China Sunergy Surges in U.S. Debut : Investors send Chinese solar group’s shares up 50 percent.
By Andrea Quong, May 17, 2007
source: Redherring.com
http://www.redherring.com/Article.aspx?a=22324
Shares of solar cell manufacturer China Sunergy shot up more than 50 percent in its Nasdaq debut on Thursday, the latest in a series of Chinese solar IPOs that have been well received by U.S. investors. The Nanjing, China-based company’s shares closed at $16.56, up $5.56 from its opening price of $11 per share. The company offered 8.5 million depository shares, originally priced between $8 and $10 per share, in a bid to raise almost $100 million. The firm is the fifth Chinese solar company to begin trading on U.S. public markets since late last year in what has become one of the hottest areas in cleantech. Investors poured $4.6 billion into solar on stock markets worldwide last year, and Chinese companies—all of them solar cell manufacturers—soaked up a lot of it.
“Investors do fundamentally like the business model,” said Jenny Chase, solar analyst at London-based research firm New Energy Finance. “The prices of solar cells and modules are quite high. These companies are making them quite cheaply.” About 40 percent, by some estimates, of the world’s solar cells are now being churned out by Chinese companies. With the money raised by IPOS, that capacity is set to “dramatically increase” as Chinese companies grab more market share, Ms. Chase said. China Sunergy, which is incorporated in the Cayman Islands and is the parent company of CEEG (Nanjing) P-V Tech, primarily makes solar cells but also is rumored to be branching out into silicon manufacturing.
Other companies that have recently gone public include JA Solar, whose stock has climbed 150 percent since it began trading in February. Trina Solar, Solarfun Power, and Canadian Solar (a Chinese company) all went public late last year. SunTech, which also makes solar cells, led the charge with an IPO in December 2005 that raised $342 million. That kind of money set a benchmark for the Chinese solar industry and attracted the attention of U.S. investors. “The interest in Chinese solar stocks in the U.S. is partly self-driving,” said Ms. Chase. “Almost all of the Chinese solar stocks have gone up since they’ve entered the market.”
But investors are also attracted by what these companies do, which is cranking out cheaper conventional solar cells in volume, Ms. Chase said. That could mean trouble for U.S. or European solar cell manufacturers that don’t have an edge in particularly innovative technology like thin-film cells, concentrators, or other non-silicon-intensive techniques, she said.
Companies like SunTech, China Sunergy, and the other Chinese solar companies trading on U.S. markets tend to use conventional processes and materials for making the solar cells that are the building blocks of solar panels. They depend on crystalline silicon to make the cells, but there is a shortage of solar-grade silicon. Much of the money raised on public markets right now goes toward locking in a steady silicon supply, which costs $70 per kilogram under contract and $200 per kilogram on the open market, according to Ms. Chase.
In the meantime, the field grows increasingly crowded. LDK Solar and Yingli Green Energy have recently filed to go public in hopes of raising $400 million and $350 million, respectively.