Renewable Energy Stock on Watch: JA Solar Holdings Co. Ltd. (JASO)
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    Stock Alert for Satcon Technology Corp. (SATC)

    Satcon Technology Corp. (SATC) is a clean energy technology provider of utility-grade power conversion solutions for the renewable energy market, primarily the large-scale commercial and utility-scale solar photovoltaic (PV) markets. The Company designs and delivers advanced power conversion solutions that enable large-scale producers of renewable energy to convert clean energy into grid-connected, efficient and reliable electrical power.  Its power conversion solutions boost total system power production through system intelligence, advanced command and control capabilities, industrial-grade engineering and total lifecycle performance optimization. SATC’s power conversion solutions feature the widest range of power ratings in the solar industry. The Company also offers system design services and solutions for management, monitoring, and performance measurement to maximize capital investment and improve overall quality and performance over the entire lifespan of an installation.

    Share Statistics (07-Feb-12)   FY

    2009

    FY

    2010

    %

    Chg

    Q3

    2010

    Q3

    2011

    %

    Chg

    Symbol SATC Revenue, $Mn 52.54 173.30 229.8% 58.38 45.01 -22.9%
    Current price $0.85 Gross marg. 6.1% 25.4% 316.4% 26.9% 11.8% -56.1%
    52wk Range: $0.48-$4.95 Oper. margin -4.1% -26.2%
    Avg Vol (3m): 850,452 Net margin 56.9% -6.8% -112.0% 0.3% -26.9% -9066.7%
    Market Cap. 101.79M              
    Shares Outstanding 119.77M EPS, $ -0.56 -0.25 -55.4% -0.02 -0.10 400.0%

    Source: Reuters.com, SEC Filings.

    Investment Highlights

    Shares in SATC jumped as much as 63% to $0.91 Tuesday after the Boston-based power conversion solutions provider announced a five-year sales, marketing and distribution deal in China.  Over 8.85 million shares traded hands during the session, versus the 10-day average of 1.03 million.

    SATC shares have gained 62.9% in the last five days and 42.8% in the last month.  Year-to-date, the stock is down 82.6%.

    SATC and China Electronics subsidiary Great Wall Computer Company (GWPC) entered into a partnership that is expected to expand SATC’s leadership position in China’s utility solar market.  GWPC, a large-scale computer manufacturer with its own R&D, is highly committed to the promise of solar PV as a source of clean renewable energy, stated the company’s CEO, Zhou Gengshen.

    The partnership is expected position SATC to capitalize on the estimated 14GW of utility scale projects under development, fueled by the country’s Feed-In Tariff program. Of  the 14GW of identified non-residential solar projects in development in China today, the majority are expected to be developed by China State Owned Entities.

    Under the terms of the sales and marketing agreement, Great Wall has committed to an initial purchase of approximately 60MW of SATC’s PowerGate Plus PV inverter solutions, which are expected to be delivered by April and utilized for Great Wall projects.

    Per the non-exclusive contract manufacturing agreement with Great Wall’s wholly owned subsidiary and SATC’s current contract manufacturer, Excelstor, Great Wall will support joint efforts by SATC and Excelstor in cost reduction driven by design and supply chain improvements. Under the terms of the deal, immediate cost reductions are provided in addition to medium- and long-term targets.

    “The Great Wall-Satcon partnership will enable continued solution innovation and cost competitiveness, helping to ensure the long term viability of solar as a key source of low cost clean energy production for decades to come,” commented Steve Rhoades, CEO of SATC.

    Looking to improve its financial performance, SATC last month announced it would slash 140 jobs globally, or about 35% of its workforce, close a factory in Canada that makes power inverters for solar plants, and other efforts to trim costs.

    SATC shares added $0.29, or $51.2, to close Tuesday trade at $0.85.  Over the past 52 weeks, the stock has traded in the range of $0.48 – $4.95. It is currently above its 50-day moving average of $0.56 and below its 200-day moving average of $0.99.

    Source: http://investor.satcon.com/phoenix.zhtml?c=93692&p=irol-news&nyo=0

    Financial Summary

    SATC reported revenue of $45.0 million for the third quarter of 2011, in line with the Company’s previously announced guidance of $45-$52 million, and flat compared with revenue of $45.5 million in the second quarter of 2011. North America continued to be the Company’s strongest performing region in the quarter, representing 91% of total revenue, with 2% coming from Asia and 7% from Europe. For the first nine months of 2011, revenue was $152.5 million, an increase of 51% over the same period last year.

    Gross margin for the quarter was 12%, compared with 8% in the second quarter of 2011. The incremental improvement in gross margin was a result of the Company’s cost reduction programs and continued product innovation, including the expansion of its 1.25MW Prism Platform solution.

    At September 30, 2011, SATC’s backlog, which consists of purchase orders from its customers, was $43.1 million. Backlog from North America represented 75% of orders to be delivered. Asia contributed 17%, while Europe contributed 8%.

    The Company expects fourth-quarter revenue to be in the range of $37 million to $42 million.

    Source: http://investor.satcon.com/phoenix.zhtml?c=93692&p=irol-newsArticle&ID=1627569&highlight=

    Financial Strength (08-Feb-2012)

    Company

    Industry

    Sector

    S&P 500

    Quick Ratio (MRQ) 0.71 3.15 1.28 0.59
    Current Ratio (MRQ) 1.39 3.76 1.63 0.92
    LT Debt to Equity (MRQ) 55.57 15.89 52.59 95.33
    Total Debt to Equity (MRQ) 255.31 34.85 79.61 134.47
    Interest Coverage (TTM) -3.83 0.36 0.49 27.61

    Source: Reuters.com, SEC Filings.

    Technical Analysis

    Source: http://stockcharts.com

    SATC is above the upper Bollinger Band, implying that it is currently extended from its recent trend. Be aware, however, that a cross outside of the Bollinger Bands can sometimes be a signal of trend strength and not, necessarily, trend reversal.

    The MACD for SATC currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0, which implies that the underlying moving averages are trending higher.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    Feb07-2012 symbol Share, $ $ Mn 2011 2012 2011 2012
    Power-One Inc. PWER 5.17 592.22M 9.23 7.83 0.61 0.56
    Advanced Energy Industries Inc. AEIS 10.64 460.88M 16.63 9.33 0.97 0.85
    Semiconductor – Integrated Circuits Median       19.90 n/a 1.44 n/a
    SatCon Technology Corp. SATC 0.85 101.79M n/a n/a 0.54 0.55

    Source: Thomson Financial

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