alternative energy -is solar power a good investment?

WONG LAM WAI , DAVIDUID:2008085991

Alternative Energy -Is Solar Power a Good

Investment?

Copenhagen Conference 2009

‘…..cutting our emissions in the range of 17 percent by 2020, and by more than 80 percent by 2050 in line with final legislation.’ A quote from President Obama ‘s speech in Copenhagen Conference 2009

ALTERNATIVE ENERGY!!

Solar Stocks

GCL-POLY ENERGY 03800.HKSOLARGIGA  00757.HK APOLLO SOLAR EN 00566.HK COMTEC SOLAR  00712.HK SINGYES SOLAR  00750.HK LDK Solar Co-ADR (LDK), SunTech (STP), Yingli Green (YGE), Renesola

(SOL), Solarfun Power Holding (SOLF)

The Solar Stock

The return of 3800.HK if you invest in March is

Above 400%

The return of Heng Seng Index

200%

The Solar Stock

The Solar Stock

What Happened?

The solar stocks dropped sharply

Some fell over 50% from its peak

It has to do with the production chain of the solar cell

Value Chain of Photo-cell

Poly-Silicon Price

US$450

US$60

Winner’s Curse

The spot price of poly-silicon falls by over 60%

($US450 => $US60) Cost of producing poly-silicon in China is ~$US50-$70/kg

Basically, Most China solar company produce for Zero Profit or even Loss

David’s Pick

Rating for the whole industry: Underweight

GCL-Poly Energy (3800.HK) and LDK Solar Co-ADR (LDK) : Long-Term Buy

Reason for Long Term Buy of GCL-Poly Energy

Policy Driven Factor:Small Poly-silicon producers with low

capacity are forced out of business.Sovereign fund China Investment Corp.

Bought 20% stake in GCL-Poly Energy Holdings Ltd.

Reason for Long Term Buy of GCL-Poly Energy

Market Factor:

Relative low Cost : $US36.3/kg . Profit is ensured.

Expected Rebound in Poly-silicon price and huge consolidation in the solar business

Demand is the Key

Value Investing

p.16 of snowball. Famous saying from Warren Buffet

"In the short term, the market is a voting machine. In the long run, it's a weighting machine"