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IBDvalueinvestin (98.34)

FSLR why? $484 Billion Chinese pledge to Obama



November 30, 2009 – Comments (4) | RELATED TICKERS: FSLR

China's Green Stimulus: A-Power, First Solar May Get Big Chunk by: Kelvin Schulle November 27, 2009 | about: APWR / FSLR    

Following President Obama's 17% CO2 cut by 2020, China pledged a 40-45% greenhouse gas cut by 2020, an astonishing number for most analysts. We know China is leading the green way to the future, its wind and solar energy technologies are leading the world. If you are an environmentalist, it is easy to understand why China has committed itself to the green technology. Thousands of people die in China from air pollution related diseases every day, the highest number in the world.

Speaking of the $454B green stimulus package, it is even larger than China's first $680B package because it is targeting the green energy sector only. The green stimulus will be used in a similar way to how the government injected the first stimulus money into their economy. Companies with government support will get a big chunk (over 20% of the first stimulus went to State-owned companies reportedly). In the wind energy sector, Goldwind technology is a major player in China, the company is listed in the Shanghai stock exchange, with a revenue of RMB6.5B in 2008, and expected to reach RMB10B in 2009. The newcomer in China's wind energy market is Shengyang's A- Power Energy Generation (APWR); the company has grown exponentially in recent years with support from local government. The company is targeting over 2GW capacity in 2010 to meet Chinese market demand. The company is also expanding overseas, in places such as North America and South America, Africa, the Mid-East and South East Asia. We would expect the two companies to get wind farm contracts of over $50B in the coming years.

The solar sector should also get a boost as well, First Solar (FSLR) already signed a 2GW contract in inner-Mongolia, this could be part of the $454B green stimulus. Chinese domestic names should also get a big chunk of the stimulus cash. In the next decade, we may see a few renewable energy companies from China going strong globally, much like we saw Google's (GOOG) growth in the early internet age.

Disclosure: Author is Long FSLR

4 Comments – Post Your Own

#1) On November 30, 2009 at 2:17 PM, IBDvalueinvestin (98.34) wrote:

typo$454 Billion not $484 Billion

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#2) On November 30, 2009 at 2:33 PM, JaysRage (79.23) wrote:

I am long APWR in my trading portfolio.    It has had quite a run up since I bought it at $11, but the price still hasn't approached the potential in terms of growth.    The P/E is just now starting to come in line with a solid fast-growing company, but with the contracts that this company has lined up, fast-growing doesn't begin to describe the opportunity in front of them.  It is one of those rare red-chip companies that is positioned to become a blue-chip as time and growth and opportunity all merge together.  

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#3) On November 30, 2009 at 2:44 PM, ETFsRule (< 20) wrote:

CHSTF.PK is another one to watch - similar to APWR, but apparently less well-known. They control the majority of China's wind energy transmission.

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#4) On November 30, 2009 at 2:52 PM, IBDvalueinvestin (98.34) wrote:

Isn't it shocking at how much money China can spend on Green Energy because it Generates such massive amounts of Positive Cash Flow as compared to the USA which is heavily in Debt.

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