Solar Thin Set for Success in Solar Market
Solar Thin Films, Inc. (SLTN) may not be as large as Applied Materials, Inc. (AMAT) or First Solar, Inc. (FSLR), but this under-the-radar company may present the best opportunity for investors to profit from the coming solar boom.
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Solar Thin Films, Inc. [[SLTN.OB]], a leading technology company specializing in amorphous silicon thin film solar modules with plans to also enter the multi-billion dollar crystalline solar market, is one under-the-radar company that may see some healthy profits from the coming boom in solar energy, with its low-cost high-yield amorphous solar modules and strong relationships with its industry partners. Meanwhile, several proposed acquisitions in the works may help it quickly ramp up its top and bottom line and improve its solar technologies.
Solar Subsidies Drive Growth
The solar industry is set to experience rapid growth amid unprecedented global demand due to large government subsidies. The United States has called for 10% of all of its energy to come from renewable sources like solar by the year 2020, while China may set aside more than $440 billion in subsidies over the same period. As a result, it is very easy for many businesses to justify the expenditures necessary to purchase solar equipment to produce electricity.
Solar Thin Films provides manufacturers with low-cost, high-yield solar modules that can be used to maximize profits for these solar operators. Currently, the company’s solar panels produce electricity at about $1.00 per watt, but that number could drop to as low as $0.50 per watt with its technology under development. After production and installation is added, these solar modules can be installed for about $3.00 per watt. And since China’s subsidies, for example, approach $2.98 per watt, it makes a lot of economic sense to utilize these solar modules.
Solar Thin Trades at a Discount
Solar Thin Film’s near-term prospects in particular make it a compelling investment opportunity. Through its subsidiaries, the company earned $1.65 million in revenues last quarter. With a growing market for its turn-key factories and equipment, and several big projects in the pipeline, the company is trading at just a fraction of the net present value of its potential cash flows over time. While management hasn’t provided any guidance, the recent contract awards in Spain and China show clear promise.
Among Solar Thin Film’s fastest growing prospects is its pending acquisition of Prösen, Germany-based Algatec that could be completed by the end of September. The company produces metallurgical solar cells as a cheaper alternative to polysilicon, which represents a billion dollar emerging industry. Currently, the would-be-subsidiary has a backlog of 80MW in sales to Q-Cells in 2009, which it believes will represent approximately $100 million in revenues. Meanwhile, last year, Algatec generated approximately $2.5 million in profits on revenues of $18 million.
Recent Announcements and Contracts
- BudaSolar Agreement – Solar Thin Films announced that it has signed an agreement to merge with BudaSolar in order to enhance its presence in Asia and improve its technology through research and development agreements. The acquisition is expected to reach completion in July or August 2009. Recently, the proposed-subsidiary also began an R&D agreement with Bangkok solar that promises to help develop its revolutionary technology and reach additional customers.
- Grupo UniSolar Order – Solar Thin Films announced that it completed shipping equipment for a 6MW amorphous silicon photovoltaic module factory located in Bejar, Spain for its customer Grupo UniSolar S.A. The company is now commencing installation of the line, which is expected to be completed by the end of 2009. The total project is estimated to be worth $10.92 million.
Conclusions
Solar Thin Films appears to be at the beginning of its growth curve as it works to achieve profitability. Management is exploring numerous strategies going forward to boost revenues and profits, including management services and several joint ventures in high-growth areas like China. These initiatives could create additional high-margin, recurring-income opportunities for the company and further reward shareholders. In the end, Solar Thin Films offers investors a great opportunity to invest in a growing and unique solar company on the ground floor.
For more information, call investor relations at 888-288-5215
or visit the Solar Thin Films page on TheOTCInvestor.com.
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