http://www.smallcappulse.com/index.php/articles/detail/ en tpitcher@smallcappulse.com Copyright 2009 2009-07-03T11:00:00-08:00 http://www.smallcappulse.com/index.php/site/pacific_crests_mark_bachman_updates_on_csi_initiative_suntech_nysestp_accel/ http://www.smallcappulse.com/index.php/site/pacific_crests_mark_bachman_updates_on_csi_initiative_suntech_nysestp_accel/#When:10:00:00Z July 2, 2009 – Analyst Comments – Pacific Crest’s Mark Bachman provided an update this morning on the California Solar Initiative (CSI), noting that the first half of 2009 showed strong growth in California PV applications. Key Takeaways ·         The first half of 2009 is up 71% over the same period in 2008 for solar installations under the CSI at 108.1MW. ·         SunPower’s (Nasdaq:SPWRA) Y/Y growth for this period was only 13%, compared with Sharp (6753.T) which is up 126%, SolarWorld (SWV.DE) which is up 281% and Suntech (NYSE:STP) which is up a staggering 538%. ·         The government segment continues to lead the CSI program, driven by a stronger subsidy ($2.30/watt) than commercial and residential ($1.55/watt). The government sector has 38.1MW installed through June, 2009, up 146% over the same period last year. ·         Sharp and Suntech have been able to win increasing share in the U.S. from recent 30% price cuts over Q1 levels, while SunPower’s have dropped between 15% and 25%. 2009-07-03T10:00:00-08:00 http://www.smallcappulse.com/index.php/site/cowens_stone_comments_on_chinas_emergin_pv_market/ http://www.smallcappulse.com/index.php/site/cowens_stone_comments_on_chinas_emergin_pv_market/#When:04:57:00Z July 2, 2009 – Analyst Comments – Cowen’s Rob Stone commented this morning on China’s emerging PV market. After Suntech’s recently signed MOU with the Panzhihua municipal government in Sichuan province for a 500MW ground mount PV project, Stone says local and provincial governments appear to be positioning for green stimulus ahead of an expected national FIT policy. Key Takeaways ·         Best positioned in Stone’s universe of coverage are Suntech (NYSE:STP) and Trina Solar (NYSE:TSL) ·         Thinks the central government sees an opportunity to combine economic stimulus and climate change initiatives ·         Biggest hurdle to national FIT announcement in 2009 is setting the optimal rate, which will likely vary provincially based on differing levels of irradiance 2009-07-03T04:57:00-08:00 http://www.smallcappulse.com/index.php/site/cowens_stone_maintains_neutral_rating_on_evergreen_solar_nasdaqeslr/ http://www.smallcappulse.com/index.php/site/cowens_stone_maintains_neutral_rating_on_evergreen_solar_nasdaqeslr/#When:12:24:00Z May 1, 2009 – Analyst Comments – Cowen’s Stone weighed in on Evergreen Solar’s (Nasdaq:ESLR) financial results for the Q1, maintaining a NEUTRAL rating, noting overhang and execution risks. Financial Results Revenues for the Q1 were $55.8 million, compared to $44.2 million in the prior quarter and $22.9 million for the same period last year. Gross margin was a paltry 1.2%, compared to 4.6% in the prior quarter and 33.6% for the Q1 last year. The company lost $64.3 million, or $0.40 per share, compared to a loss of $51.1 million in Q4 and $25K for the same period last year. Management expects to have production capacity of about 40MW per quarter at Devens by the end of 2009 and to achieve manufacturing costs of about $2 at that production level. Stone’s Takeaways ·         Partnering up with Jiawei (a Chinese cell/module maker) should reduce manufacturing costs and capex needs, but Evergreen still needs to raise capital in the next few months ·         Product revenue of $54.4 million (17.4MW,  ASP of $3.13) beat estimates of $39.9 million (14MW, ASP of 2.85) but the GM of -1.3% fell below Stone’s expectations of 4.2%. ·         Q1 fees from Sovello at $1.4 million were down 56% Q/Q ·         Revising 2009/10 estimates to reflect lower expected shipments in 2009 (99MW vs. 105MW) product GM (10.9% vs. 13.7% and reduced expenses. Expect FY09 revenue of $290.8 million and FY10 revenue of $447.3 million. Expect FY09 loss per share of $0.28 and FY10 EPS of $0.11. ·         Look for further dilution – the company’s cash position fell to $56.8M as of April 4 from $100.8M on December 31, 2008. ·         Maintains neutral rating We ran the numbers, based on Stone’s expectations, and at $2.43, the stock is trading more than 22x FY10 expected earnings, which seems to us to be extremely expensive. 2009-05-01T12:24:00-08:00 http://www.smallcappulse.com/index.php/site/global_hunters_justin_cable_weighs_in_on_akeena_nasdaqakns_q1_results/ http://www.smallcappulse.com/index.php/site/global_hunters_justin_cable_weighs_in_on_akeena_nasdaqakns_q1_results/#When:12:30:00Z April 30, 2009 – Analyst Comments – Global Hunters’s Justin Cable weighed in on Akeena’s (Nasdaq:AKNS) Q1 results maintaining a NEUTRAL rating on the stock. Akeena’s Results Akeena (Nasdaq:AKNS) reported a 37% Y/Y decline in Q1 revenue to $7.6 million, gross margins of 29.7% and a net loss of $5.1 million, or $0.17 per share. Commercial sales were $915 thousand and residential sales were $6.7 million. The company installed about 945kW for the quarter compared to 1,587kW in the same quarter last year. Cash and equivalents at March 31, 2009 were $2.9 million, and the company’s backlog was about $4.8 million. Management didn’t provide guidance, but noted that the quarterly EBITDA breakeven is about $15 million. Cable’s Takeaways ·         Revenues missed estimates of $9.5 million and First Call consensus of $9.2 million ·         The new Andalay panels are driving higher gross margins ·         Cut FY2009 estimates in both revenues and EPS. ·         Maintain Neutral.  Given the uncertainty with the company’s balance sheet, continued cash burn, and weak environment, we maintain our Neutral rating.  We suggest staying on the sidelines until we see tangible evidence that profitability is near. 2009-04-30T12:30:00-08:00 http://www.smallcappulse.com/index.php/site/bachman_and_stone_weigh_in_on_first_solar_nasdaqfslr_both_maintain_outperfo/ http://www.smallcappulse.com/index.php/site/bachman_and_stone_weigh_in_on_first_solar_nasdaqfslr_both_maintain_outperfo/#When:12:27:00Z April 30, 2009 – Analyst Comments – Pacific Crest’s Mark Bachman and Cowen’s Rob Stone commented this morning on First Solar’s (Nasdaq:FSLR) results, each maintaining an OUTPERFORM rating on the stock, with Stone forecasting 30%+ upside potential vs. the market in 12 months and Bachman increasing his price target to $231, 25x his 2010 EPS estimate of $9.24. Financial ResultsFirst Solar (Nasdaq:FSLR) reported a 112% Y/Y increase in Q1 revenues to $418.2 million, and earnings of $164.6 million, or $1.99 per share, compared with earnings of $46.6 million, or $0.57 per share for the same period last year. Consensus expectations were for earnings of $1.50 per share. Stone’s Comments ·         Higher GM and lower cost per watt and a tax benefit drove Q1 results ·         Co-investment in a large German project demonstrate the ability to catalyze market expansion, enhancing scale and capacity expansion ·         Raised 2009E revenue to $1.9B on shipments of 943MW, while reducing ASP slightly to $1.91 and costs/W slightly to $2.92. ·         Maintains OUTPERFORM Bachman’s Comments ·         Manufacturing costs of $0.93/watt beat Bachman’s estimate of $0.94/watt, and drove upside to EPS. Bachman noted that the Street has been so focused on declining ASPs that it has been largely ignoring the cost side of the equation ·         Sees gross margin staying above 50% in 2009 ·         “The bears will be hard pressed to poke holes in this report.” He said bears on the stock will remain focused on ASP declines, inventory increases and days of sales outstanding increases. ·         Raised target to $231 from $227 based on 25x his 2010 EPS estimate of $9.24. 2009-04-30T12:27:00-08:00 http://www.smallcappulse.com/index.php/site/senator_sanders_is_welcome_voice_and_critic_of_credit_card_industry/ http://www.smallcappulse.com/index.php/site/senator_sanders_is_welcome_voice_and_critic_of_credit_card_industry/#When:12:14:00Z April 29, 2009 – The situation with credit debt and usary practices amongst credit companies has gotten out of hand in the US. Yet it remains one of the most under-reported stories. This week Senator Bernie Sanders (I-VT) made comments on the floor on the issue that we think are worth reading. This is a key issue that more of you should be paying attention to: Mr. SANDERS. Mr. President, I wish to take just a very few moments to speak about an issue I think is resonating and causing great concern all over our country; that is, the outrageous escalation in credit card interest rates.     I note that the House and the Senate will soon be addressing the issue of credit cards, but I hope very much that both bodies will include within their legislation something that is long overdue; that is, a cap on interest rates. We need a national usury rate law. It is totally unacceptable to me--and I think the vast majority of the people in our country--that credit card companies are charging people 25, 30, and 35 percent rates of interest on their credit cards. This is usury. This is wrong. From a biblical perspective, this is immoral, and it is time we got a handle on it.     The truth is that a number of years ago, many States had usury laws which prohibited very high interest rates. As a result of a Supreme Court decision, those State laws were essentially made null and void and companies that moved to States such as South Dakota and Delaware could essentially charge the American people any rate they wanted. Within the last 20 years, we have seen a huge increase in interest rates. About one-third of the American people are paying 20 percent or more. It is time we got a handle on that issue.     What I would like to do this afternoon, very briefly, is read some of the e-mails that are coming to my office from the State of Vermont but, in fact, from all over this country. On late Friday afternoon, I sent out an e-mail to our e-mail list, and within 2 days' time we have had 900 responses from people who have expressed to me what is going on in terms of their relationship with their credit card companies. The stories I am hearing are absolutely appalling--in some cases, unbelievable. What is particularly disturbing is that at a time when the taxpayers of this country have provided hundreds of billions of dollars to bail out failing financial institutions--which, because of their greed, their recklessness, and their illegal behavior, caused them to collapse--these same financial institutions are now saying to the taxpayers who bailed them out: Thank you very much; now we are going to raise your interest rates substantially.     So what I will be doing in the coming weeks is coming here to the floor and reading stories from Vermont and from all over this country. Let me start off with one that comes from Poultney, VT. This is what the gentleman says:     I owned and operated a summer business in excess of 43 years. My business credit card was with Avanta at 7.9 percent for years. Last year, my payment jumped about $400 per month. I thought there was fraud involved. Upon checking, I found my interest had been raised from 7.9 to 28.8 percent. I always paid more than the minimum and always on time. When Avanta was contacted and asked why, I was told it's a floating interest. I asked to speak to a manager and was advised that's the way it was and they could do nothing to lower it. I got a line of credit loan from Heritage credit union at 1 percent over prime, paid them off, and shut down my business. After 43 years of business, it took usury to shut me down.     That is just one story.     Somebody writes from Virginia--the State of our Presiding Officer--and says:     Explain to me, do the banks/credit card companies feel that the only way to make money is to cheat us or manipulate us into taking part in an endless Ponzi scheme? How much profit is to be expected in an honest deal? Even 15 percent seems high to me.     This goes on, Mr. President. We have one from Barre, VT:     I only have one thing on my credit card every month. It is the Internet access charge of $10.95. My credit card is a Visa from Capital One. I received a letter stating that the rates were almost double what I agreed to pay if a payment was late, but it also stated if I did not agree to their term, they would cancel my credit card. Let's not only do something about credit card fees, let's stop banks in their tracks with all fees they access on customer accounts they have.     From Castle Rock, CO, another individual writes:     I have excellent credit. Nearly 780 last time I checked. I had a ``fixed'' interest rate with Capital One at 4.9 percent since 2002. In 2007 the rate was raised to 7.9 percent. I received a letter in early April of this year that it will rise to 17.5 percent for no particular reason, except that it was a company decision. I am outraged! This is really unfair for everyone but I think especially unfair for those who really pay attention to maintaining good credit.     That person had a 780 credit number, which is very good.     Here is one from Bennington, VT:     I'd been on time every month and one day I got my statement and wow my interest rate had more than doubled. I called and they did put it back to the rate I had and said it would be good for only 9 months and then they would up it again and I would have to call again. This is hard for the families who aren't using their credit cards anymore and they are on a budget and factor in the credit card payment, and then all of a sudden one month it's gone up a lot and you didn't factor that in.     Wilder, VT:     I am tired of being the one who has to pay! The executives of these credit card companies mess up and the little people pay. The government messes up and the little people pay. Now my oldest child is going off to college and I can't even get financial help except for loans. Yes, more interest. So now I have to pay more interest on my credit cards. When will I get help? I pay my bills, I pay my taxes. If I pay late I get a finance charge and it hurts my credit rating. When these big companies fall behind, they get my tax money, and I get to pay it back for them.     This is from Bridport, VT:     On my Bank of America cards I made purchases at 9.9 percent which was not a variable rate. I assumed I had that interest rate because I have never had a late payment and have never made just the minimum payment. This month I received notice that my interest rate is going to jump to 15.65 percent and be a variable rate. I do have steady income and I don't want to damage my credit rating by paying the balance off in a few months then cancel the card.     Here is another, from West Burke, VT:     My husband sustained severe brain trauma in 2000. We managed to not file bankruptcy and to pay off all credit cards. I now find that we were idiots to do this. Our credit is ruined by going a year without income. Ruined, because we paid any credit card debt we owed.     Here is one from Little Rock, AR:     I am 67 years old and had the card since the year of the flood. I was on vacation and out of the country and did not make my card payment on time. I had always kept my account up. When I went to charge a flight on line it was denied. I called them and they replied that since I was a ``late payer'' I had to pay off my account every 30 days as it used to before they allowed extended payments for large purchases. I paid off the card that day and cut up the card.     From West Newberry, VT:     I send my payment by mail and sometimes the postal service is slow and the card company got payment one day late and has changed my interest rates from 16 percent to 29.9 percent, and now if I pay the minimal payment the charges are more than what I paid on the bill.     One day late, and their rate went from 16 percent to 29 percent.     As I mentioned, in 2 days we have gotten about 900 e-mails, significantly from Vermont but from all over the country. So I have introduced legislation which would cap interest rates on credit cards at 15 percent, with some exceptions going up to 18 percent. That legislation is cosponsored by Senators Durbin, Leahy, Whitehouse, Harkin, and Levin. The legislation is based on longstanding law which regulates credit unions, which under normal circumstances cannot charge more than 15 percent.     The American people are hurting. We are in a recession because of the greed of a small number of banks on Wall Street, and now these very same banks are hitting the middle class and working families of this country with outrageously high interest rates. Enough is enough. We need to establish a national usury rate, so I ask my colleagues to support this legislation.     Mr. President, with that, I yield the floor.     The PRESIDING OFFICER. The Senator from North Dakota. 2009-04-29T12:14:00-08:00 http://www.smallcappulse.com/index.php/site/akeena_nasdaqakns_reports_we_remain_skeptical_about_stock_in_near_term/ http://www.smallcappulse.com/index.php/site/akeena_nasdaqakns_reports_we_remain_skeptical_about_stock_in_near_term/#When:12:10:00Z April 29, 2009 – Akeena (Nasdaq:AKNS) reported Q1 earnings this morning which were pretty dismal and reflected challenging conditions that the entire solar industry had to deal with in Q1. To put it in perspective, the EIA released January net generation data yesterday, showing that solar net generation in January 2009 was 5 thousand MWh compared with 15 thousand MWh net generation for the same month last year. So the overall industry has difficult, not just conditions for Akeena. That being said, we have been highly critical Akeena and its stock price in the past and remain so. The results: Akeena (Nasdaq:AKNS) reported a 37% Y/Y decline in Q1 revenue to $7.6 million, gross margins of 29.7% and a net loss of $5.1 million, or $0.17 per share. Commercial sales were $915 thousand and residential sales were $6.7 million. The company installed about 945kW for the quarter compared to 1,587kW in the same quarter last year. Cash and equivalents at March 31, 2009 were $2.9 million, and the company’s backlog was about $4.8 million. Management didn’t provide guidance, but noted that the quarterly EBITDA breakeven is about $15 million. At yesterday’s closing price of $1.10 we think the stock is still significantly overvalued in the current environment. The bright spot in this morning’s release is that it looks like the company has been able to move gross margins back upstream. But still, the company is going to need to raise money. It had $2.9 million at the end of the quarter and its operating expenses for the quarter were $5.7 million. Expect more dilution in the near term, and this will be a downward pressure on the stock. Even setting this expectation aside, the stock is trading at about .89x trailing 12-month revenues, but from the looks of things, revenues in the current year will be down from FY08, so adjusting for lower revenues against the current multiples also points to a lower trading range for the stock. Last June we recommended a short on the stock when it was trading at $6. We took profit on the stock at $4, which turned out to be a move that left significant gains on the table. At $1.10, all things being equal, it is just difficult to see any value in the stock, or near-term upside until it gets more clear how the business is going to deal with its cash requirements. IMPORTANT DISCLAIMER: This is not an offer to buy or sell securities in any jurisdiction. This article is for informational purposes only. We do not give legal or accounting advice of any kind. We are not a licensed broker and do not clam to be. We make no representations to the suitability of any transaction at any time. The author of this article has no position in AKNS. 2009-04-29T12:10:00-08:00 http://www.smallcappulse.com/index.php/site/cowens_stone_weighs_in_on_first_solar/ http://www.smallcappulse.com/index.php/site/cowens_stone_weighs_in_on_first_solar/#When:12:29:00Z April 28, 2009 – Analyst Comments – Cowen’s Robert Stone commented on First Solar (Nasdaq:FSLR), noting that he expects Q1 EPS 5% to 10% above the Street and unchanged guidance, with no major changes to gross margins. He maintains the stock rating at OUTPERFORM with 30%+ upside vs. the market in 12 months. Key Takeaways·         Modeling EPS of $1.58 on $405 million in revenue, noting that this is strong relative to industry conditions. ·         Expects lower module ASP ($2.04) to be offset by volume (196MW) but lower total revenue on sequential decline in systems ($5M). ·         Expects gross margin to decline to high 40% level in the second half of 2009, reflecting a higher mix of project revenue. ·         At yesterday’s close of $152, maintaining OUTPERFORM rating 2009-04-28T12:29:00-08:00 http://www.smallcappulse.com/index.php/site/cowens_stone_cautious_on_evergreen_solar_nasdaqeslr_maintains_neutral_ratin/ http://www.smallcappulse.com/index.php/site/cowens_stone_cautious_on_evergreen_solar_nasdaqeslr_maintains_neutral_ratin/#When:12:28:00Z April 27, 2009 – Analyst Comments – Cowen’s Robert Stone weighed in on Evergreen Solar (Nasdaq:ESLR) this morning noting that the company remains faced with challenging cash, capex and competitive cost scenarios. Stone is maintaining a NEUTRAL rating on the stock, stating that “through currently trading at 0.7x book, we see unfavorable risk/reward.” Key Takeaways ·         Estimate loss of $0.38 per share on $41.5 million in revenue for Q1, with ASP of $2.85, down 16% Q/Q, with 7.8% gross margins and negative 35.5% operating margins; ·         Expects $178 million cash war chest to be mostly consumed by mid-year, and modeling $130 million of incremental 2009/10 debt for the next wafer expansion. If they don’t expand, this will help the cash position, but at the expense of revenue and market share; ·         Estimate silicon cost/watt of $0.36 -$0.43 (at $85-90/kg <5g/W (6.2-6.5g/W) but with conversion less than $1.00, total cost is 20% lower, about $1.60 ·         Maintains Neutral rating 2009-04-27T12:28:00-08:00 http://www.smallcappulse.com/index.php/site/research_capitals_matthew_gowing_weighs_in_on_algonquin_power_income_fund_e/ http://www.smallcappulse.com/index.php/site/research_capitals_matthew_gowing_weighs_in_on_algonquin_power_income_fund_e/#When:12:01:00Z April 24, 2009 – Analyst Notes – Research Capital’s Matthew Gowing commented this morning on Algonquin Power Income Fund’s (TSX:APF.un) announcement of a JV with Emera Utilities (TSX:EMA) where the companies will be 50/50 partners. The Deal: The joint venture will purchase Calpeco (California Pacific Electric Company) from NV Energy Inc. (NYSE: NV), and will generate annual revenue and EBITDA of US$30mm and US$20mm respectively. Calpeco operates a peaking power facility with a capacity of 12 MW, and will also acquire electricity distribution infrastructure that provides power to 47,000 customers in the Lake Tahoe, California region. The deal is expected to close in mid 2010, at which time Calpeco will pay NV Energy US$116mm to purchase the assets. The JV will fund half of the acquisition through the issuance of debt.To finance their portion of the deal, Algonquin will issue to Emera 8.5mm units under a private placement at a price of $3.25 (CAD) per unit. The issue will be completed at the deal’s closing, provided the acquisition is approved by federal and state regulators. Gowing’s Opinion – Positive, highlights Algonquin as a solid BUY for investors  Our impression of the Calpeco acquisition as it relates to Algonquin is very much positive. The acquisition requires a negligible amount of cash proceeds from APF, despite the Fund acquiring an additional $10mm in annual EBITDA.  ·       The fact that Emera was willing to subscribe to a private placement of a 30% premium to APF’s current equity valuation is a significant endorsement from that company that they realize just how   undervalued the units in Algonquin have become. Furthermore, although management denied on the call that Emera’s actions represent a “creeping takeover” of Algonquin, we submit a plausible theory that Emera could move ahead to purchase the remaining outstanding units of APF when the standstill expires in two years.  We regard the financial metrics of the acquisition is attractive as we calculate Calpeco should be accretive to APF’s earnings per unit (EPU) by 3% in 2010, and by 5% in 2011, and that the $116mm asset price will have a payback to the joint venture of approximately 6 years.   On an EV/EBITDA basis, the acquisition is priced favourably at 5.8x. This acquisition price is a discount to Algonquin's historical average range of forward EV/EBITDA of 10-14x, and is also below its current multiple of 6.75x. The acquisition is also at a discount to a group of diversified power generator and utility companies that trade at multiples of 7-8x forward EV/EBITDA.     The real focus for the market in our opinion should be a reminder to investors of the growth opportunities available to Algonquin, as well as management’s industry relationships and ability to strike accretive deals. The deal speaks to the strong demand for renewable power in California, and also puts Algonquin in a favourable light considering the scarcity of electricity distribution networks in the state.            -  Management stated on the conference call that they were not currently working on the development of a 50 MW wind farm in the district of Calpeco, but they also pointed out that under California’s RPS, this is the amount of incrementally new clean power that will be required to satisfy the near term demands of the RPS in that area. We expect an announcement sometime soon on development plans or agreements of such a facility and this would be a catalyst for APF shares, in our opinion.  The drop-off in Algonquin's valuation following their October announcement of the trust's distribution is unwarranted in our view. The decision was a strategic move by Algonquin to position the Fund to take advantage of growth and development opportunities, such as the NV Energy deal just announced. Its primary reason was not a reactionary solution to a distressed cash flow levels. In the near future, We believe that the market will recognize just how cheap Algonquin's valuation has become, and understand that one can buy units in APF currently at a yield close to10%, and at an EV/EBITDA multiple which is at a discount of over 30% below previous trough levels. In addition to investing in a solid basket of low-risk, stable, cash flow producing, power and infrastructure assets, one can get exposure to the solid secular growth opportunities offered to developers of clean energy projects.  Some Background on the acquisition and financial arrangement with Emera (TSX: EMA):  Calpeco will be held jointly by APF and EMA at stakes of 50% each respectively, and the two will co-manage the operation. The purchase price is US $116mm for 94 miles of electricity distribution lines, 13 substations, and the 12 MW regulated generating facility, all located in California. Electric distribution service is provided to approximately 47,000 customers in the Lake Tahoe region. The acquisition of the NV Energy assets will provide APF and Emera the opportunity to participate in further opportunities to invest in electricity generation and power distribution assets, in the company's opinion. APF mgmt also points out that California's aggressive 20% RPS by the year 2010 will result in extensive clean energy project development opportunities for the Fund. The NV Energy assets are strategically located in an area of California that is experiencing relatively faster economic growth as a result of a thriving local tourism industry. To finance APF's required equity contribution of US $27mm of the total US$54mm equity consideration required by NV Energy, APF will be issuing 8.5mm shares at a purchase price of $3.25 (CAD) per unit for total proceeds of $27.25mm (CAD) or US $23mm. Thus, EMA purchases a stake of $27.6mm for an equivalent 9.9% ownership stake in APF. This equity contribution satisfies all but $4mm of APF's requirements to purchase the NV Energy assets. APF should be able to comfortably source the remaining $4mm in equity by mid 2010 as we estimate the company to produce over $90mm of EBITDA in 2010, without including the approximate $5mm of cash flow provided by the NV Energy assets to APF in that year. The deal is expected to close in mid 2010, at which time, the APF shares will be issued to Emera The purchase will be subject to ordinary federal and state approval, and APF's share of the operations is expected to add $15mm of annual revenue and $10mm EBITDA. APF will consolidate this proportionate share of the financial results onto their financial statements. Note that these estimates are based on the approval by the utility regulators of filings or rate case increases. However the rate case assumes a modest 8.5% rate increase so the estimates above should not change that much should the unlikely event occur that the filing be denied. There is a standstill agreement for Emera not to be able to increase its stake in Algonquin from the 9.9% level to a max of 15% over the next two years following the closing of the transaction.   2009-04-24T12:01:00-08:00 http://www.smallcappulse.com/index.php/site/cowens_rob_stone_maintains_outperform_rating_on_sunpower_notes_q1_could_be_/ http://www.smallcappulse.com/index.php/site/cowens_rob_stone_maintains_outperform_rating_on_sunpower_notes_q1_could_be_/#When:10:47:00Z April 24, 2009 – Analyst Notes – Cowen’s Robert Stone commented on SunPower’s (Nasdaq:SPWRA) results for the Q1, noting that the quarter is likely “the trough” for the company. He maintains an OUTPERFORM Rating on the stock, seeing a strong second half on identified commercial/utility projects with potential upside in the residential/components business. He sees an upside of 50% vs. the market in 12 months. Financial Results The company reported a 21% Y/Y decline in Q1 revenues to $214 million, with Tom Werner commenting that this was “the most challenging quarter” he’s seen since the company went public back in 2005. The company’s GM came in at 22.3%$ and a net loss of $4.7 million, or $0.06 per share, compared to net income of $11.9 million for the same period last year. Expectations were for earnings of $0.02 per share. Management forecast revenue in a range of $1.3 billion to $1.7 billion, with earnings of $0.25 to $0.75 per share. Highlights ·         Signed 3-year 300 to 600MW supply agreement with FPL Group in April ·         Awarded 17MW power plant agreement with Xcel Energy in April ·         Announced 8MW power plant development agreement with Exelon in April ·         Received regulatory approval of 210MW PPW with PG&E ·         Booked more than $60 million in North American commercial systems projects ·         Began construction of company’s first Italian power plant with Api Nova Stone’s Key Takeaways ·         Q1 missed expectations on shipments but ASPs held up better than expected ·         Visibility in commercial/utility business is good (130MW utility pipeline this year), while residential is “the swing factor”) ·         Cutting 2009/10E EPS to $1.25 and $2.40 on revenue of $1.3 and $2.03 billion, cutting module ASP to $3.24 and $2.90, cutting 2009E shipment to 366MW. Expect GM of 24.2% and 24.3%, respectively. At yesterday’s closing prices of $25.93, the stock is trading at 2.13x Stone’s forecasted FY09 revenues and 20x his forecasted FY09 earnings, still, a premium relative to its peers (excepting First Solar). 2009-04-24T10:47:00-08:00 http://www.smallcappulse.com/index.php/site/bachman_comments_on_solar_to_bloomberg/ http://www.smallcappulse.com/index.php/site/bachman_comments_on_solar_to_bloomberg/#When:19:36:00Z April 22, 2009 – Analyst Comments – Pacific Crest’s Mark Bachman talked to Bloomberg about the solar sector, noting that there is significant upside in several names in the group. He likes First Solar (Nasdaq:FSLR), SunPower (Nasdaq:SPWRA) and SolarWorld (SWVG.DE). He said that driving solar growth is the cost of energy, and with energy prices generally moving higher across the board, while solar power prices are coming down, the outlook is good. In terms of the primary consumers, he said look to Germany in the near term. He said looking forward  the US market is going to drive solar, citing announcements from Southern California Edison, PG&E and large deals signed by Sempra, Tri-State, Excel Energy and Exelon, the likes of which will push the US to the market leader. Stimulus Boosts for Solar ·         30% solar investment tax extended ·         Cap lifted on residential PV installs ·         Tax credits can be applied to AMT ·         Utilities can use investment tax credit 2009-04-22T19:36:00-08:00 http://www.smallcappulse.com/index.php/site/cowens_stone_maintains_outperfom_on_sunpower_notes_reset_in_guidance_should/ http://www.smallcappulse.com/index.php/site/cowens_stone_maintains_outperfom_on_sunpower_notes_reset_in_guidance_should/#When:12:41:00Z April 22, 2009 – Analyst Comments – Cowen’s Robert Stone weighed in on SunPower (Nasdaq:SPWRA) this morning commenting that “Another Guidance Reset Shouldn’t Surprise.” He maintained an OUTPERFORM rating on the stock, noting that “trading below 10x our 2010E cash EPS we see 50% upside in SPWRA shares vs. the market in 12 months and recommend investors take advantage of any pullback following Q1 results. Key Takeaways ·         Modeling cash EPS of $0.23 on revenue of $260M, estimated that blended ASP declined about 14% Q/Q, and expects a “steep drop in systems revenue” of 59% to account for most of the Q/Q decline in sales; ·         Expect continued investment in developing the utility business segment ·         A 10-20% reset on guidance should not be that much of a surprise to investors ·         SPWRA should be well positioned for US programs next year and beyond including both distributed rooftop generation and RPS driven utility projects ·         Maintains OUTPERFORM rating 2009-04-22T12:41:00-08:00 http://www.smallcappulse.com/index.php/site/developing_wind_energy_in_canada_keewatin_windpower_kwpwob/ http://www.smallcappulse.com/index.php/site/developing_wind_energy_in_canada_keewatin_windpower_kwpwob/#When:16:03:01Z April 21, 2009 – Keewatin Windpower (KWPW.OB) is is a wind energy developer in Saskatchewan Province, Canada, currently working on a 150MW project. In wind, capacity factors are a key metric, and will dictate whether the project is viable economically. Typically capacity factors are 20-40%. The capacity factor at the project Keewatin is developing is at the high end of this range, indicating that the project will have a greater level of annual wind production. A 150MW facility will generate about 500 million kWh per year of energy (not adjusting for capacity factors). At about $0.08 per/kWh, this would generate about $40 million in revenues. And the predictability of the revenues that Keewatin is anticipating is as high as it can get, since it the project it is developing is one that it anticipates selling to the government-owned entity, so the 20-year power purchase agreement is backed by the government. This is 20 years of a predictable revenue flow of about $40 million on this project (not including additional revenues from carbon credits, and factoring additional profitability through higher capacity yields). T he market cap on the stock is currently about $18 to $20 million. The catalysts for the stock, near term are: (a) anticipating a power call from the provincial utility, which is has formed a Wind Power Integration and Development Unit to study and assess of wind power on the provincial system. Last spring, the WPIDU invited developers in the Saskatchewan province to participate in the Saskatchewan Wind Data Study (Keewatin was invited to participate in this) to help it determine plans to develop wind resources. The utility recently said that it “Is planning to develop a wind power deployment strategy in 2009 using the work of the WPIDU as the basis of the strategy.” A further note on this – Canada is generally making significant overtures to wind. In 2008, Canada became the twelth country in the world to surpass the 2,000MW mark of installed capacity ending the year with 2,369MW. The Global Wind Energy Council recently reported that provincial targets throughout the country, if achieved, would result in a minimum of 12,0000MW of installed wind energy capacity by 2015. Wind is a growth industry in Canada. And Canada is going to need to bring on new energy resources with coal becoming increasingly out of favor. Natural gas prices are expected to move higher in the coming years. Wind energy, through 20-year PPAs provides price stability. (b) potential for announcement of JV partner which will work with Keewatin in responding to the power call. This is a smart move and attractive on a number of levels – chances are good that Keewatin will turn to a much larger, more established wind developer to develop the project with and this will mitigate execution risk. It will also help spread the cost of the project. Finally, it will help from an optic perspective to validating the project and Keewatin’s work to date. I would expect the Street to react positively to this development and that should drive the stock.   (c) winning the PPA should also be a significant, and largest catalyst for the stock. This is the actual contract announcement. There is a risk that Keewatin doesn’t win a PPA for its project. But I think that is mitigated by the fact that Keewatin has a better location (transmission grids running through property will reduce about $20 million of the cost of bringing the energy online – this will provide Keewatin with greater elasticity in bidding on the power call); it has higher than average capacity factors (not disclosing exactly what these are for competitive reasons); and it is going to JV on the project with a much larger, more established developer. Also, Keewatin has remained focused on this single development, making sure its environmental studies, etc. are in order. Other bidders on the power call will likely be constrained by cash and resources given the fact that they have other projects that also need funding and this is a cash constrained environment.   Worst case scenario – Keewatin sells the energy in a later power call. With the amount of installed capacity expected to move from 2,369MW to 12,000MW in the next six years, there will be demand for Keewatin’s wind project. No doubt about that. Keep in mind that Keewatin has another project of similar size that it is planning after it executes on the existing one. From a stock perspective, there doesn’t appear to be any sellers of the stock at current $0.50 to $0.60 levels. So this is anecdotal evidence supporting the notion that the downside risk here is limited, while, based on the underlying fundamentals and outlook I spoke of above, the upside is significant. The best way to make money in the markets is to find out where everyone is going and get there first. This is one of those cases that I think fits the bill.  O ur team at Aspire is working with, and has been engaged by Keewatin to develop the story and build awareness on the Street for the company, and its stock. We think that the outlook for the business is compelling and the management team is focused. The secular trends in on a broader scale (energy demand, rising natural gas prices, climate change and energy independence) bode well for the sector as do the trends within the Canadian alternative energy industry. If you have any questions about the company, or about the wind and alternative energy markets in general, we encourage you to contact us at 760-798-7579, or on our website at www.aspirecleantech.com. 2009-04-21T16:03:01-08:00 http://www.smallcappulse.com/index.php/site/our_take_on_solar_near_term_more_weakness_likely_which_will_be_unique_oppor/ http://www.smallcappulse.com/index.php/site/our_take_on_solar_near_term_more_weakness_likely_which_will_be_unique_oppor/#When:12:09:01Z April 21, 2009 – The good news for solar, according to iSuppli, is that global revenues generated by PV installs is expected to growth from $30.4 billion in 2008 to $90.6 billion in 2013, while installations are forecast to increase from 5,235MW in 2008 to 26,900MW in 2013. The bad news is that conditions are expected to get worse in 2009 before they get better. Revenue is expected to decline this year to $18.2 billion, while installations are expected to decline to 3,546MW. Exacerbating the near-term outlook for solar is that there is so much oversupply in the markets. Yesterday we reported that Pacific Crest’s Mark Bachman’s channel check estimates that there are potentially about 2GW worth of excess modules on the market with prices approaching €2.00/watt  (and as low as €1.80/watt in “significant quantities”). iSupply had also recently forecast that wafer-based production capacity will increase from 6.2GW in 2007 to 17.8GW in 2010 and 27.5GW by 2012, while poly production will increase from 5.7GW in 2008 to 19.4GW in 2010 and 37.6GW in 2012. In addition, poly prices have continued to slide into the first quarter. So, companies that were writing down inventories in Q4 when poly was selling for $150-$160/kg, are likely going to have to follow up with more write downs now that prices are reportedly as low as $80/kg. What this means for solar investors is that the near-term outlook looks shaky, and we wouldn’t be surprised to see another round of pretty dismal results for the Q1 out of the sector. This will likely create downward pressure in the near term for solar stocks. But keep in mind that the sector is poised for some pretty remarkable growth heading out of 2009. If iSuppli is on target, PV system installations are queued up for 658% growth for the 2009-2013 period while revenue is forecast to grow by 234%.  Over this period, the oversupply in production capacity, modules and poly will get soaked up by a marked increase in demand, and this will provide an improved environment for pricing stability. Our thesis is that the next round of weakness in solar stocks will represent a unique opportunity to buy growth in solar at a discount, and that the worst, in the sector, will have been priced in at that point. We are looking for solar to be an outperformer heading out of 2009 and through the 2013 period. Companies that we would be investing in on weakness in the near term would be low-cost producers with stronger balance sheets and access to capital. These are critical criterion for navigating an environment that is still extremely challenging. We don’t see any reason in the near-term to take additional risk on with more speculative names. Even at current levels, not taking into account further weakness in the group, leading companies in the sector, and low-cost producers are trading at multiples which have focused almost exclusively on pricing pressure, oversupply and low-to-no growth. Stick with them.   2009-04-21T12:09:01-08:00 http://www.smallcappulse.com/index.php/site/pacific_crests_mark_bachman_weighed_in_this_morning_on_sunpower/ http://www.smallcappulse.com/index.php/site/pacific_crests_mark_bachman_weighed_in_this_morning_on_sunpower/#When:14:20:00Z April 20, 2009 – Analyst Comments – Pacific Crest’s Mark Bachman weighed in this morning on SunPower (Nasdaq:SPWRA) with a headline reading “Cover Your Short Positions; Upgrading to Sector Perform”. Bachman doesn’t have a price target on the stock.   Key Takeaways:   ·         Bachman’s short these is largely played out, fundamentals approaching a bottom – covering into the Q1 earnings call is “prudent” ·         Q1 and Q2 results likely to miss, 2009 guidance likely revised to low end – but Bachman isn’t sure this is going to be bad for the stock price. Current FY09 revenue guidance is for revenue in a range of $1.6 to $2 billion and EPS of $2.2 to $2.8 billion. ·         Bachman’s contacts suggest that there is possibly 2GW worth of excess modules on the market with prices approaching €2.00/watt and a prominent Chinese manufacturer is offering significant quantities at €1.80/watt. HOWEVER, Bachman said Industry fundamentals likely to get better, not worse: industry is entering seasonally strong period and the financing environment is improving. ·         No target price on stock, but thinks it could trade between $23 and $39 with a media value of $31 based on pro forma estimates (based on 2010 estimates). On the other hand, if 2009 estimates are used downside could be $16.29. 2009-04-20T14:20:00-08:00 http://www.smallcappulse.com/index.php/site/impressed_by_nabe_forecasts/ http://www.smallcappulse.com/index.php/site/impressed_by_nabe_forecasts/#When:12:49:01Z April 20, 2009 – We have not been impressed by the National Association of Business Economics (NABE) forecasts on the economy for years, if ever – but it nonetheless continues to provide us with its insights. This morning NABE released its Industry Survey which presents the responses of 109 NABE members for the period of March 23, 2009 to April 1, 2009: The primary takeaway from NABE is that there is “Fresh evidence that the US economy’s recession is abating”, in as much as key indicators are still declining but the breadth of the decline is narrowing. The April survey showed better (less negative) results for industry demand, profit margins, employment, capital spending and credit conditions. We hope NABE is right, but then it was so slow to acknowledge the extent of the recession (see “NABE Finally Gets to the Party”) that we wouldn’t be surprised to see it prematurely advocating that the economy is getting back on track. 2009-04-20T12:49:01-08:00 http://www.smallcappulse.com/index.php/site/cowens_raj_comments_on_ldk_solar/ http://www.smallcappulse.com/index.php/site/cowens_raj_comments_on_ldk_solar/#When:12:43:00Z April 17, 2009 – Analyst Comments –  Cowen & Company’s Raj Seth maintained LDK Solar (NYSE:LDK) this morning at a NEUTRAL commenting that “estimates continue to look too high” and he is “adjusting for lower ASPs.” Key Takeaways ·         Seth says “LDK is well positioned to prosper in the long-term but first has to battle through what continues to look like a very tough CY2009 characterized by falling demand, renegotiations of many of its contracts to accommodate lower industry pricing, a shifting (slowed) internal poly ramp, etc.” ·         Seth expects another inventory write-down due to declining poly prices ·         “Given recent industry dynamics and pricing trends, we believe that it’s prudent to moderate estimates to better reflect ’09 shipment growth and somewhat lower industry pricing (wafers) than previously assumed.” ·         Modeling CY09E of $0.47 on $1.24 billion, with expectations of H2:09 shipment ramp to 23-25% sequential growth and ASPs to $1.39. Modeling GM of 13.4% in FY09. ·         Note: After inventory write-down in Q1, LDK was carrying 2,3000MT at an average cost of $175/kg. Spot poly is now at $80-$100. ·         CY10E EPS is $1.09 with assumed shipment growth of 40% at ASP of $1.20. GMs modeled at 18.5%. Assumed blended poly costs of about $100/kg. ·         Long-term contracts being renegotiated will continue to be a fluid process.  ·         LDK trades at 8x Seth’s CY10EPS, 1.6x EV/09 revs and 1.2x TBV. We agree with Seth’s instincts that more write-downs are on tap – for the entire sector. The last round of write-downs for solar companies on inventory came when poly prices were in the $150-$175/kg range and now spot prices are trading in the $80 to $90kg range so the writing is on the wall, in our opinion. For this reason, we think solar stocks in general will see pressure in the near term, including LDK. That being said, we continue to believe that LDK, as a low-cost producer of wafers, the largest in the world, is well positioned to weather the pricing pressures in the industry. Seth’s comments seem to reflect the same. LDK’s backlog is massive. It has more than 14GW through 2018, with down payments from customers and another 6GW of wafer processing orders. Granted, as Seth notes, this backlog will get renegotiated – but it still provides for long-term visibility. While we do expect weakness in LDK’s stock, we think that the current prices are overly pessimistic given the long-term outlook for the solar sector in general, and LDK’s leadership position. Seth’s revenue target of $1.24 billion this year is truly pessimistic; representing what would be a 24% Y/Y decline. We just don’t see things winding down that much for the business. Moreover, the recently announced Q-Cells (QCE.DE) teaming agreement should help compensate for revenues pushed out from other customers dealing with credit issues and project delays. Given the tough Q1 and continued challenging credit conditions, we have reduced our revenue target on LDK to $1.4 billion for this year, and net income to $98 million. Based on our estimates and on assumptions of a 1x sales multiple (FY09) and 9x income multiple, we arrive at a target trading range for the stock of $7.40 to $11.40. However, since we do agree with Seth that more write-downs will be announced (throughout the sector, not just with LDK) and likely there will be some reductions in guidance, we think that the near term response from the Street will put pressure on LDK’s stock. We see this as an accumulation opportunity and would look for opportunities also to sell puts on the stock into weakness as well as an opportunity to get put the stock at a more favorable price. Important Disclosure: The SCPEditor is LONG LDK. The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. 2009-04-17T12:43:00-08:00 http://www.smallcappulse.com/index.php/site/trading_strategies_selling_puts_on_first_solar_nasdaqfslr_pt_iv/ http://www.smallcappulse.com/index.php/site/trading_strategies_selling_puts_on_first_solar_nasdaqfslr_pt_iv/#When:14:12:00Z April 15, 2009 – On February 26, amidst a downward-trending market, we noted that First Solar’s (Nasdaq:FLSR) stock looked attractive at the $105 level, and suggested a hedged strategy to take advantage of the market weakness in the stock – selling the April 18 110 Puts for $15.40. The sale of puts at this point would have produced a premium to the seller of $15.40 while obligating the seller to purchase the stock (at a cost average of $96.40) if First Solar’s stock was trading sufficiently below the strike price of $110 on expiration day – April 18. As of this morning, First Solar’s stock is trading at $149, up 41%. The April 18 110 Puts, which expire this week, are trading at $0.05. The profit potential of the Put strategy is limited to the premium received for selling the puts. The risk to the strategy is mitigated by the premium. If the stock gets put to the seller, it gets put to the seller at the strike price less the premium, effectively lowering the entrance point into the stock position accordingly. This is a strategy that we recommend only on stocks that you want to own in any case, albeit at a lower price. In which case, you are getting paid to buy a stock you are amenable to in the first place. We also recommend this strategy in situations where the stock, and the broader market are showing weakness. This increases the premium of the option underlying the stock. The profit potential to being long the stock is unlimited. But then, there is a greater amount of risk as well. The stock might decline precipitously from the purchase price. In which case, the stock purchaser would probably be hoping that she would have waited, perhaps buying the stock at a lower price. This is the appeal to selling puts on the stock. Again, it is a compelling strategy, in our view, when the markets are selling off and uncertain. For more of our commentary on this strategy within the context of the First Solar trade click here. IMPORTANT DISCLAIMER: This is not an offer to buy or sell securities in any jurisdiction. This article is for informational purposes only. We do not give legal or accounting advice of any kind. We are not a licensed broker and do not clam to be. We make no representations to the suitability of any transaction at any time. The author of this article is LONG FSLR. 2009-04-15T14:12:00-08:00 http://www.smallcappulse.com/index.php/site/ardas_yerger_rates_a_power_at_outperform/ http://www.smallcappulse.com/index.php/site/ardas_yerger_rates_a_power_at_outperform/#When:14:02:00Z April 13, 2009 – ARDA Advisors’ Brian Yerger commented this morning on A-Power’s business and stock, rating the stock at OUTPERFORM, and calling for a price target at 6.5x 2010E EPS, which would be about $9.49 per share, or an implied market cap of $341 million, assuming, as Yerger does, about 35.9 million shares outstanding for the period. Key Takeaways ·         Q4 and FY08 results (revenue and EPS) came in above street consensus ·         2009 distributed generation backlog expected to be booked as revenue is about $290 million, with net income of $29 million. ·         Wind turbine sales are anticipated to be at 30 units in 2009, at an ASP of $3.5 million, which should drive another $105 million in revenue, bringing aggregate revenue estimates to $395 million, which is “rational and attainable.” ·         Concerns remain about wind turbine ramp, and estimates will remain below company forecasts. ·         Believes shares are attractive at current levels, and that 2010 EPS/E of $1.46 is appropriate. Rating at OUTPERFORM and valuation at “a conservative multiple of 6.5x 2010 EPS/E. 2009-04-13T14:02:00-08:00