Local solar cell makers Motech Industries Inc (茂迪) and Gintech Energy Corp (昱晶) were given a positive review by Credit Suisse yesterday, citing a "better-than-feared" industry outlook for the second half of this year.
Credit Suisse's latest report on Taiwan's solar energy sector followed the Swiss brokerage's forecast for demand in Germany last month which was revised upwards to 5.5 gigawatts of peak power (GWp) after an earlier estimate of 4.7 GWp.
It also came after US President Barack Obama on Saturday announced the award of nearly US$2 billion to two solar power 〝companies to build new plants in Arizona, Colorado and Indiana.
Credit Suisse's Taipei-based analyst Darryl Cheng (鄭德榮) said yesterday in the report that he believed Germany's scheduled feed-in tariff (FIT) cuts next year could help boost solar photovoltaic (PV) installation in that country, during the second half of the year, and hence increase output from Taiwanese solar cell makers.
FIT is a mechanism by which governments around the world offer a guaranteed purchase price for electricity generated by renewable energy sources over a fixed long-term contract. In Taiwan, the Ministry of Economic Affairs has demanded the state-run Taiwan Power Co (Taipower, 台電) adopt a FIT program to help develop the nation's renewable energy industry.
"First-quarter solar PV installation in Germany was 715 megawatts of peak power [MWp], only 13 percent of our 5.5 GWp estimate due to weak first-quarter seasonality ... However, we expect significant pick-up in the second quarter and the second half," Cheng said in the report.
The average selling prices (ASP) of solar PV have dropped since the fourth quarter of last year, which also implies a lower cost for governments to subsidize use of solar energy, Cheng said.
"We expect more government initiatives to be rolled out in the coming quarters," he wrote in the report.
While Credit Suisse forecast moderate ASP decline, Gintech chairman Pan Wenent (潘文炎) said yesterday he expected product prices to be slightly higher in the third quarter than in the second.
Gintech's profit in the second quarter was little changed from the first, Bloomberg quoted Pan as saying at a ground-breaking ceremony for a new facility in Miaoli County's Jhunan Township (竹南). The market across the region for its products "isn't bad," he said.
Credit Suisse rated "outperform" on Motech and Gintech stocks with target prices of NT$131 and NT$106, respectively, but offered a "neutral" recommendation on Sino-American Silicon Products Inc (SAS,中美晶) with a target price of NT$77.
Motech yesterday ended the day 2.79 percent higher at NT$110.5, Gintech closed 1.47 percent lower at NT$93.7, while SAS edged down 0.67 percent to NT$73.7.
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