Goldman Comments on Preliminary Solar Anti-dumping Determination (SCTY) (FSLR) (SPWR) (TSL)
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a research note, Goldman Sachs analyst Brian Lee commented on news Friday that the US Dept. of Commerce announced its preliminary determination on its anti-dumping investigation into imports of certain Chinese and Taiwanese solar products. Lee noted duties were higher than expected, but incremental impact will likely be limited. SolarCity (Nasdaq: SCTY) is the most at risk, while SunPower Corporation (NASDAQ: SPWR) and First Solar (NASDAQ: FSLR) may see a modest benefit."The DoC set preliminary AD duties on solar imports from China, ranging from 26.33% on Trina Solar (NYSE: TSL) up to a China-wide rate for unspecified manufacturers of 165.04%. On Taiwanese solar imports, the US DoC established rates between 27.59% and 44.18%. In our view, these rates are broadly higher than expectations of both industry players and investors. We note these are preliminary AD rates, with the final determination expected to be decided in mid-October," said Lee.
"In the mid $0.70/W range today, we note solar module ASPs in the US have already increased since the beginning of 2014 owing to tariff uncertainties. And while AD duties were set higher than expected (we believe consensus was 20%-30%), we note that in anticipation of negative rulings, Tier I Chinese module makers have already begun to move away from sourcing from Taiwan and reverted to producing all-China modules – resulting in ASPs of $0.75-$0.80/W for these vertically integrated Chinese products even after adjusting for 2012 duties. Moreover, recent checks suggest US module shipment volumes remain robust with small-scale utility projects the only segment of potential weakness in the near term," he continued.
"We expect SolarCity – which we estimate sources 90%+ of its panel supply from China – to reveal a much-improved, multi-year cost roadmap on its August 7 earnings call on the heels of its Silevo acquisition. Moreover, we note mitigating factors such as low-cost inventory and supply agreements for non-Chinese products (e.g. REC, Kyocera) provide supply availability in the near term, in addition to all-China modules now being quoted at the $0.75-$0.80/W range – which is much better than feared, in our view," he added.
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Shares of SolarCity closed at $72.57 yesterday. |
