Suntech Power Capital Structure

Reviewed by Arseny Lebedev BT 401 Due Diligence 12/3/2008

Table of Contents ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Arseny Lebedev

Definitions ,[object Object],[object Object],[object Object],[object Object],[object Object],Arseny Lebedev

1. Pre-401 Summary Arseny Lebedev

Overview of PV 16-20% Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

PV Market Snapshot Arseny Lebedev ,[object Object],[object Object],Current market size: $10-15 Bn Sources: SolarBuzz, Analysts ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Suntech Overview ,[object Object],[object Object],[object Object],[object Object],[object Object],Dr. Zhengrong Shi Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Important Facts ,[object Object],[object Object],[object Object],Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Changes in Comparables #1 Very similar operationally Vertically integrated for silicon production PV leader Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Comparables Arseny Lebedev $Millions ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Income Statement Quarterly 2007 2006 (Sep '08) MEMC Total Revenue $ 546.0 $ 1,921.8 $ 1,540.6 Gross Profit $ 269.7 $ 1,000.0 $ 689.0 Operating Income $ 227.5 $ 849.9 $ 558.3 Net Income $ 182.8 $ 826.2 $ 369.3 STP Total Revenue $ 594.4 $ 1,348.3 $ 598.9 Gross Profit $ 128.3 $ 274.1 $ 148.9 Operating Income $ 87.1 $ 171.6 $ 103.2 Net Income $ 55.9 $ 171.3 $ 106.0 Qcells Total Revenue $469.56 $1,125.78 $710.02 Gross Profit $130.03 $424.41 $273.09 Operating Income $69.40 $254.13 $166.41 Net Income $94.94 $191.44 $125.26

II. Financial Markets Arseny Lebedev

Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],“ Suntech slashed its revenue forecasts for the fourth quarter, blaming the euro's sudden fall against the dollar and delayed orders by customers who had trouble getting project financing.” – Steve Gelsi, MarketWatch

Lifetime Stock Performance (STP) $80 $25 $8 80% Loss Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Since Last May $40 to $8/share Qcells Suntech MEMC Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Analyst Coverage Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: Marketwatch

Shareholders 64% of outstanding stock is held in the US Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

IV. Business Model Analysis Arseny Lebedev

PV Value Chain Majority of Revenue Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Products: PV Cells PV Modules Arseny Lebedev Priced in Watts, i.e. $4.00/Watt ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Segments & Ratios Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

P&L Arseny Lebedev $Millions ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object], FY 08 Q3 Q2 Q1 7-Dec 6-Dec 5-Dec 4-Dec estimate 8-Nov 8-Jun 8-Mar (TTM) (TTM) (TTM) (TTM) Total Revenue $1,865.00 $594 $480 $435 $1,348 $599 $226 $85 Cost of Sales $1,398.75 $466 $364 $338 $1,047 $439 $154 $58 Gross Operating Profit $466.25 $128 $116 $96 $301 $160 $72 $27 Operating Profit before Depreciation (EBITDA) $251.78 $87 $77 $62 $199 $115 $47 $22 Total Net Income $ 216.94 $56 $65 $56 $ 171 $ 106 $ 31 $ 20

Capital Expenditures Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

3. Capital Structure Arseny Lebedev

Debt / Equity 3 rd Quarter Arseny Lebedev 2 nd Quarter ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Other Debt Items Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Derivatives Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Leverage Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Debt / Equity Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Cost of Capital Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Utilized vs. Potential Capacity Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Why so Debt Heavy ? Utilized/Unutilized Capacity Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Total: 750 MW 2008 Total: 1 GW 2009

Governance Nuggets ,[object Object],[object Object],[object Object],[object Object],[object Object],Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Corporate Structure Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Board of Directors Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Name Title Expertise Shi, Zhengrong Chairman of the Board, CEO Technical Know-How Maynard, Jason Independent Director Finance Qiu, Zhi Zhong Independent Director Finance Zhang, Songyi Independent Director Finance Worley, Julian Independent Director Finance

Shareholders Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

GAAP vs Non-GAAP, Misc Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Market Valuation Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Discounted Cash Flow Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Assets 3 rd Quarter Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Asset Nuggets Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Inventory Turns Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

P/E History Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Metrics Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

More Ratios Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

5. Other Risks, Conclusion Arseny Lebedev

Risks ,[object Object],[object Object],[object Object],[object Object],Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Silicon Shortage 88% of global polysilicon supply comes from five companies. ,[object Object],[object Object],[object Object],[object Object],[object Object],Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Suppliers

Polysilicon Prices Per Kilogram Source: Lehmen Brothers + Industry News Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Invest Focuses Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Conclusion (Investor POV) Arseny Lebedev ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Negatives Positives ,[object Object],[object Object],[object Object],Short: Buy @ < $10 Long: Buy & Hold < $15 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Disclaimer: I am an optimist. And STP shareholder.

Suntech Power Capital Structure

Recommended

Recommended

More Related Content

Viewers also liked

Viewers also liked (20)

Similar to Suntech Power Capital Structure

Similar to Suntech Power Capital Structure (20)

Recently uploaded

Recently uploaded (20)

Suntech Power Capital Structure