Four Chinese Solar Stocks Under Threat from Pollution

By Irwin Greenstein

Mother Nature has its own beating in store for already battered solar energy stocks. As if the plunging price of oil wasn’t enough to bring solar stocks to their knees, the new report by the United Nations shows how China’s toxic pollution may hinder the development of the country’s burgeoning solar industry.

The putrid haze of Beijing that has engulfed China and greater Asia is reducing the amount of sunlight that actually reaches the ground, according to a new report from the United Nations Environment Program.

In addition to being responsible for millions of deaths and blighted crop yields, these so-called Atmospheric Brown Clouds (ABCs) have dimmed China’s skies to the extent that the country’s solar initiative, and its huge solar industry, could become DOA.

As it stands now, Chinese solar stocks are on life support — depleting the portfolios of investors who got in at the top of the China IPO solar bubble of 2006-2007.

The losses have been staggering…

1. Solarfun Power Holdings Co. (Nasdaq:SOLF) has a 52-week range of $4.20 - $40.19 - a drop of 89.5%
2. Trina Solar Ltd. (NYSE:TSL) fell from 56.50 to 8.51 over the past 52 weeks - for a loss of 84.9%.
3. Suntech Power Holdings (NYSE:STP) saw it’s 52-week price plunge to $9.53 from $90.00 - a loss of 89.4%
4. And JA Solar Holdings, Co., Ltd. (Nasdaq:JASO) fell from $27.00 to 2.01 over the past 52 weeks - a loss of 92.5%.

In a conference call to analysts on November 12th, JA Solar CEO Samuel Yang said “At this moment the market reaction has been panic.”

Now it appears that China’s home market for solar products is facing a very dim future as well from decades of pollution.

ABCs reflect solar radiation back to space by absorbing heat in the atmosphere.

In China, ABCs can cut sunlight on the Earth’s surface in two ways. Fossil-fuel particles such as sulphates reflect and scatter rays back into space, while black carbon in soot, absorbs sunlight before it reaches the ground.

According to the report, smog blocks 10-25% of the sunlight that should be reaching terra firma in China.

This isn’t just a thin layer of pollution blocking out the sun. In some places, it can be a mile thick. It can stretch from the Arabian Peninsula to the Yellow Sea, sometimes drifting as far east as California.

The U.N report says “In China the observed dimming trend from the 1950s to the 1990s was about 3-4 per cent per decade, with the larger trends after the 1970s.”

What does this mean for investors?

Those of you who tend to be bottom feeders should stay away from China solar stocks at any price. As we all know, when it comes to stock markets nothing is permanent. But zero is the share price we could be looking at for some these fallen IPO stars.

Disclosure: no positions

Suntech Power Dramatic Decline Of Output

According to reliable sources, Suntech Power China has cut at least half jobs and is preparing for further cutting.

Unconfirmed sources say that one of the China's biggest solar companies, Suntech Power Co, based in Wuxi China has seen a decline recently because of financial crisis.

One worker worked in the old production line told reporters that he was told to maintain only one day at work in one week. That is to say he's only paid one day salary per week, if not worse.

Another street source told reporters that Suntech Power had already closed or temporarily closed at least 24 production lines which represent 50% of its production. Unreported and unconfirmed data show that 2,000 workers have lost their jobs.

Other big solar companies have all suffered recently, however some medium companies that have not come into market are not hit very hard. According to some sources from China Municipal Bureau of Foreign Trade & Economic, some medium solar companies in China have put more resources in R&D and they are able to pass the crisis safely because they didn't put a lot of sources into production in the last three months and they did not leave too many stocks to sell. The good management was working in these companies.

Although Suntech Power is not likely to be dead, the current situation will certainly do harm to its reputation.

Be Careful Of Market Ambushers

Recently when you Google Solar Panels in Alibaba the largest B2B platform you would probably find a lot of solar panel distributors in Korea, China and Taiwan. A small amount of them I can guarantee that never exist while a certain amount of them are ambushers or very small brokers.

Today somebody told me that some factory (if there is any) is selling in a world remarkable low price. Wow.

What I am suggesting here, is, for USA and Europe buyers, before you get your cheque out of pocket, check the background of that company. Email the sales representative of the company and telephone them. Get your feelings about their reliability. Always remember, it is not worth to get yourself into trouble after one or two years because you want to save 5 cents per W. You do need a reliable manufacturer to guarantee the products warranty!

Solar Brokers

There is a joke about the brokers. One day there was a trading exhibition in NY. One major US solar company (assume named "A") in LA wanted to find a good supplier world widely. One Chinese company ("C") offered a very attractive solution, however because the head quarter of company A did not fully trust Chinese, he let one British trading company B to find reliable suppliers in Europe. British guys then transfered the solution to a cheaper sub-contractor Indian company I. However company I believed that a broker in Hong Kong may find even cheaper solution in Asia so company I transfered the contract to H in Hong Kong again. Hong Kong guy knew Chinese company C pretty well so H let C manufacture the commodities for H. Finally the contract circled the whole world and only brokers got the biggest "Fat".

In the PV industry, there are so many lazy downstream company's employees. All day they sit in the office, phoning their Hong Kong or Indian brokers to push for a cheaper price, while the only thing needs them to do, is to move their buns, get a ticket and fly to China, contact one or two biggest manufacturers that have reliable records, then they will find that they are getting the biggest benefits from this little journey...

Jetion Is Rewarded As A Most Successful Chinese Company As On 31 OCT 2008 By Deloitte China

Source from

http://www.deloitte.com/dtt/press_release/0,1014,sid%253D7040%2526cid%253D232048,00.html [Source in Chinese]

Deloitte China has published 50 China’s high technology result on 31/Oct/2008. According to the result, the average increase of income of the 50 most successful Chinese companies is 1,877%. The average increase of income of the 5 top successful Chinese companies is 11,988%, much more than the average 9,668% increase as of 2007’s data.

The most successful company has been rewarded to Jetion Science and Technology Co Ltd, who is based in Jianyin, Jiangsu province and owns Jetion Europe. The company’s average income increase has exceeded a world remarkable 34,706% record in three years starting from March 2005.

For more data please contact Deloitte China, Dickie Luk, CEO of Customers & Marketing Strategies
Email: dluk@deloitte.com.hk

For Jetion investment please contact Russell Tang, Investment Manager
Email: tanght@jetion.com.cn

For Jetion sales please contact John Shen, Sales Consultant
Email: shenyang@jetion.com.cn