Stone Cuts Estimates on China Sunergy (Nasdaq:CSUN) - Maintains Neutral

Mar 12, 2010
Author: SCP Editor

March 12, 2010 – Analyst Comments – Cowen’s Rob Stone maintained his NEUTRAL rating on China Sunergy (Nasdaq:CSUN) this morning, commenting on the company’s financial results for Q409 and FY09.  

Financial Results

Reported Q4 revenues of $97.6 million, up 21.8% sequentially and 125.9% on a Y/Y basis. Gross margin was 10.7%, compared to 10.2% in Q309 and negative gross margins for Q408. Net loss for Q409 was $3.5 million, or $0.09 per diluted ADS, compared with net income of $7.8 million for Q309 and a net loss of $26.8 million in Q408. The company shipped 74.3MW, compared with 54.4MW in Q309 and 14.1MW for the same period last year. Blended ASPs during Q409 were $1.26/watt, down sequentially from $1.32/watt. Blended ASPs for Q408 were $2.97. Wafer costs for Q409 were $0.80/watt, compared to $0.87/watt in Q309.

FY09 revenues were $284.9 million, down 18.8% Y/Y, on shipments of about 194MW, compared to 107.2MW for FY08. Gross margin was 5.8%, compared with 4.4% in 2008. Net loss for the year was $9.8 million, or $0.25 per diluted ADS, compared with a net loss of $22.9 million for FY08.

Blended ASPs for FY09 were $1.36/watt, compared with $3.32/watt in FY08. Wafer costs for the year were $0.95/watt, compared to $2.78/watt in 2008. In terms of guidance, management expects Q1 shipments to be between 68MW to 75MW with a gross margin between 12%-14%. For FY10, it expects to ship between 280MW to 350MW.

Key Takeaways

·         In addition to following up with note on CEO’s absence at the conference call, and suggestion that the company’s technology is attractive, Stone said “the pure-play cell model lacks scale and home” citing price pressures on module manufactures which is pushing them out of Europe and upstream firms increasingly going vertical – which is shrinking the range of potential suppliers and customers for CSUN.

·         Stone thinks the stock is likely to trade near book value.

·         Cut estimates – cut Q1 ASP by 4-5%, lowered GM to 10-11%; cut 2010-12 EPS to $0.19, $0.28 and $0.15 on sales of $359 million, $416 million and $475 million. Started 2013 EPS at $0.13 on revenues of $530 million.