[pagebreak:Solar Roundup: Chinese Solar Buys and Brags] Suntech Power Holding (NYSE: STP) proved Thursday that solar manufacturers are still looking to protect themselves against a silicon shortage when the company said it will buy up to a $100 million minority stake in silicon producer Nitol Solar.
The relationship between Chinese solar-panel manufacturer Suntech and Russia-based Nitol is not new. In August, Suntech struck a multiyear silicon supply agreement with Nitol.
Nitol said it’s currently building a plant in Siberia, Russia, with a silicon production capacity of 3,700 metric tons. Suntech’s backing is expected to help the company complete the plant in 2009.
The companies gave no details concerning other perks Suntech might get from the investment. But the close alliance likely will play in Suntech’s favor as it stocks up on the key ingredient in solar-electric systems.
The move could prove crucial to Suntech’s success as Wall Street analysts have suggested companies that don’t hedge for the full impact of the silicon shortage could fall during an anticipated industry shakeout (see Solar Sector Heading for a Shakeout).
A little extra cash could also help Suntech move forward. On Tuesday, the company said it plans to raise between $425 million and $500 million by selling convertible senior notes to institutional investors in a private offering (see Suntech Wavers).
By Thursday afternoon, investors had decided they liked Suntech’s decisions and pushed company shares up $0.78, or 2.39 percent, to $33.45.
Also looking to make gains in its silicon inventory has been LDK Solar (NYSE: LDK).
At a Morgan Stanley conference earlier this month, LDK CEO Xiaofeng Peng said the company had secured more than 80 percent of the silicon it needs for the coming year at a fixed price. He then acknowledged getting the other 20 percent will be a challenge in the current silicon shortage (see LDK Defends its Inventory Accounting).
LDK’s Stock Jump
On Thursday, the Chinese solar-wafer manufacturer said it has sold almost all the wafers it expects to produce this year.
The company also said it has sold more than 90 percent of the wafers it expects to make in 2009.
The news isn't surprising. In October, LDK already said it was almost sold out for 2008 and 2009.
Still, investors took notice of the reminder and sent LDK shares skyrocketing $4.85, or 23.7 percent, to close at $25.28.
No doubt Wall Street’s reaction is a relief to LDK, which has been struggling to get back investors’ confidence since a former financial controller, Charley Situ, raised suspicions about the company’s silicon-accounting practices in October (see LDK Says Inventory Discrepancy Allegations Have ’No Merit’, Independent LDK Audit Finds 'No Material Errors, Inventory Concerns Keep Haunting LDK, and LDK Sinks on Silicon, Economic Fears).
It probably didn’t hurt that LDK also took the opportunity Thursday to soothe investors by reiterating some of its accounting practices in a statement.
Upon close reading, investors might pick up on LDK’s confirmation that much of the silicon it has now is "in transit" and not physically in its warehouse.
[pagebreak:Solar Roundup: Continued]
During a fourth-quarter conference call, analysts questioned why the silicon included in LDK’s inventories didn’t match the amount in the warehouse. At the time, an investor group report had suggested the silicon being transported to the warehouse accounted for the difference (see LDK Defends its Inventory Accounting).
More Solar News
In other solar industry news, installer Akeena Solar (NSDQ: AKNS), saw its stock drop almost 9 percent Thursday after reporting a worse-than-expected fourth-quarter loss.
Net loss for the quarter was $4.5 million, or $0.18 per share, compared to net loss of $1.2 million, or $0.07 per share, in the same quarter a year ago.
Costs, like those associated to company expansion, contributed to the loss.
Although Akeena’s net sales for the quarter more than doubled from $4.5 million a year ago to $10.3 million, it wasn’t enough to make investors happy.
Thomson Financial analysts were expecting a loss of 11 cents per share for the quarter, excluding one-time charges, on $9.6 million in revenues.
As a result, Akeena’s stock sank $0.56, or 8.35 percent, to $6.15.
Germany’s SolarWorld also saw its stock take a hit when the company suggested earnings growth this year may fall short of a previous forecast, according to Bloomberg.
Shares tumbled about €1.45 ($2.26), or 4.6 percent, to €29.86 ($46.64) per share on the Frankfurt Stock Exchange.