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I just bought 11 SUNTECH POWER (STP) solar panel producer because of today G8 climate deal June 7, 2007

Posted by deminvest in China stock, growth stock, investment, risky investments, Single stocks, Social investing, stock I own, stocks, STP, suntech.
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Low cost solar panels

Big news of today: “World leaders agreed on Thursday to pursue “substantial” but unspecified cuts in greenhouse gases and pledged to reach a United Nations deal by 2009 on long-term measures to fight global warming.”

Being greedy, like just poor people can be, I am not only happy for my dear planet Earth, but I also want to make some bucks of today’s news!

Who will benefit? Solar panel producers I guess.

Where will most solar panels produced? In China of course, just like everything else.

Who is China’s largest solar panels producer? Suntech Power Holdings Co. Ltd. (NYSE traded with ticker STP)

Is it a good company? Yes it is: Forward P/E 20.32: honest. Quarterly Revenue Growth (yoy) 174.50% : wonderful! Quarterly Earnings Growth (yoy) 35.10%: nice.

It’s a buy!

I bought 40 STP shares at $33,4051 Each, spending a a total sum of $ 1.336,2.

I am very confident about this investment. I know I shouldn’t be. I know often when I am confident I make mistakes…

Let this not be the case!

Comments»

1. Phred - June 7, 2007

I would say your probably right on this one! I picked up Canadian Solar INC which is incorporated in Canada but does all manufacturing in China.

Nasdaq: CSIQ
http://finance.google.com/finance?q=CSIQ

They are nicely priced and are set to rise based on past performance.

What do you think of Evergreen solar? They have a VERY interesting technology to produce quality solar panels for much cheaper due to their manufacturing process of stretching out their material use… literally!

NASDAQ:ELSR
http://finance.google.com/finance?q=ESLR

2. Simon Ritchie - June 7, 2007

Sorry man, you lost 4% on your first day! The G8 deal isn’t great for Suntech. The stock’s still a great buy, though.

3. deminvest - June 8, 2007

Thank you for the suggestion Phred.
I looked at Evergreen too. I preferred Suntech for several reasons:
1) I don’t really understand those technical producing technologies. I am not qualified to figure out if CSIQ did or didn’t reach a technical breakthrough. I don’t invest in technology I don’t understand, at least until I see those technologies resulting in revenue and earnings growth.
2) I understand (a bit better) numbers and I don’t like those of Evergreen too much: big losses, large debts and revenue growth rate of 20% only, poor if compared to Suntech’s 174%.
3) Pricing pressure: in my (uneducated) opinion, Evergreen and Canadian are too small, growing too slowly and too far from China to resist Suntech’s competitive pressure on pricing.
Suntech has sales of $750M compared to $77M by CSIQ and 105 by ELSR. Also Suntech had huge (174% yoy) revenue growth but smaller (35%) earnings growth: this means pricing war! Suntech is putting pressure on prices to grow its market-share.
That is why smaller Evergreen and Canadian Solar are posting losses. They can’t resist Suntech’s prices also because they have par of their staff on heavy western payrolls.

4. P.ANGUS-LEPPAN - June 9, 2007

I want to invest in Suntech. But I live in Australia and am not sure how to do so – I am happy to do it online if I can find out how. Please advise best way. In Australia I used Commsec for internet dealing but I think they only deal in Aus. shares.

5. deminvest - June 10, 2007
6. trapdor - June 10, 2007

I like your blog a lot.

I am not very confident of SUNTECH though. They are already facing a lot of competition in China.

The problem is now the prices of the raw materials are so high, and all the production line of the Chinese companies are imported. So they are not making a lot of money now. The market in Germany, which saved SUNTECH in 2004, is now closing. Companies in Japan and US are doing very well, too.

7. deminvest - June 11, 2007

Thank you Trapdor,

you have a much more detailed knowledge of Solar panel market than I have, so I find your comment extremely interesting. I am not able to answer you because of my little knowledge of that market. I can only quote a few articles (that may contain lies) that I read somewhere before buying Suntech:

1) Regarding market’s acceptance of Suntech’s products Zhengrong Shi, Suntech’s Chairman and CEO said:
“We already have firm purchase contracts in place for our entire 2007 projected output, which is notable given that this volume is more than double our 2006 output. In fact, we are already receiving purchase orders for 2008,”
http://www.solarbuzz.com/News/NewsASCO108.htm
I believe him, mainly for his ability to deliver sales results (+174%) higher than his own forecasts in the past.

2) Regarding the price of raw materials, I read that Suntech should be much better off than its many newer and smaller competitors, because it has long term contract aready signed:

“MEMC recently signed an agreement with Suntech to provide polysilicon to Suntech over a 10 year period. This 10 year agreement was the second event that made me decide to feature Suntech in this month’s SINLetter. MEMC will supply between $5 to $6 billion of polysilicon to Suntech over a 10 year period. According to full year 2005 results from Suntech, cost of goods came in at $157 million. If we consider that $100 million of this amount was for polysilicon, then the only way Suntech would need $5 to $6 billion of polysilicon in a 10 year period would be if it were to grow at an annual pace of 50% for 10 years.”
http://energy.seekingalpha.com/article/15189

Trapdor, why is the German market closed to Suntech?

8. trapdor - June 15, 2007

Thank you for the response, deminvest. Actually, I don’t know much in this field either. I feel you know more.

Sorry, I shouldn’t use the word ‘closing’.

In 2004, Germany government changed its energy policy which favored companies like SUNTECH that makes environmental friendly products. 75% of the sales of SUNTECH in that year came from the German market. With more companies (both in and out Germany) entering this market, their share in Germany went down. It’s just a fact. I didn’t mean the market is closed to SUNTECH. I am just a little bit worried if they can find other large market. I guess this cannot be the reason for us to not to invest in SUNTECH.

I just found SUNTECH may have a success in the Japan market (SUNTECH acquired MSK in Japan). http://www.renewableenergyaccess.com/rea/news/story?id=45616(not a news though. this was almost a year ago, don’t know if you knew.)

9. deminvest - June 15, 2007

I didn’t know about this acquisition. It is really very interesting.

Japan’s market is a great one and has a very convenient location from China. Today I also ready about another large 10-year contract worth about $678 million to get polysilicon supply from Hoku: http://www.reuters.com/article/hotStocksNews/idUSN1443639320070614

It seems that Suntech’s managers don’t consider their 6 Billion supply from MEMC enough to support their sales projected growth.

The Japan news and the supply contract, are both telling me to be positive regarding STP shares. They are now at $34.4, 3% higher than my buy price.

10. Eric Nagel - June 20, 2007

My God it’s scary how similar our investing strategies are. I bought IXYS and LDK a few weeks ago. Nothing good, yet, but I know I’ll get my 33% out of these guys soon enough.

11. deminvest - June 21, 2007

Why LDK?

LDK is priced 15.82 times their sales (compared to 6.60 times for STP). Did they show consistent fast growth like STP (174.50% revenue growth y/o) ?

I know it is not nice to say, but, since you don’t seem to like LDK and since Suntech is (unfortunately) again close to my buy price, why don’t you compare the two companies and consider the opportunity to switch from one to the other?

I am quite confident Suntech is very good. I hope facts will not prove me wrong!

12. Eric Nagel - June 21, 2007

I have a few retirement accounts, and each does a different thing.

One is a Roth IRA, and I let other people control that one.

One is a Traditional IRA, rolled-over from my 401(k) (when I used to have an employer). I mostly hold stocks, but I buy and sell with a financial reason behind my choices. It’s doing quite well.

The other is a plain-old stock account and I trade with my heart, over my brain. It usually doesn’t do too good🙂

LDK is in the traditional stock account. I think solar is a great idea, saw LDK was coming out, and picked it up when I could. I’m pretty much flat w/ my 2 solar stocks. One deal, though, could change either one quite a bit (actually, one big deal would probably change both of them). No financial reason behind that purchase.

Looking at STP, compared to my two… I would agree STP is the better pick. However, I doubt I’ll take a loss on mine, either.

13. Even in this disaster Friday, suntech (STP) managed to go up and reach my 40% target. « Democratic Investments by the people for the people - October 19, 2007

[…] I had bought 40 STP shares at $33.4051 Each, spending a a total sum of $ 1336. […]

14. jasveer - December 19, 2007

i want to buy solar panels

15. Ascanio Romano - January 21, 2008

Please Note:

I would like to buys solar panels for poor homes specially land houses.
CAN YOU HELP WITH PRICES AND SPECIFICATION
HOW TO BUILD BUY MYSELF OR IF I SELLS TO OTHERS
If others can makes the roof by themsels.

NOTE:
I am based in Italy covering 7 north regions.

My home is North of the ity of Milan.

I need prices per each means 50 0r 200 W or what you have that can suite.

I do repeat:

I want to buys for selling all over the Regions know well.

Than you in advance for your reply

Best Regards.

Romano

16. zala - October 1, 2008

i would like to buy shares with solar panel producers.

17. deminvest - October 2, 2008

STP is the safest bet for solar enery
TSL is riskier but may give much higher returns

18. Steve Barles - October 15, 2008

I’m going to build a series of houses and would like to feature them using solar power. In investigating this solar inductry, Suntech’s name came up. Could you pleae forward me so information on your solar panels, average amount of panels to take care of a 10,000 sq. ft house fully air conditioned with a tennis court and swimming pool that runs 24/7 using 220v and a 3 hp motor. This will give me an approximate amount of panels needed and include pricing. Our goal is to build cluster homes and use solar power as a feature to eliminate the cost of in-coming electricity.

19. Survival Bill - December 31, 2008

Been waiting for cheep solar panels for the last 20+ years still waiting whats up with that how about wind turbins still waiting for them cheep to….

http://www.survivalbill.ca

20. ken - March 4, 2009

Ouch sorry about the loss in value… 5.83 today.. Everyone has been smacked by this recession..

21. Andrew - November 21, 2010

damn.. what happened to this one!? It’s plummeted..

22. deminvest - November 24, 2010

With the big recession three things happened:

1) oil prices fell 40%, making solar power a worse deal.
2) governments have less money to subsidize solar panels.
3) Obama promised a green economy that didn’t happen. Companies that invested to boost panels production are in big trouble now.

Fortunately for me, STP had hit my 40% target in 2007 so I got my invested money back.

https://deminvest.wordpress.com/2007/10/19/even-in-this-disaster-friday-suntech-stp-managed-to-go-up-and-reach-my-40-target/

23. cheng - December 2, 2010

Guys,

Instead of buying solar panel makers at 20+ PE, you should consider buying gas or oil companies with PEs below that. Even Exxon or Chevron are now trading at below 15 PE. Gazprom and Lukoil (Russia) are trading at below 10.

Nature took billions of years to produce those stuffs (who can beat that?) and those companies are pumping them out for close to nothing and they are running out!

24. deminvest - December 2, 2010

Cheng, I am invested in Exxon (free stock), Chevron (free stock),CONOCOPHILLIPS (free stock), CNOOC (free stock), Petrochina, and British Petroleum (unfortunately!).

Still I think investing in solar energy producers is a good idea for several reasons:

1) solar panels are fabricated. They are becoming more efficient and less expensive to build with time.

2) Oil will become more expensive with scarcity. It is just a matter of time. Solar energy will eventually cost less than energy obtained from burning oil.

3) If and when quotas for Co2 emissions will be enforced, solar panels request will boon

4) Large urban areas will need to fight pollution

5) Environmentalism is growing worldwide.

Main threat to Solar Energy comes form Nuclear plants. Wind mills can only be employed in certain areas.


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