Solar energy stocks have been down partly because of fears that the German government would drastically cut solar energy subsidies. However, those fears have subsided as the ruling parties in Germany recently reached an accord to cut subsidies only by 8% in 2009 and 9% in 2010, which was considerably less than the industry and analysts had expected. This issue has been a dark cloud hovering around the sector and its stock prices for the past several weeks.
China Sunergy Co., Ltd. (Nasdaq:CSUN) revenues for the three months ended March 31, 2008 were $77.0 million, surging 32.3% from the first quarter in 2007. The company was able to pleasantly surprise analysts with net income in the first quarter 2008 of $500,000. Although net income decreased from 2007 by 90%, according to management, this decrease was due to a three-week interuption to operations caused by heavy snow storms in January and higher silicon wafer costs, which was due primarily to the strengthening of the Chinese Renminbi against the U.S. dollar.
The Company has ample reserves with cash and cash equivalents of $110.4 million as of March 31, 2008. China Sunergy is also funding its operations from internal cash flow as it reported positive cash flow from operations for the three months ended March 31, 2008 of $1.8 million (net income plus depreciation, excluding positive working capital changes).
China Sunergy Co., Ltd. (Nasdaq:CSUN) manufactures solar cell products in China. The Company utilizes crystalline silicon solar cell technology converting sunlight into electricity through a process known as the photovoltaic effect. China Sunergy is in the right sector and in the right country. China is a huge market and as mentioned in a prior article, the Chinese government is very protective of its industries, giving China Sunergy a major advantage over foreign compteitors. It is difficult to predict which companies will endure in a fast growing technological industry. However, putting together a basket of solar energy companies, which includes some Chinese market exposure should produce sunny results for your portfolio.
China Sunergy closed Friday, June 6th, at $11.51. As evidenced by the chart below, the stock is down 40% from its fifty-two week high of $19.23.
References:
http://www.chinasunergy.com/en/index.php
Company's First Quarter 2008 Financial Results
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