Things are not exactly booming in Taiwan; on average revenue is down 41% YTD, but May has brought a dose of optimism to an industry embattled by losses for almost a year now. Investors need to consider the drop in average selling prices (ASP) before drawing a conclusion on revenue decrease. For the leading companies, volume sales measured in MW are up and above those of last year.
While some businesses seem to be getting fairly rapid turnaround, this is not an industry-wide phenomenon. Among the major players, May has been mostly a revenue decrease from the month before. Moreover, there is no single source identified as a contributing factor, but a combination of European, Japanese and American demand is dominating the landscape. It appears not everyone is getting a large intake of orders from China; however, at least one of the major companies has described the anti-dumping and countervailing duties as help in volume and pricing.
DelSolar, currently operating 700MW in Taiwan and 400MW in China, reported an increase in sales by 49%, which the company contributed to internal module sales. Another mid-size cell maker, Tainergy, with 600MW of cell manufacturing lines, including 100MW in China, had a 15% revenue increase. In the case of Tainergy, May sales are a 70% improvement from the same time of last year, a confirmation of how fragmented the situation is, but also supporting the thesis that MW sales are growing rapidly.
Among the top three, Neo Solar Power increased its revenue by 7% month-over-month, but for the year to date, revenue is down 23% in comparison to 2011. The company is receiving orders from China and it is also enjoying a steady increase in business from Europe, Japan and the US. Utilization is running at high 90% and June is expected to bring strong results. Neo Solar is expected to see a 25% to 30% increase in revenues over the Q1. Gintech is also describing high utilization levels. The company added a larger percentage of OEM business in May, and despite the 7.7% drop in month -over-month revenue, shipments were 5% greater in May than the previous month. While we suspect Q2 results to be in the range of a 10 to 20% increase in revenues over Q1, Gintech should record growth over the last year. The company has also announced an expansion, expecting to bring its capacity to 1.5GW in the second half of the year.
Despite a 23% drop in revenue versus last year and a 9% drop month over month, Motech`s revenues may see an increase in Q2. The company plans 370MW of cell shipments for the quarter ending in June. Since 500MW of Motech`s cell manufacturing in China is under the same 31% importation duties as cells made by JA Solar (NASDAQ:JASO), large parts of the 1.1GW capacity in Taiwan can be dedicated to the US market, if necessary. Recently, the company had decided to abandon its polysilicon production ambitions and dispose of 30% interest in AE Polysilicon, a partnership listing Total of France and Dutch Scheuten Solar, recently acquired by Guangdong Aiko Solar Energy Technology Co. from China. AE represents American assets of the company, at one point estimated at a $41M investment. The reason quoted for the shutdown: lack of economies of scale and a major decrease in the price of poly. Renesola (NYSE: SOL), which had sold wafers to Solartech and Neo Solar in multi-million deals in 2010, has been struggling with the cost of polysilicon at around $30 to stay competitive. No wonder many small businesses like Hoku (NASDAQ:HOKU) and AE had abandoned plans still in construction stages; faced with estimated costs of $50 to $100 per kg, they are unsustainable under current market conditions.
