Shares of local solar energy-related stocks rose yesterday on speculation a Japanese solar company would increase outsourcing to Taiwan following an explosion, but Citigroup said the optimistic mood would be short-lived.
Japan’s Yomiuri Shimbun newspaper reported on its Web site yesterday that an explosion occurred at one furnace of electronics conglomerate Kyocera Corp’s solar cell manufacturing plant in Yasu, Shiga Prefecture, on Monday.
The paper said the explosion occurred at about 12:15am and caused a fire, but it was put out in 90 minutes with no injuries.
As the Yasu facility, with a wafer capacity of 100 megawatts, is likely to be shut down temporarily for an investigation, shares of Taiwanese solar cell makers like Motech Industries Inc (茂迪), Gintech Energy Corp (昱晶) and Neo Solar Power Corp (新日光) as well as solar wafer suppliers like Sino-American Silicon Products Inc (中美晶) and Green Energy Technology Inc (綠能科技) rose yesterday in Taipei trading on expectations that Kyocera may increase outsourcing to Taiwanese suppliers.
Those stocks, however, later pared some of their gains. At the close, Motech was up 1.63 percent to NT$125, Gintech edged up 0.42 percent to NT$95, Sino-American moved up 0.71 percent to NT$99.10 and Green Energy climbed 0.75 percent to NT$94.60, while Neo Solar fell 0.13 percent to NT$75.90.
“While this may benefit the wafer makers like Sino-American and Green Energy, we see limited impact to the overall demand/supply outlook into 2011,” Citigroup analyst Timothy Lam (林子謙) said in a client note.
On Aug. 5, Kyocera announced it would begin full-scale production of multicrystalline silicon solar cells at the new Yasu solar cell plant, which was completed in March and is the largest of its domestic manufacturing facilities, the company said on its Web site.
The plant is expected to ramp up solar cell capacity to 600 megawatts of peak power [MWp] in fiscal 2010 (ending in March 2011) and 800MWp for fiscal 2011.
Lam said the incident would not translate into many orders for Taiwanese companies as some local media had speculated because the Japanese company’s products have been mainly focused on domestic demand.
Moreover, Lam said in the note that the scale of Kyocera’s production at the Yasu site (100MW) is smaller than any new wafer facilities that will come on-line in either China or Taiwan “over the next 3 to 6 months,” while the current tight wafer supplies are likely to ease further “by the end of this year,” thanks to a seasonal slowdown and vastly higher capacities.
As the solar cell sector will likely face downward pricing in the first half of next year due to subsidy reductions, Citigroup said that lower-cost producers with strong customer-penetration, such as Motech and Gintech, are likely to stand out from its peers.
Investors should also pay attention to companies that are prudent in inking contracts amid falling prices of new polysilicon supplies, the US brokerage added.