Suntech Power
Suntech Power’s Amazing Quarter
Wow… Suntech Power (ticker: stp), the largest producer of solar powered energy cells and other products in China, has had an amazing quarter. It has also made some very good strategic moves in just the last several weeks. This is a company that I am very glad I picked up a (very) small stake in when it was hovering near lows after coming back from steep heights shortly after its IPO. (Update: Due to valuation concerns, I sold out at a nice little profit a while back)
What is the good news from this quarter? It is growing at an absolutely astounding rate.
Here is the synopsis from the Wall Street Journal this morning:
The Wuxi, China, maker of photovoltaic solar cells and solar electric systems had second-quarter earnings of $26.5 million, or 17 cents a share, compared with $1.42 million, or 1 cent a share, a year earlier.
Four analysts surveyed by Thomson First Call expected, on average, earnings of 15 cents a share.
Suntech said revenue for the quarter ended June 30 more than tripled to $128.2 million from $41.9 million a year ago.
Five analysts surveyed by Thomson First Call expected, on average, revenue of $114 million.
In addition, Suntech said it expects third-quarter revenue of $162 million to $169 million.
In addition to this amazing quarter (and record of incredible growth that is likely to continue in today’s slowly greener, high priced oil world that we live in), Suntech has recently done the following (in just the last couple of weeks):
- Assured a 10 year contract with a key supplier for solar wafers (very important because this was in question in the past, with current and future supplies being tight, of being able or not being able to secure a steady supply of these wafers, a very important component in the manufacture of solar cells)
- Acquired a significant player in the Japanese market, which is the biggest market for solar power in the world at the moment and has pretty stiff barriers to entry for foreign companies (by buying this company, MSK corporation — just finalized yesterday –, Suntech makes its continuing entry into this large market a lot easier)
- Just announced plans to open a representative office in the States to help speed up sales and provide better customer support, contact, etc.
STP Way Down from December IPO
Also, STP is still way down from the high it hit not too long after its IPO in December of last year.
This is a company that has been growing at incredible rates and which will likely continue to grow at a fast pace for many years to come. If you annualized their earnings from the current quarter (this quarter’s earnings x 4) they would be selling at a mere 40x earnings, and since they are growing at such a rapid rate, it is pretty easy to see that this is a pretty undervalued growth story if they continue their current meteoric rise.
Check Suntech Power Out
I’m not recommending you buy this formally, but look into the company more and you might be as excited as I am at the moment. It is an incredible growth story, involved in a business that wants to help make the world a greener, nicer place to live. The demand for such products is not going to go away anytime soon. In fact, the economics of solar cells has progressed quite a bit, one with production costs continuing to fall (STP’s goal is to be the low cost provider of solar cells), and two with the price of oil not likely to fall back to $20-$30 a barrel in the foreseeable future. This is a company with room to run, take a look and you might be surprised.
The author owns a tiny, tiny stake in STP.
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