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Chinese solar companies lower forecasts, shares fall

Post Time:May 25,2009Classify:Industry NewsView:390

Suntech Power Holdings Inc and ReneSola Ltd lowered their full-year forecasts on Thursday as the credit crisis has choked off funding for renewable energy projects, sending shares of the Chinese solar power companies down sharply.

Suntech's announcement that it would issue new shares to pay down debt also fueled the selloff, and the solar panel maker's shares were down 12 percent in afternoon trade.

Solar manufacturers have been hit by the sharp decline in prices for photovoltaic solar products because the credit crunch is forcing new projects to be put on hold at the same time that new supplies are coming on the market.

Suntech reported a surprise quarterly profit, but cut its shipment forecast for the year. It will also issue 20 million new shares, a move that will dilute its earnings per share.

"The quarter itself was pretty good, and the (sales) guidance reduction was not drastic at all," said Pavel Molchanov, analyst with Raymond James, adding that the share offering would have an 11 percent dilutive effect.

Renesola, meanwhile, posted a first-quarter net loss and said revenue fell 13 percent. Shares of the London-listed company fell 11.6 percent to 111 pence.

Suntech, which is based both in San Francisco and in Wuxi, China, trimmed its full-year shipment forecast to between 600-700 megawatts from the more than 800 MW it had predicted earlier this year.

Still, revenue will grow modestly in the second quarter from the first, Suntech Chief Executive Zhengrong Shi told a conference call with analysts, and the industry has a solid outlook going forward.

"China's recently announced national solar subsidy, Japan's reintroduction of solar subsidies in 2009 and state incentive programs and the federal stimulus package in the U.S. should provide a strong foundation for mid-term growth," he said.

Renesola CEO Xianshou Li also said he expected to see a recovery in solar demand "as the year progresses."

The Jiashan, China, company forecast 2009 revenue of $500 million to $550 million, down from an earlier view of $650 million to $700 million given in March.

On Tuesday, Suntech and Renesola's Chinese peer JA Solar Holdings Co Ltd posted a larger-than-expected quarterly loss and said it would miss its 2009 revenue target. German Q-Cells SE earlier this month cut its sales outlook for the third time since December.

Solar makers are hoping that U.S. stimulus measures approved earlier this year will allow new projects to get under way and give financial players more confidence in the sector.

Suntech's average selling price (ASP) for its modules fell about 15 percent in the quarter from the fourth quarter.

But its costs for polysilicon, the material used to make the solar cells that turn sunlight into electricity, fell about 25 percent from the fourth quarter.

Separately, China's LDK Solar, which is set to release quarterly earnings results after the market close on Thursday, said it had adjusted its 2008 financial results to include a new $87.5 million inventory writedown and a provision for doubtful pre-payment recoveries of about $12.3 million.

Suntech's ADS in New York fell 13.5 percent to $13.70 on the New York Stock Exchange, bringing its gain so far this year to about 17 percent.

LDK shares fell 8.7 percent to $8.99.

Source: ReutersAuthor: shangyi

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