China solar cos offer gloomy outlooks, shares fall

Chinese solar companies Suntech Power Holdings Inc, ReneSola Ltd and LDK Solar gave gloomy outlooks on Thursday as the credit crisis chokes off funding for renewable energy projects, and their shares fell sharply.

Solar manufacturers have been hit by the sharp decline in prices for photovoltaic products because the credit crunch is forcing new projects to be put on hold at the same time that new supplies are coming on the market.
Solar makers are hoping that U.S. stimulus measures approved earlier this year will allow new projects to get under way and give financial players more confidence in the sector.

Analysts, however, were split on whether there were yet any reasons for optimism.

Simmons & Co analyst Burt Chao said prices on the industry’s key raw material, polysilicon, were expected to decline further than prices on solar products, allowing companies to expand their profit margins.

“For the bulk of the industry which uses silicon … it’s actually positive that raw material costs are coming down,” Chao said. “I don’t think you see a return to 30 percent gross margins in these businesses, but I do think you get meaningful accretion.”

Soleil’s Leming, however, said he saw little to get excited about.

Reuters