Apollo Solar 0566

[winston]

vested

DJ MARKET TALK: UOB Starts Apollo Solar At Buy; HK$1.24 Target
Nov 15, 2010

1435 [Dow Jones] STOCK CALL: UOB KayHian starts Apollo Solar Energy Technology (0566.HK) at Buy with HK$1.24 target (9.2X full-diluted FY11 P/E).

Says, Apollo Solar leading provider of silicon-based equipment, turnkey solutions for manufacturing of thin film solar modules.

Says, signed sales contract with Hanergy to supply 3GW of thin film manufacturing turnkey solutions for HK$19.84 billion over next 3 years; combined with company's other existing contracts, implies FY09-FY12 CAGR of 124% along with gross margin of approximately 65%.

Adds, as part of deal, Hanergy will subscribe to 4.9 billion new shares of Apollo for HK$1.1 billion, making Hanergy key strategic investor in company; creates synergies in R&D, brand recognition for both companies, making Apollo key supplier of Hanergy's aggressive expansion plans going forward.

Source: Dow Jones Newswire

[winston]

Vested.

Buyback 2m shares yesterday ( very high price ? )

http://www.hkexnews.hk/listedco/listcon ... 117553.pdf

[winston]

Vested. From UOBKH:-

Addressing concerns over earnings visibility

What’s New

• Based on feedback and comments after our recent initiation, we have further discussed with management regarding their outlook on earnings visibility up to 2012 and beyond, and would like to highlight several key points as follows:


• Hanergy solar expansion plans continuing to move forward.

Hanergy, Apollo’s largest customer, is currently building three 1GW production bases in Guangdong, Sichuan and Heilongjiang provinces (using equipment from sales contract with Apollo).

Recent negotiations with local government officials in Jiangsu and Hainan during the past month have resulted in agreements to establish additional 1GW TF module production bases in these provinces. Apollo is in an ideal position to secure the equipment deals for this new expansion.


• Benefactors of tremendous growth in the solar sector. The estimated total installed solar generation capacity is expected to grow from 22.9GW in 2009 to 70.7GW by end-12 (CAGR of 45.6%). Market research firm, IMS Research, predicts 120GW to be installed by end- 14.

Thin-film solar module technology is expected to grab a 25% share of this increased demand by 2012. Currently, production capacity for thin-film solar modules account for only about an estimated 10% of total solar module capacity, and is dominated by one producer (First Solar).

China accounts for 40% of global output of solar modules, and is considered to be the ideal location to install new capacity because of a combination of low operation costs and favourable government policies (Rmb5t government funding towards renewables, 15% power generation target for renewables, and plans to establish domestic
carbon trading system).

Management sees Apollo ideally positioned both geographically and technologically to gain significant market share in a rapidly expanding sector.


Stock Impact

• The lack of long-term earnings visibility is common for companies in the solar sector as estimates for both supply and demand are murky at best. This problem is magnified for solar equipment makers as revenues are \primarily of a non-recurring nature.

However, we are more positive regarding Apollo as we see the HK$19.84b Hanergy sales order on hand providing it earnings visibility up to 2012, which allows time for management to leverage their relationship with Hanergy, improve their technology and grab hold of opportunities from the global solar expansion in order to generate both new and recurring revenues and ultimately to gain earnings visibility beyond 2012.


Valuation/Recommendation

• Maintain BUY and target price of HK$1.24. Our revenue assumptions are based on confirmed orders only and are discounted for potential delivery delays, with a 30% upside potential for 2012 revenue if deliveries are on schedule.

We will continue to use our more conservative revenue assumptions until the company has a longer track record; as such no changes were made to the target price.

[profittaker]

17th Jun 2010

On the date of the signing of the sales agreement, the companies also agreed that Hanergy subscribe, or procure the Hanergy nominee to subscribe, for 4,911,528,960 subscription shares at the subscription price of HK$0.239 per subscription share.

Peng Li Bin, Apollo’s executive director, said, “Hanergy is one of the largest and leading non-state-owned clean energy generation enterprises in China. Having Hanergy to be our strategic investor and one of our major shareholders serves to demonstrate that the technology level and R&D capability of Apollo have been recognized by Hanergy.”

http://www.pv-tech.org/news/_a/order_fo ... key_thin-/

[profittaker]

After selling institution still have nearly 200% shareholding. Is there any problem with the data?

http://stockhtm.finance.qq.com/hk/quotp ... 66.htm#zjc

0566.JPG

[winston]

Not vested

Valuation/Recommendationï‚·

Maintain BUY and target price of HK$1.24. Apollo is a low-risk play with a multi-year orderbook secured with orders from Hanergy and an increasing number of new customers both domestically and overseas.

Investment by key strategic investors should further boost investor confidence in Apollo. Even based on our conservative forecast assumptions, Apollo is very
undervalued, trading at only 4.2x 2011F PE.

Maintain BUY and target price of HK$1.24 (fully diluted and assuming the first two tranches of the Hanergy share allotment are completed in 2011).

Source: UOBKH

http://research.uobkayhian.com/research ... 602579.pdf