Stock Alert for Hanwha Solarone Co. Ltd. (HSOL)

Hanwha SolarOne Co. Ltd. (HSOL) is a vertically integrated manufacturer of silicon ingots, wafers, PV cells and modules. The Company offers high-quality, reliable products and services at competitive prices.  Partnering with third party distributors, OEM manufacturers, and system integrators, HSOL serves the utility, commercial/government, and residential markets.  It maintains a strong worldwide presence with employees located throughout Europe, North America and Asia, and embraces environmental responsibility and sustainability with an active role in the voluntary photovoltaic (PV) recycling program. 

Share Statistics (28-Sept-11)   FY

2009

FY

2010

%

Chg

Q2

2010

Q2

2011

%

Chg

Symbol HSOL Revenue, $CNY 3,778.32 7,526.99 99.2% 1,752.71 1,791.18 2.2%
Current price $2.69 Gross marg. 11.5% 20.8% 80.9% 21.0% 7.8% -62.9%
52wk Range: $2.28-$13.48 Oper. margin 15.5% -1.8%
Avg Vol (3m): 872,083 Net margin -3.8% 10.1% -365.8% 15.6% -3.8% -124.4%
Market Cap. 225.71M              
Shares Outstanding 83.91M EPS, $ -0.53 2.36 -545.3% 0.81 -0.16 -119.8%

Source: Reuters.com, SEC Filings.

Investment Highlights

Shares of HSOL have gained 4.9% in the last five days, though the stock dropped 32.3% in the last month.  Year-to-date, the stock is down 78.7%.

The Chinese solar cell maker last week said it has secured a five-year loan of $100 million from Standard Chartered Bank and Korea Development Bank.  According to Jay SEO, CFO of HSOL, the new loan facility provides the Company with the capital resources to fund its continued business expansion, and the Company views it as a critical component of its financial plan. HSOL said the deal provides for loans in U.S. dollars.

HSOL last month provided its business outlook for the full year 2011, expecting its module shipments to be at the lower end of the previously announced range of 1GW to 1.2GW, of which about 20 to 25% will be for PV module processing services, and capital expenditures to be about $400 million.

Source: http://investors.solarfun-power.com/releasedetail.cfm?ReleaseID=607435

Financial Summary

HSOL reported an operating loss of RMB32.3 million (US$5.0 million) for the second quarter of 2011, compared with an operating profit of RMB253.9 million in the first quarter of 2011 and RMB274.3 million in the second quarter of 2010. The Company attributed the sequential decrease to lower gross profit and higher operating expenses as it continued to invest in personnel, management systems, branding and technology, and to one-time severance expenses paid to former management.

Net loss attributable to shareholders on a GAAP basis was RMB69.0 million (US$10.7 million), compared with net income attributable to shareholders of RMB149.4 million and RMB272.8 million for the previous quarter and year-ago quarter, respectively.  Net loss per basic ADS on a GAAP basis was RMB0.82 (US$0.13), compared with net income per basic ADS on a GAAP basis of RMB1.78 in the previous quarter and RMB4.71 in the comparable quarter last year.

Total net revenues came in at RMB1,791.2 million (US$277.1 million), a decrease of 18.4% from the previous quarter and an increase of 2.2% from the comparable quarter last year.

As of June 30, 2011, the Company had cash and cash equivalents of RMB1,485.7 million (US$229.9 million) and net working capital of RMB1,850.0 million (US$286.2 million), compared with cash and cash equivalents of RMB1,354.4 million and net working capital of RMB2,486.3 million as of March 31, 2011.

Source: http://investors.solarfun-power.com/releasedetail.cfm?ReleaseID=600809

Financial Strength (29-Sept-2011)

Company

Industry

Sector

S&P 500

Quick Ratio (MRQ) 1.30 0.40 0.53 0.77
Current Ratio (MRQ) 1.57 0.56 0.76 1.13
LT Debt to Equity (MRQ) 18.77 44.65 14.56 109.49
Total Debt to Equity (MRQ) 46.35 49.81 19.13 146.76
Interest Coverage (TTM) 1.54 10.08 24.11

Source: Reuters.com, SEC Filings.

Technical Analysis

 

Source: http://stockcharts.com

HSOL is below its 20-day moving average. This bearish sign is even more significant because the moving average is also trending lower.

HSOL’s recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility.

HSOL’s MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below 0, which suggests that the underlying moving averages are bearish.

Comparative Analysis

Company Name Ticker Price per Mrkt. Cap. P/E P/S
Sept27-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
 

LDK Solar Co. Ltd.

LDK 3.31 468.25M 13.79 6.37 0.18 0.16
MEMC Electronic Materials Inc. WFR 5.58 1.29B 6.41 5.12 0.38 0.35
Semiconductor – Broadline Median       13.74 n/a 1.79 n/a
Hanwha Solarone Co. Ltd. HSOL 2.69 225.71M 29.89 8.97 0.19 0.18

Source: Thomson Financial

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