NEVs blog

Equities and commodities all fell during the week ending November 14th.  US REITs were particularly hard hit (RWR -18.5%).  For a complete summary visit our returns page. 

Sustainable energy also fell sharply with only 10 companies in our indices advancing.

SOLAR has experienced continuted high volatile with a variety of downgrades occuring during the week.    On Wednesday the index hit its 52 week low and closed the week down 74.5% YTD.  

This huge adjustment has left  the market cap of our SOLAR index shrinking to USD 33.4 billion from a peak of over USD 110 billion.   Some of the US traded companies, Yingli (YGE), JA Solar (JASO), SolarFun (SOLF), Trina (TSL), and Canadian Solar (CSIQ), are trading below book value with trailing PE ratios ranging from 4.6 – 6.5. 

These price levels reflect a very negative outlook for profitabilty and growth at the companies.    The negative outlook is stemming from concerns about sales levels,  margins, and negative currency exchange movements.   

Some data is coming out allowing us to assess the current valuation levels.  In its conference call this week JA Solar (JASO) reduced its sales forecast in 2009 to between USD 1.5 – 1.7 billion and EPS to USD 0.90.   These numbers reflect a huge 75+% sales growth over expected 2008 sales of USD 849.5 – 878.9 million and a forward PE of 3.1 on Friday’s close.   Sunpower also lowered its guidance for 2008 to EPS of USD 1.68, a forward PE of 15.2 on Friday’s close.   

Mark has a long position in JASO.

Author: Mark Henwood

Emerging markets, EAFA, and the US market (S&P 500) were little changed on the week, commodities (DJP) rose 2.8%.  Sustainable energy stocks created some excitement but overall were mixed:

Solar raced ahead for the week rising 9.5% driven by a variety of positive developments.  Three of the index components China Sunergy (CSUN), Suntech Power Holdings (STP), and Rensola (SOLA.L) all rose over 25% for the week.

On the cost side silicon supplies are expected to increase in 2009 resulting, according to Suntech Power Holdings (STP), in a potential price drop of up to 20%.  This may allow margins to increase while lowering the cost of the final product. 

Demand continues to be strong with expectations that Italy, Germany, and other countries will offset any reduction in the Spanish market.  Demand seems to also be growing for larger scale plants with announcements for a 10MW plant by Yingli (YGE) and an 800 MW project by Pacfic Gas and Electric in Calornia. Note that this one project is larger than the annual production capacity of most solar companies. Solar companies are also executing well with China Sunergy (CSUN) leading the way with an earnings suprise this week of 125% which drove its 29.%5 increase for the week.  The triple play of expected lowering of costs, strong demand, and good financial execution created over USD 9 billion in increased market cap. 

Mark is the founder of Camino Energy, an information provider specializing in globally traded sustainable energy stocks.

Author: Mark Henwood

Emerging Markets and commodities fell while US markets rose.  The dollar strengthened 3.6% against the Euro.

 

The three largest strategies, Renewable Electricity, Solar, and LED-Lighting all declined against a backdrop of a stronger dollar.  With 45% of both the Solar and Renewable Electricity Indices priced in Euro’s or Euro zone currencies the weekly decline was driven to some degree by currency movements.  Some other factors affecting the week included an analyst upgrade (CREE +13.0%) and concerns about polysilicon supply affecting 2009 earnings (YGE -12.9%). 

Mark is the founder of Camino Energy, an information provider specializing in globally traded sustainable energy stocks.