China Solar Stocks Shine In US

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CHINESE solar-power companies are flocking to U.S. markets, offering investors a new way into one of the fastest-growing corners of the renewable-energy industry.

The latest frenzy over Chinese solar stocks was in evidence last week when Nanjing-based China Sunergy made its debut Thursday on the Nasdaq Stock Market, rising 51% in its first day of trading. Some investors are hoping for a repeat performance when two other Chinese companies that manufacture solar-energy equipment, LDK Solar and Yingli Green Energy Holding, list on the New York Stock Exchange in the next few weeks. A Chinese company already on the NYSE, Trina Solar, has filed for a secondary offering, and two more Chinese solar companies might offer shares in the U.S. in the coming year.

LDK is slated to list June 1. Its offering could raise as much as $470 million, which would make it the largest U.S. IPO of a mainland Chinese company since 2004.

The IPO boomlet reflects a confluence of two trends: growing interest in clean-technology stocks and demand from investors for more plays on China''s economy. The solar industry is growing about 30% a year, fueled by new government policies in the U.S., China and dozens of other countries wanting to boost alternative-energy use. Chinese companies are now rising to the fore, threatening rivals in the U.S., Europe and Japan and illustrating how China''s manufacturing advantages extend to the emerging clean-technology industry.

'Solar is a commodity and the only thing that matters is cost per watt,' says Jesse Pichel, a clean-technology analyst at Piper Jaffray. 'This industry will ultimately be based in China for all the same reasons that cellphones and computers are made there.'

Chinese solar stocks began to heat up in late 2005 when Suntech Power Holdings of China, one of the world''s largest producers of photovoltaic cells, listed on the NYSE. The $455 million IPO was the largest by a Chinese company in the U.S. that year, and the shares doubled in price in the first month before retreating.

This year, Suntech shares have been quiet; yesterday at midday, they were down four cents at $34.58, a gain of about 2% from the end of 2006. Shares of Suntech, which has a market value of about $5.5 billion, currently trade at about 19.2 times projected per-share earnings for 2008, according to CIBC World Markets.

Since Suntech''s listing, four other Chinese solar companies have sold shares in the U.S., and several have racked up considerable gains. All that activity raises concerns about a possible solar bubble.

'The excitement, to some extent, is warranted, but some of the valuations are getting out of hand,' says Jeff Osbourne, director of equity research at CIBC World Markets. On April 17, he downgraded two new Chinese stocks, Nasdaq-listed JA Solar Holdings and Solarfun Power Holdings, after their share prices topped his targets.

Analysts say many investors viewed Suntech''s initial success as an indicator for the overall Chinese solar industry, but some newcomers may not be as well positioned to deal with current industry dynamics. 'The market does not yet separate winners and losers,' says Mr. Pichel of Piper Jaffray. 'There''s more momentum money and less good trading on numbers.'

One key point of differentiation between the newcomers is access to polysilicon, a material used to convert sunlight into energy. The entire solar industry is battling a shortage of the material. Because silicon accounts for about 40% of the cost of a solar panel, the price companies pay for it over the next several years will have a huge impact on margins. Companies like Suntech, which have long-term silicon-supply contracts, will likely pay lower rates than competitors that have to buy it on the spot market.

That is one factor brightening prospects for LDK. The company contains costs by using recycled polysilicon, which is relatively easy and inexpensive to buy. LDK makes silicon wafers, a key ingredient in solar cells, which in turn are used in solar panels.

LDK is also at a sweet spot in the solar supply chain with relatively few competitors. Competition tends to be concentrated higher up the chain, between companies making finished solar panels. LDK is expected to sell 7.4 million ordinary shares -- about 17% of the company -- at between $25 and $27 each.

Access to silicon is also a plus for Yingli. Like Suntech, it is vertically integrated, producing everything from silicon ingots to finished panels. Yingli has secured a long-term silicon-supply contract with a major Chinese producer, according to people knowledgeable about the company.

The company aims to raise about $350 million with its IPO but hasn''t yet set the terms. Some analysts say Yingli will likely launch at a higher valuation than LDK because of its integrated structure. Yingli is likely to price in the range of $11 to $13 a share, according to a person familiar with the IPO.

Concerns about silicon prices have made some analysts cautious about the secondary offering from Trina Solar, another vertically integrated Chinese player. The company is relying on short- and medium-term silicon-supply contracts, which means Trina may be more vulnerable to fluctuations in silicon prices. The company released first-quarter earnings Monday, which showed that operating margins fell to 10.5% from 15.1% in the fourth quarter of 2006, a sign that rising silicon prices might be cutting into profitability.

American depositary shares of Trina, which listed on the NYSE in December and which has a market cap of about $1.2 billion, have roughly tripled from the IPO pricing. Last week, the company filed for a secondary offering of 5.4 million shares that is expected raise about $315 million. The shares trade at about 14.9 times earnings per share for 2008, according to Thomson Financial estimates.

Silicon isn''t the only problem faced by some of China''s solar players. Rampant piracy in China means U.S. and European companies might be reluctant to outsource production of cutting-edge solar technologies to Chinese suppliers.

Also, tough competition could prompt Chinese companies to sacrifice margin in the quest for market share. That would be especially damaging for the solar industry, where the high silicon costs are eroding profits.

Meanwhile, solar power isn''t a panacea for the world''s energy woes. While the price of solar energy has been dropping for decades, it is still significantly more expensive than power purchased from a grid in most parts of the world, and the industry relies heavily on government subsidies.

中国的太阳能企业接二连三地涌入美国上市，这为投资者开辟了一条进入可再生能源行业中一个迅猛发展领域的新途径。

投资者对中国太阳能类股的热情在上周再次显现出来，总部设在南京的中电光伏(China Sunergy)在那斯达克首日上市股价即飙升了51%。投资者期望另两家太阳能设备制造商赛维LDK太阳能高科技有限公司(LDK Solar)和英利绿色能源控股有限公司(Yingli Green Energy Holding)未来几周在纽约证交所上市时也能有类似表现。已经在纽约证交所上市的天合光能(Trina Solar)提出了大股东转售申请，还有两家中国太阳能公司明年可能在美国募股。

LDK将于6月1日上市。该公司融资规模可能高达4.70亿美元，从而成为2004年以来在美国IPO金额最大的中国大陆企业。

如此多的太阳能公司进行IPO是两大趋势相互作用的结果：对清洁技术类股日益增加的兴趣和投资者希望进一步参与到中国经济中的要求。在美国、中国等数十个国家推广替代能源的新政策推动下，太阳能行业的年增长速度达到了30%左右。中国公司现在正跻身前列，已经危及到了美国、欧洲和日本竞争对手的地位，这也显示出，中国的制造业优势在向新兴的清洁技术行业延伸。

Piper Jaffray清洁技术分析师杰西•皮切尔(Jesse Pichel)说，最终该行业的发展基地将位于中国，原因就同在那里生产手机和电脑一样。

中国的太阳能类股从2005年下半年开始升温，当时全球最大的太阳能电池制造商之一尚德太阳能电力有限公司(Suntech Power Holdings of China)在纽约证交所上市。4.55亿美元的IPO是当年中国公司在美国募股的最大规模。该公司股价在一个月内上涨了一倍，随后出现了回调。

尚德太阳能的IPO定价为15美元，该股周二收于34.79美元。CIBC World Markets的数据显示，尚德太阳能的市值约为55亿美元，目前的股价约为2008年预期收益的19.2倍。

自尚德太阳能上市以来，又有四家中国太阳能公司在美国募股，其中几家涨幅巨大。所有这些都带来了可能存在太阳能泡沫的担忧。

CIBC World Markets股票研究部主管杰夫•奥斯伯恩(Jeff Osbourne)说，在某种程度上说，这种热情是合理的，但其中一些股票的估值正在失去控制。4月17日，在那斯达克上市的两只中国新股晶澳太阳能(JA Solar Holdings)和林洋新能源(Solarfun Power Holdings)超过了他的目标股价后，他下调了这两只股票的评级。

分析师称，许多投资者认为尚德太阳能最初的成功代表了中国的整个太阳能行业，但一些新公司在目前的行业发展情况下可能并未占据有利位置。Piper Jaffray的皮切尔说，市场尚未分出赢家和输家，不分青红皂白追涨的资金太多。

新公司出现分化的关键一点在于多晶硅的供应。多晶硅是一种将日光转化为能源的材料。整个太阳能行业普遍受到了多晶硅短缺的局限。由于硅占太阳能板成本的40%左右，今后几年公司获得多晶硅的价格将对其利润产生巨大影响。尚德太阳能等签订了长期硅供货合约的公司可能比从现货市场上购买的公司支付更低的价格。

这是LDK前景看好的一个因素。该公司通过利用回收多晶硅控制了成本。LDK生产晶圆，这是太阳能电池的主要材料。而太阳能电池则用于太阳能板中。

LDK的另一个优势是处在太阳能供应链上的一个有利位置，竞争对手很少。竞争主要集中于供应链的末端，即生产太阳能板成品的企业之间。预计LDK将发行740万股普通股，占公司总股本的17%左右，价格约在25美元至27美元之间。

英利绿色能源在获取硅供应方面也处于有利位置。同尚德太阳能一样，它也是一家垂直一体化公司，生产从硅锭到成品太阳能板等几乎所有产品。据知情人士透露，英利已经同中国一家主要生产商签订了长期的硅供应合约。

该公司计划通过IPO融资3.50亿美元左右，但还没有确定具体条款。一些分析师表示，由于公司的一体化构架，英利的估值可能会比LDK更高。据了解此次IPO的人士称，英利可能将价格区间定在11美元到13美元之间。

对硅价的担忧让一些分析师对中国另一家垂直一体化公司天合光能的大股东转售持谨慎态度。该公司目前主要依赖中短期的硅供应合约，这意味着它更容易受到硅价波动的冲击。该公司周一发布了第一季度业绩，其中运营利润率从2006年第四季度的15.1%降至10.5%，显示出硅价上涨可能导致了该公司赢利能力的下降。

天合光能的美国存托股票去年12月份在纽约证交所上市，目前已经比IPO定价上涨了两倍左右，市值约为12亿美元。上周，该公司提交了向大股东转售540万股股票的申请，预计融资额将达到3.15亿美元左右。Thomson Financial的数据显示，目前该股股价约为2008年预期每股收益的14.9倍。

硅的供应和价格还不是中国太阳能企业面临的唯一问题。中国侵犯知识产权现象的猖獗意味着欧美企业可能不愿将先进太阳能技术的应用外包给中国供应商。

而且，激烈的竞争可能促使中国企业牺牲利润以抢占市场份额。这将更加不利于太阳能行业的发展，而硅成本的居高不下已经侵蚀了公司的利润。

而且，太阳能并不是解决全球能源问题的万能灵药。尽管太阳能价格在这几十年里不断下降，但在全球大多数地区仍大大高于普通电网的电力价格，该行业仍严重依赖于政府补贴。