Social Media & The Feedback Economy: Risks, Rewards & Opportunities
Solar reveals major rewards and risks
Click here to load reader
-
Upload
patrick-obrien -
Category
Documents
-
view
220 -
download
4
Transcript of Solar reveals major rewards and risks
Markets
26 renewable energy focus January/February 2008
Solar reveals major rewards and risksRENEWABLE ENERGY STOCKS CONTINUED THEIR RELENTLESS SURGE
UPWARDS TOWARDS THE END OF LAST YEAR BOOSTED BY THE
FAVOURABLE Q3 EARNINGS SEASON AND THE BOOMING SOLAR
SECTOR. Patrick O’Brien
In the period from the end of September to
the end of November 2007, the WilderHill
New Energy Global Innovation Index (ticker:
NEX) – which tracks 88 stocks across all
significant sectors of the low-carbon energy
industry, including renewable energy,
biofuels and emerging low-carbon technolo-
gies – easily outperformed the S&P500,
AMEX Oil and Nasdaq. The NEX ended
November up 6.6%, while the other three
indices all fell, by up to 3%.
However the renewables sector still involves
signifi cant risk of the NEX constituents, more
stocks fell in value (46) than increased (42),
and while some individual stocks off ered
incredible returns (one doubled in value), two
stocks tumbled by over 50%.
Solar was the star of the show during the
period – 7 of the 8 biggest gainers on the NEX
were from this sector. Five of them increased
their market capitalisations by over a billion
dollars.
Thin fi lm cell maker First Solar led the way, up
by 101%. It is often cited as an example of the
irrational exuberance in the solar sector due
to the fact that it has by far the highest valu-
ation multiples, but it delivered an excep-
tional quarter – doubling revenue in Q3
sequentially while reporting an EBIT margin
of 30.4%.
The second highest performer was China-
based cell and module manufacturer Suntech
which gained 98.4% during the period. The
increase was largely due to its increase in
production targets for 2008 during which it
expects revenue of up to US$2.1bn.
While many of the larger solar stocks enjoyed
a stellar earnings season, this was not a uniform
phenomenon, as the two biggest losers on the
index were also major solar players. LDK Solar
and Conergy brought up the rear with falls of
57% and 58% respectively.
Chinese wafer manufacturer LDK suff ered
badly after its former fi nancial controller
made public allegations against the company,
claiming it was overvaluing the inventory of
silicon on its balance sheet. Despite protesting
that the claims “have no merit” and revising
its fi nancial forecasts upwards, investors do
not seem to have been persuaded, looking at
the stock over the period shown by the table
on the opposite page – nb: activity in January
has seen the stock rebound, before falling off
again.
Bottom of the heap for the period – Conergy
– was punished after it issued a profi t warning
just days after telling journalists that it would
not, and its CEO Hans-Martin Rüter resigned in
the aftermath. The German solar giant is
suff ering from a shortage of modules which
had a signifi cant impact on its Q3 results, and
it had to sell new shares and options in order
to avert a liquidity crisis.
Outside of solar, the best performer was
Germany’s Schmack Biogas, up by 66%,
though this represents only a partial recovery
from the collapse it suff ered in July when it
issued a profi t warning due to a slump in
demand for biogas plants from the agricul-
tural sector.
One of the biggest losers of the period was
US-based biofuel company Pacifi c Ethanol
whose bad year was compounded by Bill Gates’
recent announcement that he planned to
offl oad his 21% stake in the company.
What is the NEX?
The NEX index consists of between 80 and
90 constituents, allowing it to cover all
significant sectors of the low-carbon energy
industry, including renewable energy,
biofuels and other low-carbon technologies.
The NEX is a rule-based index and uses an
equal-weighting methodology modifi ed by
sector and market capitalisation. It is carefully
designed to provide diversifi cation across the
diff erent sectors of the clean energy industry
and across the size of company. It has an
extensive global representation including
Europe, Asia-Pacifi c, and the Americas.
Components are limited 5% of the index by
weight at rebalancing.
It is calculated and disseminated by Dow
Jones Indexes. Live price-return information is
available in US Dollars: Euro, Pounds Sterling
and Yen. Total return indexes in all four curren-
cies are also provided once per day. The index
is rebalanced quarterly in March, June,
September and December. It was initially
determined to yield a benchmark value of
100.00 at close of trading on 30 December
2002.
About the authorPatrick O’Brien works for New Energy Finance (www.newenergyfi nance.com).
For more information on the NEX global clean energy stock market index: www.nex-index.com
ref_0901_p26_27.indd 26ref_0901_p26_27.indd 26 25/01/2008 15:44:2525/01/2008 15:44:25
Markets
renewable energy focus January/February 2008 27
NEX Constituents Performance (28 September - 30 November 2007)
ID Name Country/Location Primary Sector Main Market Ticker Local Currency
% Change
34 First Solar US Renewable - Solar NASDAQ-GM FSLR USD 101.42%
74 Suntech Power Holdings Co Ltd China Renewable - Solar New York STP USD 98.42%
66 Schmack Biogas AG Germany Renewables - Biofuels, Biomass & Waste-to-Energy
XETRA SB1.DE EUR 66.51%
73 Sunpower Corp US Renewable - Solar NASDAQ-GM SPWR USD 50.25%
33 Evergreen Solar Inc US Renewable - Solar NASDAQ-GM ESLR USD 47.48%
60 Q-Cells AG Germany Renewable - Solar XETRA QCE.DE EUR 34.34%
44 JA Solar Holdings Co. Ltd. (ADS) China Renewable - Solar NASDAQ-GM JASO USD 32.01%
51 MEMC Electronic Materials Inc US Renewable - Solar New York WFR USD 31.80%
75 Suzlon Energy Ltd India Renewable - Wind Mumbai 532667.BO
INR 31.05%
77 Techem Germany Demand-Side Energy Saving XETRA TNH.DE EUR 27.77%
62 REpower Systems Germany Renewable - Wind XETRA RPW.DE EUR 22.11%
2 Acciona SA Spain Renewable - Wind Madrid ANA.MC EUR 21.66%
30 EnerNoc US Generation Effi ciency & Smart Distribution
NASDAQ-GM ENOC USD 19.88%
5 American Superconductor Corp US Generation Effi ciency & Smart Distribution
NASDAQ-GM AMSC USD 17.87%
78 Theolia France Renewable - Wind EN Paris TEO.PA EUR 17.75%
85 Vestas Wind Systems A/S Denmark Renewable - Wind Copenhagen VWS.CO DKK 17.19%
56 Plug Power Inc US Hydrogen & Fuel Cells NASDAQ-GM PLUG USD 16.77%
70 Solaria Energia Spain Renewable - Solar Madrid SLR.MC EUR 16.24%
83 Verbund Austria Renewables - Other Vienna VER.VI EUR 14.30%
35 Fortum Oyj Finland Renewables - Other Helsinki FUM1V.HE
EUR 14.14%
50 Meidensha Corp Japan Generation Effi ciency & Smart Distribution
Tokyo 6508.JP JPY -15.80%
22 Cosan SA Industria e Comercio Brazil Renewables - Biofuels, Biomass & Waste-to-Energy
Sao Paulo CSAN3.SA
BRL -16.04%
43 Itron Inc US Demand-Side Energy Saving NASDAQ-GS ITRI USD -16.68%
1 Abengoa SA Spain Renewables - Biofuels, Biomass & Waste-to-Energy
Madrid ABG.MC EUR -17.15%
3 Actelios SpA Italy Renewables - Biofuels, Biomass & Waste-to-Energy
Milan ACT.MI EUR -17.20%
59 PRAJ Industries Ltd India Renewables - Biofuels, Biomass & Waste-to-Energy
Mumbai 522205.BO
INR -17.88%
6 Anhui BBCA Biochem China Renewables - Biofuels, Biomass & Waste-to-Energy
Shenzhen 000930.SZ
CNY -19.02%
87 Zhejiang Yankon Group China Demand-Side Energy Saving Shanghai 600261.SH
CNY -19.32%
23 Cree Inc US Demand-Side Energy Saving NASDAQ-GS CREE USD -20.80%
25 Ebara Corp Japan Hydrogen & Fuel Cells Tokyo 6361.JP JPY -24.67%
76 Takuma Co. Ltd. Japan Renewables - Biofuels, Biomass & Waste-to-Energy
Tokyo 6013.JP JPY -25.19%
48 Maxwell Technologies Inc US Power Storage NASDAQ-GM MXWL USD -28.29%
40 Gurit Holding AG Switzerland Services & Suppliers Swiss GUR.SW CHF -29.16%
84 Verenium Corp US Renewables - Biofuels, Biomass & Waste-to-Energy
NASDAQ-GM DVSA USD -30.87%
7 Arima Optoelectronics Corp Taiwan Demand-Side Energy Saving Taiwan 6289.TW TWD -32.10%
26 Echelon Corp US Demand-Side Energy Saving NASDAQ-GM ELON USD -32.87%
55 Pacifi c Ethanol Inc US Renewables - Biofuels, Biomass & Waste-to-Energy
NASDAQ-GM PEIX USD -36.49%
13 Brasil Ecodiesel Brazil Renewables - Biofuels, Biomass & Waste-to-Energy
Sao Paulo ECOD3.SA
BRL -42.39%
47 LDK Solar Co. Ltd. (ADS) China Renewable - Solar New York LDK USD -57.11%
20 Conergy AG Germany Renewable - Solar XETRA CGY.DE EUR -57.99%
ref_0901_p26_27.indd 27ref_0901_p26_27.indd 27 25/01/2008 15:45:1625/01/2008 15:45:16