Suntech Power Holdings Co., Ltd. (ADR) (STP)

TMFSpeck (74.93) Submitted: 6/13/06 11:05 PM

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I agree with your infrastructure premise, but I think that the Middle East current political climate and the emergence of China as a modern global player may force us to alternatives more quickly than we'd like. The earliest/best/most viable players in that market could be well-positioned for real growth.

I don't think that the time is upon us yet, but I think we marginalize alternative fuel innovations at our own peril.

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TMFEldrehad (99.99) Submitted: 6/14/06 10:45 PM

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I don't disagree with you. When it comes to replacement of at least certain fossil fuels as an energy source, it isn't a matter of if, but when. That said, I don't see the 'when' happening soon enough to support the very high multiples that are commonplace across the alternative energy arena.

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TMFBreakerDave (99.03) Submitted: 8/10/06 9:40 AM

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Russell, when are you going to "end the pain" on this one?! :)

Suntech is a bigger and more substantial player in alternative energy than I think a lot of the other flimsier "hopeful" companies that I think you're targeting to underperform. Check out this company's financials.

Just a little taunting of a player rated 99 by a player rated 8. :) --DG

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TMFEldrehad (99.99) Submitted: 8/17/06 8:28 PM

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First, pretty easy to say from a guy who hasn't made an outperform call on this stock, isn't it? C'mon Dave, put what little is left of your player rating on the line here if you are so sure I'm so wrong! ;-)

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XMFJordan (86.66) Submitted: 8/20/06 11:27 PM

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Hi Eldrehad -

Your bearish sentiment is the right on target, but for the wrong reason.

Traditional PV cells are about to be killed by a significant technology shift to thin film PV. This shift will be lead by Nanosolar, currently privately held, which will bring online in 2007 a factory that will be capable of producing 345 MW worth of PV cells per year. This factory will cost $100M to build versus $1B for an equivalent (in terms of MW cell equivalents produced per year). So, a Nanosolar factory can be built for one year's deprecation on a tradational PV fab.

The costs per watt of Nanosolar cells is 1/5 the cost of tradational PV. This means that a system - with time of day metering - capable of giving a family a zero electric build will cost $5-10K. At this point, there is no way to argue against having a solar power system in most situations.

That said, I am not going to fight the ticker on this one. I honestly believe that solar energy companies will have a nice run for anywhere from 6 to 24 months, but will hit a wall when Nanosolar shows its stuff. I can't predict when they will drop off the cliff, so I am not going to short them or pick them as underperform.

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TMFEldrehad (99.99) Submitted: 8/23/06 5:56 PM

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Clearly, nanosolar is a real threat that I failed to mention. That said, I don't think that takes away from my original argument.

What I'm basically saying is that PV cells can't compete with fossil fuels on a cost basis, and until they can, this sector will suffer. That nanosolar may hasten the demise of many of these PV comanies is a distinct possibility, but even if nanosolar never proves viable, I still think that underperformance here is highly likely.

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MrRedDevil (25.40) Submitted: 8/24/06 7:50 PM

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I have been following solar energy for a long time. In general most of these comments make sense. However, there are two things that show that these arguments may not be sufficient in this case:

1. The company is showing very rapid growth over a two year time period
2. It is showing a Profit.

Both of these have historically been problems for the industry. Yet, somehow they seem to have overcome them.

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TMFEldrehad (99.99) Submitted: 8/25/06 4:02 PM

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You are right that this company is growing rapidly and is profitable. The question, however, is if it is growing rapidly *enough* to justify the current market cap. While I'm currently upside down on this pick and there's certainly a chance that I'm wrong, I'm still convinced that the valuation is just too rich and I'm standing by my underperform call here.

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mylonelyhearts (< 20) Submitted: 9/27/06 12:39 PM

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I think that TMFJordan's comment is pretty interesting. I think that the biggest threat to this company would be in the way of a paradigm shift in technologies. That's usually the way it goes for technology companies.

But assuming that that is not going to happen I think you may have not looked at a few things. Firstly, one needs to appreciate the degree of government subsidies that are being offered by many countries that are considered to be wealthy (Japan, Germany and other European nations). While it may be true that these countries have invested a great deal in their infrastructure they are also natural resource poor. Secondly, there are developing nations such as India that do not have the infrastructure that you have spoken about and their energy needs (and wants) are increasing quite strongly. Finally, STP is subsidized by the Chinese government. I think that this is one reason why their debt/equity ratio is so low. And a share of STP actually has more cash behind it than the balance sheet stipulates.

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TMFKopp (40.76) Submitted: 12/05/06 10:57 AM

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Dr. Shi (founder and CEO of Suntech) took part in the development of thin-film technology while still at the University of NSW. He ran the company that was built around that technology until he went off to start Suntech. Traditional PV cells are great right now because they can be made profitably, but being the scientist and innovator that he is I don't doubt that some of those Suntech R&D dollars are going towards thin-film technology.

As in any technology scenario Suntech stays in business and in a leadership position if they can keep up with technology. If they can't, well, that's a problem. My guess is they can and will, and they will have a good customer base, brand recognition, and infrastructure in place when they do get thin film going.

Check out the section on Dr. Shi - http://pvsec15.sjtu.edu.cn/en_conference/awards.php

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copper1815 (< 20) Submitted: 3/16/07 9:55 PM

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The investment and policy momentum is just too hard to miss in the alternative energy space, at least for solar and wind systems. Meanwhile oil prices are going to stay high as a result of chronic lack of investment by national oil companies. The time window for solar development is broad this time and the investment is there. California is going to copy slected EU states to grow this market. More corporate buy in like rooftop systems by WMT and others will help spread the market in other areas. STP has been busy supplying the leading edge of a large potential market that is coming into play. They're going to need a lot more silicon to meet the need.

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MGDG (25.48) Submitted: 11/18/07 12:34 AM

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Demand is still strong for their solar products. California is subsidizing the cost through 2007. Economically California on it's own would be the 13th largest globally by GDP. New home/condo builder's in California have been installing them all year. Roofing contactors in California are advertising on local radio for the new Solar Save Tiles for add-ons to existing structures.
New capital cost structures are being used where a private company buys the product and pays for the installation on a tract of homes, at no cost to the homeowner and sells the excess electricity back to the power grid. This effectively gives them a electricity generation farm without having to buy the real estate.
I would be curious as to how much of an impact the California subsidies are having on current demand and once the subsidies end, will the builder's and private electricity generators continue to purchase the products at current prices?---Fool on---Educate---Make money

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Gtrinvestor (99.98) Submitted: 2/20/08 11:56 AM

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Great thread on STP here. I think I learned in about 2 min what it would have taken me all day otherwise. I put a rec on your pitch in hopes that it moves back to the top bear pitch so others can glean from this discussion what I have. Fool on.

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