Getting back to reality
Share prices to be pulled back to reality, top sell Gintech
Solar share price in Taiwan has rebounded by more than 30% to factor
in unrealistic demand expectations in the US for 2009. Taiwan cell
makers are now trading at a demanding valuation of 1.2x 2009E P/BV,
or at a 71% premium to China solar cell/module makers who are trading
at 0.7x 2009E P/BV. The deteriorating solar PV module/cell price trend
cannot support the expensive valuation of Taiwan solar makers. Gintech
is our top sell as cell makers with high exposure to the contract market
are most vulnerable. We also downgrade Motech and SAS to REDUCE
to factor in potential downside risk from disappointing demand.
Oversupply remains despite supply discipline
We have trimmed our global polysilicon/wafer and cell supply by 9-14%
to factor in emerging supply discipline, but based on the conservative
demand outlook, we maintain our oversupply estimation for 2009. Global
solar PV demand annual growth will slow to 16% y-y from >30% in the
past three years due to lack of new demand drivers and tightened credit
from banks.
US could not ease oversupply until 2010
We agree President Obama’s renewable energy subsidy program
should create potential upside for solar PV demand in the US. The
USD8b energy loan from the stimulus package could potentially create
2.3GW of solar PV demand in the US in the next couple of years. We
expect substantial demand from early 2010 if all goes well. However, we
believe, in 2009 US demand will remain at 470MW, 9% of global market
share.
Solar cell/module price to test variable cost
We project solar PV module price will fall to EUR1.90-2.00, for IRR to
exceed 8% in Germany, from where we expect the maximum global
demand. Influenced by the unfavorable currency climate, the euro has
fallen to USD1.20/EUR from USD1.50/EUR last year, which inevitably
will lower the module and cell price to USD2.30-2.40 and USD1.90-2.00
per watt-peak. That is close to our variable cost estimate.

Contents
Shares price to be pulled back to reality........................................................................ 3
Capex cut is not fast enough ......................................................................................... 7
Strong US demand in 2009 may not come true........................................................... 11
Module price expected to test variable cost................................................................. 17
Solar-energy value chain ............................................................................................. 19
Company updates........................................................................................................ 23