the low end of YGErsquo;s guidance) shipped at ASPs per watt of about $2.65, well below industry estimates. Based on these assumptions, the stock is currently trading at 0.48x FY09 estimated sales and 4.33x FY09 estimated income. Our near term stock price target range for YGE is $8 to $9, a 49% to 68% increase from current levels, which would represent a 1x sales multiple of 2008, and a 0.72x sales multiple of 2009; and a 10x earnings multiple of 2008, and a 7.24x earnings multiple of 2009. Here is what other analysts are saying: middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Jesup amp; Lamont rates at BUY with $11 price target (12/1/08) middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; AmTech Research rates at BUY with $6 price target (11/13/08) Important Disclosure: The SCPEditor is does not hold any position (Long or Short) in YGE. The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. pa href="http://feeds.feedburner.com/~a/smallcappulse/feed?a=o2i0LS"img src="http://feeds.feedburner.com/~a/smallcappulse/feed?i=o2i0LS" border="0"/img/a/p

We Think No Stock is More Attractive than LDK Solar (NYSE:LDK) at Current Levels

Small Cap Pulse — Fri, 14 Nov 2008 22:03:00 +0000

November 14, 2008 – LDK Solar (NYSE:LDK) one of our favorite companies to tout on the Small Cap Pulse, tipped to a lowly $12.40 in yesterday’s session before closing back up to $14.32. The management took the time this week to remind the Street that its fundamentals remains strong, despite a challenging global economic environment: secured contracts of 1.8GW for 2009, more than 100% of current planned output for the year; operating at full capacity; strong cash position of $460 million with available line of credit for another $430 million. At current levels, we think the stock is ridiculously oversold and represents a huge upside – near and long term. Here is why: At yesterday’s closing price, the stock is trading at a P/E ratio of 5.26x trailing-twelve months’ earnings and a P/S ratio of 1.49x trailing-twelve months’ sales. We are forecasting FY2008 revenue of $1.8 billion and profit of $324 million; and FY2009 revenue of $2.9 billion and profit of $580 million. This represents Y/Y revenue growth from 2007 to 2008 of 243% and Y/Y profit growth from 2007 to 2008 of 132%. LDK has $4.32 in cash per share. The company is a leader in a massive growth market – solar. Global photovoltaic (PV) demand is expected to grow from 2.8GW in 2007 to 8.9GW in 2010 to 15.9GW in 2012. Currently, installed solar on a worldwide basis is about 0.1% of total global electricity consumption. In addition to the support solar is getting on a legislative basis from governments around the world, efficiencies are getting better, technologies are evolving and solar is getting closer to hitting grid parity – which means that within the coming years solar will be able to compete with conventional energy sources without subsidy. This ultimately will make solar more competitive and will drive consumption. LDK’s Expansion and Outlook · Wafer Capacity Expansion – Forecasted at 1,100MW in 2008 to 2,000MW in 2009 · Strong Backlog – 11,872MW through 2018 LDK is fast evolving its business upstream to become a leading player in the poly business with its polysilicon project in China – a 15,000 t/a project which is China’s largest poly project. It will begin operation in early 2009 with planned production of 5,000 to 7,000 tons of poly. This is going to give LDK stronger margin control through vertical integration of its midstream and upstream businesses – an important factor in the current environment which expects margin pressure midstream due to module oversupply and margin pressure upstream due to a massive amount of poly coming online in the industry beginning in 2010. But then again, if we are right about demand, and with only 0.1% penetration in terms of solar’s contribution to the global energy grid, we think that demand and higher efficiency will more than compensate for the increases industry-wide in terms of supply. Getting back to the financial metrics – at yesterday’s closing price, the stock is trading at 0.85x this year’s forecasted sales, and 0.53x FY2009 forecasted sales; and it is trading at 4.73x this year’s forecasted earnings and 2.63x next year’s forecasted earnings. This is remarkable, given the business’ fundamentals and outlook! At a modest 10x P/E against this year’s forecasted earnings, the stock would be trading at $30. At a 7x P/S against next year’s forecasted earnings, the stock would be trading at $38.00. We think these multiples are extremely defensible, and are calling for the stock to climb back to a multiple of 13x P/E as the markets stabilize at some point by mid-2009. This would put us at a projected price target within 12-months of $70. At yesterday’s closing price of $14.32, we think this represents one of the most compelling opportunities out there. Important Disclosure: SCPEditor is LONG LDK. The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance

Why We Think Solar Is Oversold and Has Much Room for Growth

Small Cap Pulse — Wed, 29 Oct 2008 21:13:00 +0000

October 29, 2008 – With valuations on the S&P based on estimated profits now at 10.7 times, and valuations in the solar sector at even lower levels, we have to ask how pessimistic, and how cynical the markets are going to get when valuing these companies. What is a reasonable valuation for an industry that is growing 62% per year and for leading companies that are posting triple-digit earnings and revenue growth? For example, LDK Solar (NYSE:LDK) is trading 6.13 times trailing 12 months earnings, and slightly more than 1 times trailing 12 months sales. It is posting more than $100 million in profit per month, it has $1 billion in cash (on prepayments of contracts) and is booked through 1018. It has no need to raise capital and has recently said it won’t do so for the next couple years while it is doubling production capacity. The company expects to grow its earnings from about $140 million to $324 million this year, and will increase sales from $524 million to $1.8 billion this year. There are several other examples we can cite which have equally compelling valuations, including JA Solar (NYSE:JASO), Yingli Green Energy (NYSE:YGE), Trina Solar (NYSE:TSL), Canadian Solar (Nasdaq:CSIQ), and Suntech (NYSE:STP). We get the fact that there are going to be module oversupply issues in 2009 which will pressure margins, and this should call for a reduction in valuation multiples for the midstream group. And we get the fact that polysilicon prices will come down in 2010 and 2011 to reflect the aggressive ramp in production capacity and the fact that new players are coming into the market, like LDK and Hoku (Nasdaq:HOKU). And we get the fact that the tight credit markets current financial crisis on a global basis will undoubtedly have an impact – as yet unknown – on demand. But we think all of this has more than been priced into stock prices. And we think that what continues to be overlooked is the impact the extension of the ITC is going to have on the industry and how much it will counter some of the negative trends we mentioned above. Navigant consulting said it expects the renewal of the ITC to result in as much as $232 billion in investments into solar through 2016. And what is also getting overlooked, in our opinion, is how quickly the industry is evolving from in terms of its path to hitting grid-parity – the milestone which will enable solar to compete on a non-subsidized basis with conventional energy sources. Prices per watt are coming down, and this will pressure margins, but cells are becoming more efficient which will enable cell producers to defend their margins. And when solar hits grid parity, volume will take off, and more than compensate for reduced margins. The bottom line, in our opinion, is that the solar industry has been oversold, reflecting what we think is a surreal level of pessimism, and one that is totally unwarranted and indefensible, given the facts, given the fundamentals and given the secular trends. There is plenty of room for growth: · Solar Contribution to Electric Power Sector. Through seven months in 2008, solar represented .02% (5 trillion Btu) of the total 2,378 trillion Btu that renewable energy contributes to the electric power sector. To put it in perspective, geothermal accounted for 7% (179 trillion Btu) and wind represented 11% (277 trillion Btu); · Solar Contribution to Residential Energy Consumption. Through seven months in 2008, solar represented 13% (43 trillion Btu) of the total 324 trillion Btu that renewable energy contributes to residential energy consumption. To put it in perspective, biomass (wood) represented 82% (268 trillion Btu). Note that solar didn’t even register in terms of renewable energy consumption in the Energy Information Administration’s data on renewable energy consumption in the commercial sector (which totaled 68 trillion Btu); · Solar As Percentage of Total Renewable Energy Consumption. Through seven months in 2008, solar represented 1% (48 trillion Btu) of the total 4,440 trillion Btu of renewable energy consumption. To put It in perspective, geothermal represented 4% (203 trillion Btu), wind represented 6% (277 trillion Btu) and biomass represented 50% (2,224 trillion Btu). · Solar Contribution to Total Electricity Net Generation. Through seven months in 2008, solar represented 517 million kilowatthours of total electricity net generation (2,424,870 million kilowatthours). To put it in perspective, coal represented 1,169,570 million kilowatthours and nuclear represented 466,376 million kilowatthours. · Solar Contribution to Primary Energy Consumption. Through seven months in 2008, solar represented .048 quadrillion Btu of total primary energy consumption (59.283 quadrillion Btu). To put it in perspective, coal represented 13.213 quadrillion Btu, natural gas represented 14.630 quadrillion Btu, petroleum represented 22.024 quadrillion Btu and nuclear represented 4.866 quadrillion Btu. · Solar Contribution to Primary Energy Production. Through seven months in 2008, solar represented 0.48 quadrillion Btu of total primary energy production (43.179 quadrillion Btu). To put it in perspective, coal represented 13.678 quadrillion Btu, natural gas represented 12.330 quadrillion Btu, crude oil represented 6.335 quadrillion Btu, and NGPL represented 1.454 quadrillion Btu. Note that there is a marked discrepancy between production and consumption, implying that supply demand imbalances persist, which bodes well for solar and other renewables. Source: EIA Monthly Energy Review, October 2008 Note: Renewable energy’s contribution to the overall net generation of electric power in far outpaced the growth of conventional energy sources on a year-over-year basis, 87% to 2%. But there is significant room for growth, with renewable energy accounting for slightly more than 2% of total net generation of electric power in both 2007 and 2008. Important Disclosure: SCPEditor is LONG LDK, YGE and HOKU. SCPEditor has no position in JASO, TSL, CSIQ and STP. The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance.

Our Conviction is That Solar is Way Oversold

Small Cap Pulse — Fri, 24 Oct 2008 20:54:00 +0000

October 24, 2008 – The markets are clearly in a panic today and will inevitably flush more equity out of the system. We can only hope that this is ‘capitulation’, but don’t presume to be able to predict how stocks will trade in the near-term. Here is what we can say with a certain level of confidence: an increasing number of stocks are getting OVERSOLD. Take a look at the solar sector. Here is a list of stocks with yesterday’s closing prices (inevitably they will be lower today) and some corresponding fundamentals to consider which make us think that they are tremendously oversold: · Canadian Solar (Nasdaq:CSIQ) closed at $9.15 yesterday with a market cap of $301 million. The company is expected to post revenues of more than $900 million this year, and about $1.7 billion next year. Its 2007 to 2008 revenue growth is 213% and its 2008 to 2009 revenue growth will be about 81%. Its’ 2008 EV/Revs is 0.3 and 2009 EV/Revs is 0.1. It is expected to earn $2.70 per share in 2008 and $3.60 per share in 2009. Its P/E against 2008 forecasts is 3.4 and against 2009 forecasts is 2.5. Its’ 2009 PEG based on forecasts is 0.1. It is trading 1.2x book value. · JA Solar (NYSE:JASO) closed at $4.41 yesterday with a market cap of $722 million. The company is expected to post revenues of just more than $1 billion this year, and $1.8 billion next year. Its’ 2007-2008 revenue growth rate is 182% and its 2008-2009 expected revenue growth rate is 77%. Its’ 2008 EV/Revs is 0.5 and 2009 EV/Revs is 0.3. It is expected to earn 0.98 in 2008 and $1.50 in 2009. Its P/E against 2008 forecasts is 4.5 and its P/E against 2009 earnings forecasts is 2.9. Its 2009 PEG based on forecasts is 0.1. It is trading 1x book value. * LDK Solar (NYSE:LDK) closed at $16.27 yesterday with a market cap of $1.96 billion. The company is expected to post revenues of about $1.8 billion in 2008 and $2.9 billion in 2009. Its’ 2007-2008 revenue growth rate is 243% and its 2008-2009 expected growth rate is 61%. Its’ 2008 EV/Revs is 1.3 and its 2009 EV/Revs is 0.8. It is expected to earn $3.26 in 2008 and $4.52 per share in 2009. Its’ P/E against 2008 earnings is 5 and its P/E against 2009 forecasted earnings is 3.6. Its’ 2009 PEG based on forecasts is 0.1. It is trading at 2.8x book value. · Trina Solar (NYSE:TSL) closed at $11.22 yesterday with a market cap of $283 million. The company is expected to post $885 million in revenue in 2008 and $1.3 billion in revenue in 2009. Its’ 2007-2008 revenue growth rate is 193% and its expected 2008-2009 revenue growth rate is 51%. Its 2008 EV/Revs is 0.3 and 2009 EV/Revs is 0.2. It is expected to earn $3.68 in 2008 and $5.43 in 2009. Its P/E against 2008 forecasts is 3x and its P/E against 2009 forecasts is 2.1. Its’ 2009 PEG based on forecasts is 0.00 and its price to book is 0.7x. · Yingli Green Energy (NYSE:YGE) closed at $4.31 yesterday with a market cap of $558 million. The company is expected to post 1.1 billion in revenue in 2008 and 1.6 billion in revenue in 2009. Its 2007-2008 revenue growth rate is 86% and its 2008-2009 expected revenue growth rate is 52%. Its 2008 EV/Rev is 0.8 and its 2009 EV/Revs is 0.5. It is expected to earn $0.97 per share in 2008 and $1.44 per share in 2009. Its P/E against 2008 forecasts is 4.4 and its P/E against 2009 earnings forecasts is 3. Its 2009 PEG based on forecasts is 0.1 and its price to book is 0.9. These are just a few examples of what we are seeing in the markets in terms of oversold solar companies based on fundamentals. The solar industry is a burgeoning growth industry which currently represents just about 1% of total energy production, and its piece of the energy pie is going to grow by leaps and bounds in the next decade. Here are some additional facts: • World solar photovoltaic (PV) market installations reached a record high of 2,826 megawatts (MW) in 2007, representing growth of 62% over the previous year. • Global industry revenues were $17.2bn in 2007, while capital investment through the PV business chain totaled $5.3bn. • The extension of the ITC could drive 19,000MW additional solar installations, and increased investment of $232 billion between 2009 and 2016. We remain completely bullish on the solar sector, and on the companies which we mentioned above, amongst others. The solar stocks will assuredly be caught up on the broader market selling, and so subject to further downward pressure. But the fundamentals driving the industry are solid, and in place for the next 20 years. The industry has broad legislative support. It has broad support in the private sector. And it has broad support on an international basis. Looking out past 2009, we think that this period of performance by solar stocks will be seen as a unique opportunity to purchase dramatic growth and earnings at a remarkable value. Important Disclosure Note: SCPEditor is LONG LDK and YGE. The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance.

Where to Find Value and Growth in the Midst of Volatility

Small Cap Pulse — Wed, 22 Oct 2008 20:55:00 +0000

October 22, 2008 – Stocks have been revaluated in the past couple months, to say the least, and we hear pundit after pundit in the financial media prognosticating as to whether stocks have hit levels which truly represent oversold conditions, or whether there is still more downside, or both. No one knows, and generally speaking this point is not controversial. We will continue to report on a number of companies we think that regardless of whether the markets move up or down five hundred points in the near term – and they will – investors should own for the mid-to-long term. We continue to keep our sights on the alternative and clean tech sectors as being amongst the most compelling from a growth perspective. On a bipartisan basis, support for alternative energy is strong. The private sector continues to invest, and the international community is on board as well. The international energy agency has called for an remarkable $45 trillion to be invested into alternative energy and clean tech between now and 2050 to hit targets for carbon and GHG reduction. Investments will continue to pour into solar, wind, geothermal, biofuels, energy efficiency, energy storage and electric as well as hybrid automotive. Here is one of the most impressive companies, in our opinion, in the solar industry: LDK Solar (NYSE:LDK) – a Chinese solar wafer maker, which is moving upstream building a massive polysilicon plant which will enable it to better control its costs, and maintain stronger margins. The company has made a habit of raising guidance and beating expectations. Recently, it raised guidance for revenue to a range of $530 to $540 million for the Q3, up from a previous guidance range of $486 to $496 million. We expect it to post $1.8 billion in revenue this year, and $2.9 billion in revenue next year. The stock closed at $20.13 yesterday, about 1.20x this FY2008 sales, .74x FY2009 sales, and 6.6x projected earnings for this year. These multiples are characteristic of a low-growth, dividend paying utility company but they are not characteristic of a business that is growing revenue 243% from 2007 to 2008 and growing earnings 132% from 2007 to 2008. At a 2x price to sales ratio for FY2008, the stock would be trading at $33, and a 14x P/E ratio for this year’s forecasted earnings, the stock would be trading at $42. We think that both of these multiples are absolutely defensible and reasonable. Global growth in the solar market has been dramatic, and will only continue. Consider these points: · World solar photovoltaic (PV) market installations reached a record high of 2,826 megawatts (MW) in 2007, representing growth of 62% over the previous year.(*) · Global industry revenues were $17.2bn in 2007, while capital investment through the PV business chain totaled $5.3bn.(*) · The extension of the ITC could drive 19,000MW additional solar installations, and increased investment of $232 billion between 2009 and 2016. (**) (Source: Solarbuzz (*) and Navigant Consulting (**). So we are extremely bullish on the growth of solar for the foreseeable future, and solar companies building modules, wafers and cells to meet burgeoning demand downstream will need to get their polysilicon supply from someone. LDK will be one of the four to five primary suppliers. It is on track with all production, having recently announced that it reached annualized wafer production capacity of 1.2GW at the end of the third quarter, and ahead of its previously announced schedule target of year-end. This is a business that has set, and continues to set aggressive targets and meets and beats them. The stock is cheap, and to our point at the outset, whether the broader markets dip 500 points on any given day, the upside here, in our opinion, is undeniable. IMPORTANT DISCLOSURE NOTE: SCPEditor is LONG LDK. The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance.

Notes and Comments from Solar International and Piper’s Solar Symposium

Small Cap Pulse — Thu, 16 Oct 2008 21:23:00 +0000

October 16, 2008 – We attended the Solar International Expo this week in San Diego and were amazed by the participation and attendance for the event by the industry trade, as well as Wall Street. On Tuesday, Lazard held a closed conference for the industry’s leading solar firms, attended by its institutional clients, and yesterday, Piper Jaffray held a Symposium of its own for leading solar firms, and we attended that event, with a client of ours Premier Power (OTCBB:PPRW). Other firms in attendance at Piper’s Symposium were JA Solar (Nasdaq:JASO), GT Solar (Nasdaq:SOLR), Canadian Solar (Nasdaq:CSIQ), Applied Materials (Nasdaq:AMAT), Energy Conversion Devices (Nasdaq:ENER), LDK Solar (NYSE:LDK), BP Global Wind and Solar (NYSE:BP), Suntech Power (NYSE:STP), ReneSolar (NYSE:SOL), Trina Solar (NYSE:TSL), Akeena Solar (Nasdaq:AKNS), Q-Cells (QWV.DE) and Solarfun (Nasdaq:SOLF). Here are some of our notes from the presentations: Overall, one of the takeaways was that there are expectations for further commoditization in the wafer, module, cell and poly production segments of the market. There has been substantial expansion upstream from polysilicon manufacturers and entrance into the upstream markets from companies like LDK which will result in a substantial contribution to poly supply by mid-2010. GT Solar said its clients alone will being on about 60,000 metric tons of supply by that time. The additional supply and increased competition will be instrumental in helping to driving prices down. Another key factor in helping to drive prices down in the upstream channel is the introduction of new technologies from firms like GT Solar that will create further efficiencies for producers. This is probably good news, because firms at the mid-stream channel are going to need better pricing because there is expected to be some oversupply for modules that will also be a downward pricing influence. Module supplies were a major topic of discussion at the tradeshow, and at Piper’s event, and the consensus was generally that, at least in the next 12 months or so, oversupply will likely be the dynamic in the market. A wild card here is the credit markets, and whether projects and production will begin to get cancelled and/or pushed out. The general take on this issue was cautious optimism. Almost all firms, after reaffirming their own solvency and access to sufficient capital to manage their 2009 cap ex requirements, said that they hadn’t seen any significant cancellations or projects getting pushed back yet. But they generally acknowledged that this may become an issue next year if the recession deepens on a global basis. Anton Milner, CEO of Q Cells, was a bit of an exception here as he did acknowledge that he had seen some companies slowing down their plans, at least in the near term. Our take here is that companies that have strong balance sheets and access to capital will likely be able to stay their course, and even ramp capacity plans, while weaker capitalized companies will get weaker in this environment and be forced either to sell, or go the way of consolidation. This was another interesting topic at Piper’s Symposium – with producers’ stock prices being as cheap as they are in this market, have capitalizations gotten so cheap that it may make sense for larger players thinking about getting into the upstream production business to buy, rather than build. This was a question put to both Reyad Fezzani, CEO of BP Global Wind and Solar, and to Anton Milner. Both acknowledged that this is an ongoing discussion at their respective firms, while Milner disagreed that companies have gotten cheap enough to make this an actionable strategy for Q-Cells. Samuel Yang, CEO at JA Solar, said that he sees the current market environment being a good time to ramp his company’s capacity, and that JA Solar has the elasticity in its operating margins to withstand downward pricing pressure better than many of his peers. There was also a substantial amount of interest in the downstream market, and the impact of the ITC. Rhone Resch President of the Solar Energy Industries Association said that lifting the cap on residential should be a key driver for the market, helping to unleash pent up demand. He also said the utility exemption repeal is important. Interestingly, he said that the SEIA is going back to Congress to work to fine-tune the legislation, perhaps requesting an adjustment for the credits to create rebates, making them refundable, which could be more effective in the current economic environment. He also said that in a couple weeks, industry leaders will be meeting to discuss and plan solar’s agenda with the next Congress in the form of what he calls the “Big Ask”. He added that we can also look for the next Congress to develop a Renewable Portfolio Standard, and in the process, he will be leading the SEIA’s efforts to help create more market certainty for solar. The 8-year extension was a first critical step in this process. Two downstream companies presented at the Symposium, Akeena and Premier Power. An interesting topic of discussion in both of these sessions is the fact that installed solar in the U.S. runs about $8 per watt while it is about $6 in Europe and $6.60 in Japan. Why is the U.S. so much more expensive? Barry Cinnamon of Akeena and Miguel de Anquin of Premier agreed in their respective presentations that there is an administrative layer in the U.S. cost structure that is a materially more expensive contributor to installed cost than there is in Europe. Another interesting point that came out of discussion in the downstream markets is that the rooftop systems in Europe, and in particular Germany and Spain are going to be much more attractive from an investment perspective than ground mount systems. This is a dynamic that plays particularly well into Premier’s business, which has opened two offices in Spain and is exploring other areas for expansion in the EU region. So, again, the general take for the solar industry is upbeat, although tempered by a cautiously optimistic outlook for the near term. The ultimate impact of the global credit crisis on the near term demand for solar is still unclear. Or, more accurately, the demand is as strong as it ever has been, and growing, but the impact of the global credit crisis on budgets to pay for projects in the near term is still unclear. The good news is that there is a strong, and expectedly strengthening level of legislative support for the industry, and despite the rollercoaster that solar companies have endured in terms of Wall Street and stock prices, their access to capital for growth and production is still firmly in place. Moreover, the trends at all channels continue to point to the progression of the solar industry to grid parity. Prices are coming down, efficiencies are increasing and when these dynamics hit the tipping point, adoption in the energy markets for solar will explode.

Solar Comes to San Diego

Small Cap Pulse — Tue, 14 Oct 2008 20:20:00 +0000

October 14, 2008 – The largest solar conference in North America is being held this week, and all of the major players, as well as a strong representation from Wall Street, are in attendance, here in San Diego. Today, the conference kicks off, and in conjunction, Lazard is hosting a conference for several leading solar companies. Tomorrow, Piper Jaffray will be hosting a symposium where many of the same companies will present again. In addition, at the conference itself, in the Finance Track, Rob Stone of Cowen will be on panel discussing the financial and market conditions in the solar industry. So to be sure, this week we will come away with a significant amount of increased transparency into the health of the solar industry, which is much needed on the heels of the recent market turbulence with comments about oversupply in the module space that has created so much volatility. We will be attending Piper’s symposium, and the Finance Track at the show, and will report back the highlights. Amongst those presenting tomorrow at Piper’s symposium are JA Solar (Nasdaq:JASO), Yingli Green Energy (NYSE:YGE), GT Solar (Nasdaq:SOLR), Canadian Solar (Nasdaq:CSIQ), Applied Materials (Nasdaq:AMAT), Energy Conversion Devices (Nasdaq:ENER), LDK Solar (Nasdaq:LDK), BP Global Wind and Solar (NYSE:BP), Suntech (NYSE:STP), ReneSola (NYSE:SOL), Trina Solar (NYSE:TSL), Premier Power Renewable Energy (OTCBB:PPRW), Q-Cells (QCE.DE) and Solarfun (Nasdaq:SOLF).

October 8, 2008 – LDK Solar (NYSE:LDK)

Small Cap Pulse — Thu, 09 Oct 2008 00:08:00 +0000

October 8, 2008 - LDK Solar (NYSE:LDK) reported this morning that it has raised Q3 revenue guidance to a range between $530 million to $540 million, up from a previous guidance range of $486 million to $496 million. It also said that its shipments had a total capacity of 230MW to 240MW, up from a previously forecasted 210MW to 220MW. And it has reached 1.2GW of production capacity by the end of the quarter. This was its year-end goal, so it is clearly ahead of schedule. None of this should be too surprising for investors paying attention to LDK's results over the past couple of years. It has made a practice of executing and beating Street expectations, and raising guidance. Nonetheless, its stock has been sold off lately on broader market weakness and due to the Street's reaction to Goldman Sach's downgrades of First Solar (Nasdaq:FSLR) and SunPower (Nasdaq:SPWRA) yesterday, and related comments about module oversupply. We think the stock has tremendously oversold at current levels, and this morning's raise in guidance validates that sentiment. We now raising our forecast for LDK's FY2008 revenue to $1.8 billion, and our income forecast to $324 million. At yesterday's closing price of $19.32, the company is trading at less than 7x FY08 earnings, which, if we are right about our estimates, will be up 131% on a Y/Y basis. The stock is trading at 1.18x FY08 sales, which we forecast to be up 243%. These multiples do not reflect fair value, in our opinion, and are the byproduct of the broader market selloff, and yesterday's commentary from Goldman Sachs about oversupply in the module space. The oversupply issue is old news, and it has been getting priced into solar stocks now since January. The fact that Goldman Sachs decided to slash ratings on a couple companies that we agree, were still holding pretty stiff premiums on a relative basis, really shouldn't have bled over to impact LDK and several other midstream companies that have already been sold off to levels which more than factored this all in. But it did. We see this as unique opportunity to buy LDK at a tremendous discount to what more reasonable multiples would put the stock at. At a 14x PE against 2008 earnings guidance, the stock would be trading at $66. This is a 230% premium from current levels. The S&P average has historically support a P/E multiple of 14x, and this is with the inclusion of a broad number of businesses that don't show anywhere near the sequential and year-over-year growth rate that LDK continues to demonstrate. So we think this valuation and target is completely reasonable and defensible. That being said, the markets can stay irrational longer that you can remain solvent. This is the maxim that has been pushing so many fund managers to deleverage and blow out their positions - even the good ones - to get back to a level of solvency and risk that they can stomach. This is the euphoric dynamic which has driven the markets down 12% since we got the bailout bill, and more selling is on tap this morning. So LDK's stock can get cheaper, as its fundamental strength is being completely overlooked by the Street. We don't propose to be able to call bottoms. But we think anywhere at current levels the upside for LDK over the next 12 to 18 months, when the markets do eventually recover, is undeniable. Important Disclosure Note: SCPEditor Is LONG LDK. The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Disclaimer: Information has been obtained from sources considered to be reliable, but we do not warrantee that it is accurate or complete. This material is not an offer to sell or a solicitation of an offer to buy any securities. While we believe all sources of information to be factual and reliable, in no way do we represent or warrantee the accuracy thereof, nor the statements made herein. THE READER SHOULD VERIFY ALL CLAIMS AND DO HIS OR HER OWN DUE DILIGENCE BEFORE INVESTING IN ANY SECURITIES MENTIONED. COMMON STOCKS INVOLVE SUBSTANTIAL RISK AND IT IS POSSIBLE TO LOSE YOUR ENTIRE INVESTMENT. This information is not an endorsement of the Company by SCP. SCP is not responsible for any claims made by the Company. You should independently investigate and fully understand all risks before investing. Statements included in this email or fax may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks and uncertainties such as competitive factors, technological development, market demand and the Company's ability to obtain new contracts and accurately estimate net revenues due to variability in size, scope and duration of projects, and internal issues in the sponsoring client. Further information on potential factors that could affect the Company's financial results, can be found in the Company's Registration Statement and in its Reports on Forms 10-K and 10Q filed with the Securities and Exchange Commission (SEC).

Comments on First Solar (Nasdaq:FSLR) and SunPower (Nasdaq:SPWRA) Downgrades

Small Cap Pulse — Tue, 07 Oct 2008 20:46:00 +0000

October 7, 2008 – Solar stocks haven’t been getting any breaks lately. On Friday, the industry got much needed long-term visibility and Federal support through the extension of renewable tax credits, which will be a huge boost to sales in the U.S. markets, but the solar stocks suffered amidst a broader selloff as the Street focused on the dismal outlook for the domestic and global economies. And then this morning, Goldman Sachs’ solar analyst Michael Molnar cut First Solar (Nasdaq:FSLR) and SunPower (SPWRA) to Sell ratings citing oversupply in the sector for modules and not enough subsidies in Europe, sending the group reeling in pre-market activity. Here is our take: 1. Molnar’s comments seem to us to coming late. That the solar landscape, both in terms of feedstock production and module production is becoming increasing crowded and competitive, which will lead to commoditization, oversupply and downward pressure is no new news. In our opinion, these factors have been being priced into the group for the last eight months. 2. The ratings on First Solar (Nasdaq:FSLR) and SunPower (SPWRA) should not be taken as an indiscriminate call to sell all solar companies. Even as of yesterday’s close, FSLR was trading at a 57x P/E and SunPower was trading at a 104x P/E. Other companies in this sector, that remain extremely well positioned are trading at much more modest multiples. LDK Solar (NYSE:LDK) closed yesterday at a 9x P/E. Yingli Green Energy (NYSE:YGE) closed at a 10x P/E. JA Solar (Nasdaq:JASO) closed at a 22x P/E. Trina Solar (NYSE:TSL) closed at an 8x P/E. We think that LDK, trading at current multiples, has already more than factored in any of the risks Molnar cites and that the stock is tremendously oversold. The company is expected to grow its income this year from $139 million last year to $309 million this year (122% growth) and its top-line revenue from $524 million to $1.7 billion (224% growth). We are forecasting, based on management comments, FY09 revenue of $2.9 billion and income of $580 million. At yesterday’s close, LDK is trading about 4.4x our forecasted FY09 income and less than 1x FY09 P/S. These multiples don’t reflect a profitable growth stock that is posting triple-digit year-over-year top and bottom-line growth. 3. In every growth market, commoditization and oversupply are prevalent. And certainly, these are key factors which impact business margins, which in turn, should play into company valuations and price targets. That being said, there is a tremendous amount of growth in place for the solar industry driven by the government support at the state and federal level, the private sector, and on an international basis. Conventional wisdom is that hundreds of billions will be invested into alternative sources of energy over the next twenty to thirty years. The International Energy Agency and G8 have called or $45 trillion in investments. Solar will certainly get its share. We agree with recent comments from some solar executives that predict many companies in the industry today will be gone in a year’s time. That is also a common characteristic of every growth industry which attracts so many, and then consolidates. But for the companies well-positioned from a technology and manufacturing perspective, the catalysts for long-term growth and success are present. And in the case of so many of these companies, we think that this growth is nowhere near being factored in. Molnar’s comments were a shot-gun approach to the market, where he needed to use a scalpel - or at least this is how it is being translated by the media and the Street. To be sure, First Solar and SunPower will lead the rest of the group lower. We agree, and are on record, with the sense that First Solar and SunPower are overvalued relative to several of their peers, and to that end, the correction is not controversial. But to the extent that the some of the companies we mentioned above (in particular LDK and YGE) are negatively impacted, we can only point to this as a unique opportunity to accumulate. Important Disclosure Note: SCPEditor and/or his affiliates are LONG LDK and YGE, and do not have positions in TSL, FSLR, SPWRA and JASO. The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance.

ITC Extended In Senate – We Like HOKU (Nasdaq:HOKU),LDK Solar (NYSE:LDK) & Premier Power (PPRW.OB)

Small Cap Pulse — Wed, 24 Sep 2008 18:57:01 +0000

September 24, 2008 –The Senate passed a much anticipated tax package yesterday, which, amongst other things, renews the Investment Tax Credits (ITC) for alternative energy. This is a huge win for the renewable and clean tech industry, and frankly, we are surprised it didn’t hit heavier headwinds in the Senate vote – only 2 voted against the broader tax package. Perhaps its passage was a benefactor of a Senate that is focusing itself on the crisis in the financial markets and the proposed $700 billion bailout plan. Regardless, the passage of the extended tax credits will buoy the sector, drive growth and bode well for solar, wind, geothermal, clean tech, and other renewable energy companies. Under the bill, wind will get a single year of tax credit extensions, solar gets eight, tidal gets two. Buyers of PHEVs will get anywhere from $2,500 to $7,500 back. The eight-year extension of the investment credit for solar energy would more than triple investment during that period, to $325 billion, and almost triple employment in the industry, to 440,000 in 2016, according to the Solar Energy Industries AssociationPredictably, solar stocks reacted immediately to the news yesterday, and we expect that they will outperform on the news. Companies that we like in each of the solar segments, and that we think will benefit strongly from the ITC extension include: Upstream (polysilicon manufacturers): HOKU Scientific (Nasdaq:HOKU) – impressive $2.3 billion backlog, strong revenue visibility through 2020, smartly getting significant up-front prepayments on contracts to pay for its plant being built will reduce need to dilute shareholders. Stock closed yesterday at $6.40, with a $130 million market cap and our 12-month target for the stock is in the $15-$17 range. See our previous commentary on the stock. Midstream (wafer and module makers): LDK Solar (NYSE:LDK) – multi-billion backlog, leading wafer manufacturer becoming vertically integrated which will improve margins, expanding wafer capacity to 1,100MW in 2008 to 2,000MW in 2009, wafer backlog of 610MW in 2008, 1,200MW in 2009, 1,512MW in 20010 and 9,160MW from 2011-2018, strong revenue growth ($105 million in 2006, $523 million in 2007 and $1 billion+ expected in 2008) with equally impressive gross profit and net income growth (net income grew from $25.9 million to $139.1 million from 2006 to 2007). Stock closed yesterday at $34.92, trading at 13.49x P/E (ttm), earning $2.59 per share and at a $3.72 billion market cap. Our 12-month target for the stock is in the $63-$70 range. See our previous commentary on the stock. Downstream (integrators): Premier Power (OTCBB:PPRW) – a best-in-class integrator focused on commercial markets in the U.S. and Europe, has growth revenue from $16.7 million in 2007 to more than $48 million contracted this year, unlike so many of its peers, Premier has managed to grow profitably, which we think should put it in a position to demand a premium to peers like Akeena Solar (Nasdaq:AKNS). The stock closed at $5.25 yesterday, holding an approximately $152 million market cap. We haven’t arrived at a price target on this one yet, but we think that with the extension of the ITC, and Premier’s already demonstrated ability for strong revenue expansion while maintaining profitability in challenging market conditions bode well for stock appreciation. Important Disclosure: SCPEditor is LONG HOKU, LDK and PPRW, and is a principal of Aspire Clean Tech Communications, which is the corporate communications advisor to PPRW. It is paid $7,500 by PPRW on a monthly basis for a period of 12 months beginning in September and has been compensated by 30,000 shares for the 12-month period. The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance.

Business Week. CPI data.

Vlada Kynsky — Mon, 12 May 2008 14:06:00 +0000

Monday
Economic: Treasury Budget ($157.5B)
Earnings: CryptoLogic (CRYP), Holly (HOC), Hecla (HL), JA Solar (JASO), MBIA (MBI), Sprint (S), XM Satellite (XMSR), Clearwire (CLWR), Fluor (FLR), LDK Solar (LDK), Time Warner Tcom (TWTC), McDermott (MDR), Nuance (NUAN)

Tuesday
Economic: Import / Export, Retail Sales (0.0%, .2%), Biz Inventories (.5%)
Earnings: Camico (CCJ), Canadian Solar (CSIQ), DISH (DISH), Fossil (FOSL), GigaMedia (GIGM), HOKU (HOKU), Liz Claiborne (LIZ), TJX (TJX), VeraSun (VSE), Wal-Mart (WMT), Applied Materials (AMAT), Electronic Arts (ERTS), Home Inns (HMIN), MercadoLibre (MELI), Pan Am Silver (PAAS), Whole Foods (WFMI)

Wednesday
Economic: Weekly Crude, CPI & Core (.3%, .2%)
Earnings: Deere (DE), Diana Ship (DSX), Freddie (FRE), Jack Box (JBX), Macy’s (M), Agilent (A), Brocade (BRCD), Ctrip.com (CTRP), Sina (SINA), Teekay (TK)

Thursday
Economic: Weekly Claims (365K), Empire (1.0), CU & IP (80.2%, -.2%), Philly Fed (-20)
Earnings: Blackstone (BX), Blockbuster (BBI), Daimler (DAI), JC Penney (JCP), Urban Outfitters (URBN), Yingli Green (YGE), Autodesk (ADSK), BMC (BMC), Focus Media (FMCN), Hewlett Packard (HPQ), Nordstrom (JWN), Salesforce (CRM)

Friday
Economic: Housing Starts & Build P’s (940K, 912K), Michigan (63)
Earnings: Abercrombie (ANF)