Anyone familiar with a stock called 5N PLUS (VNP.TO)? First Solar is their biggest customer [see DJ article below]. I first heard about it today, via a C news alert for FSLR:
FSLR: =DJ 5N Plus Stk Doubles In Less Than 3 Weeks:Seen Pushing Higher
By Stuart Weinberg Of DOW JONES NEWSWIRES
TORONTO (Dow Jones)--How high might 5N Plus Inc.'s (VNP.T) stock price go?
"My own feeling is that this stock could double" within three to six months and hit C$20 by the end of 2008, said one institutional investor who owns the stock.
5N's stock is trading at more than double its initial-public-offering price of C$3 - and the Montreal company has only been public for two-and-a-half weeks.
In Toronto Tuesday, 5N is down 9% to C$7.00 on 314,000 shares.
5N produces high-purity metals, such as tellurium, cadmium and selenium, for use in electronic applications, most notably the rapidly growing solar-power industry. It's best known for supplying cadmium telluride, or CdTe, to high- flying solar-cell maker First Solar Inc. (FSLR).
First Solar uses CdTe to make "thin-film" solar cells, a relatively new type of cell that is lightweight, pliable, and most importantly, far less expensive to produce then polysilicon-based solar cells. First Solar's production costs are about US$1.19 per watt, whereas cells produced using polysilicon - which is in short supply - cost nearly double that. This cost advantage has helped propel First Solar's share price more than 11-fold to about US$240.00 since the firm's IPO at US$20 in November 2006.
Phoenix-based First Solar accounted for 55% of 5N's C$22 million in revenue in fiscal 2007. 5N's fiscal year ends May 31 and the company is scheduled to report its fiscal 2008 second-quarter results after the close Tuesday. The company, which was once part of a division of mining giant Noranda, has been profitable since its inception in 2000.
While 5N's relationship with First Solar is a key growth driver, the fact that it relies on one company for so much of its revenue also heightens its risk profile. 5N acknowledged as much in its preliminary prospectus. "The loss of, or a decrease in the amount of business from, this customer, or any default in payment on its part could significantly reduce our net sales and harm our operating results," 5N said in the risk-factors section of the prospectus.
5N has two long-term supply agreements with First Solar. The first expires in September 2011 and involves the supply of CdTe and cadmium sulphide from 5N's production facility in Montreal. The second expires July 31, 2011 and involves the supply of the same materials from 5N's new production facility in Eisenhuttenstadt, Germany. That facility, which will double 5N's CdTe production capacity to 200 metric tons a year, is expected to begin commercial operations July 31, 2008.
First Solar Has Call Option On German Plant
The German supply agreement includes a "call" clause giving First Solar the right to buy all of the equity interests in 5N's German subsidiary for the net cost of 5N's investment in the facility, or about C$14 million.
In an interview Monday, 5N Chief Executive Jacques L'Ecuyer characterized the call option as a penalty clause that kicks in if 5N is unable to deliver product in accordance with timeframes set out in the supply agreement. "It's a very special case and it would only apply if we're basically in default of our sales contract of our supply agreement with them," he said.
L'Ecuyer described 5N's relationship with First Solar as "very good." He said the company's new German facility will double its CdTe production capacity to 200 metric tons a year. 5N expects to be able to expand production capacity at the German facility beyond 100 metric tons with relatively minor incremental costs. "As we increase capacity, we expect we will be able to improve gross margins," he said. "But of course, this being said, at the moment, what we've told everybody is that we feel that we can maintain margins at current levels."
Margins at the end of 5N's fiscal 2008 first quarter were 47%, up from 36% a year earlier, according to the company's preliminary prospectus. Revenue rose to C$6.4 million from C$4.9 million, while net income came in at C$1.1 million, up from C$686,000.
L'Ecuyer noted that, in addition to First Solar, 5N has an agreement to supply CdTe to Calyxo, a subsidiary of German-based Q-Cells AG (QCE.XE), the world's second-largest producer of solar cells. He declined to name other customers, or potential customers, but 5N's preliminary prospectus cites several companies building, or considering building, facilities to produce CdTe-based thin-film solar cells. These include U.S.-based AVA Solar Inc., PrimeStar Corp., Solar Fields Corp. and Italy-based Arendi Corp.
L'Ecuyer said 5N also hopes to supply companies that make thin-film cells using copper, indium and selenium, or CIS. The prospectus identifies U.S.-based Nanosolar Inc., Miasole and Ascent Solar Technologies Inc. (ASTI) as companies focusing on this technology. Japan-based Honda Motors and Holland-based Shell Solar are also considering this technology, the prospectus said.
While the thin-film solar-power industry is generating buzz around 5N, the company does business in other promising areas. It provides high-purity tellurium, cadmium and zinc to manufacturers of radiation sensors for medical- diagnostic and medical-imaging devices. It also provides an antimony-germanium- tellurium alloy used to develop next-generation random access memory used in computers and other electronics.
L'Ecuyer said he believes 5N is the only integrated supplier of high-purity metals. By that he means 5N can extract important metals from low-purity-metal concentrates and refine those metals to high-purity levels. "We don't believe any of our competitors are currently integrated in the way that we are," he said.
The institutional investor said his bullish view boils down to several key points. 5N went public at the right time, in the right space, has good margins, growing revenue and opportunities to expand those revenue in several different markets. It also has a proprietary method for manufacturing high-purity CdTe, the investor said, adding that he believes 5N is largely unknown to U.S. investors. As for its reliance on First Solar, he believes this will decline over time as demand for solar-grade CdTe and other high-purity metals used in thin-film solar cells increases.
Company Web Site: 5nplus.com -Stuart Weinberg, Dow Jones Newswires; 416-306-2026; stuart.weinberg@dowjones.com
Corrected January 8, 2008 14:45 ET (1945GMT)
(END) Dow Jones Newswires
01-08-08 1344ET
Copyright (c) 2008 Dow Jones & Company, Inc.
01/08 14:40 DJ CORRECT: 5N's CdTe Capacity To Rise To 200 Metric Tons
5N Plus Inc.'s (VNP.T) new German facility will double its CdTe production capacity to 200 metric tons a year. 5N expects to be able to expand production capacity at the German facility beyond 100 metric tons with relatively minor incremental costs.
(In a story published at 1:44 p.m. EST, the production capacity figures were incorrectly stated in megatons.)
(END) Dow Jones Newswires
01-08-08 1440ET
Copyright (c) 2008 Dow Jones & Company, Inc.
[end of DJ article]
Here's the English version of their web site with a blurb from the page right after it:
206.41.92.188
"Metal purification for the electronic industry is our specialty and our quality is recognized in a variety of applications including solar energy, medical imaging, infrared detectors, and thermoelectric devices. Whether it be for special grades of tellurium, cadmium, zinc, selenium or their compounds, 5N Plus is the preferred source.
With recycling services for all of our products we provide a comprehensive solution to the treatment of our customer’s production residues. "
BTW, they are hiring.
Lynn |
