China's Comtec Solar System Group, Limited, founded in 1999, is one of the leading solar wafer companies in the world, operating in production and sale of Monocrystalline solar wafers, Monocrystalline solar ingots and other related products. Comtec’s “Super Mono Wafer” is the premium product of the company. Registered in the Cayman Islands, Comtec came to the Hong Kong IPO market in October 2009. In March 2011 Comtec Solar was ranked sixth in the top 10 wafer companies in the world by Green World Investor. Since then, Comtec’s sales have continuously increased, but its profits have taken a toll.

Comtec solar systems earned revenue of US$ 80.48 million in 2009, which increased to US$ 162.19 million in 2010 and decreased by 0.5% to US$ 161.44 million by the end of 2011. Out of US$ 161.44 million, US$ 154.82 million (95.9%) was received from production and sale of Monocrystalline solar wafers. The decrease in revenues is attributed to a reduction in average selling prices throughout the industry, as well as global over-capacity.

Comtec’s revenues mainly come from the sale of solar wafers to solar cell and module manufacturers in Mainland China, Taiwan, Germany and the Philippines. Their respective contributions are shown in the table below:

The major customers of Comtec are Chinese-based multinationals such as JA Solar Holdings, China Sunergy and Suntech Power Holdings, the world’s largest producer of silicon solar modules.

The overall shipment saw an increase from 175.3MW in 2010 to 222.1MW in 2011. The fall in selling prices, however, caused a net loss of US$ 7.35 million in 2011. This loss was translated as a loss per share of US$ 0.007, down from earnings per share of US$ 0.334 in 2011. The annualized production capacity was increased to 600MW in 2010, which was maintained in 2011. Comtec started substantial production of “Super Mono Wafers”, its premium product, for its overseas clients in 2011.

In June 2011 the company issued five-year bonds to US-based private equity fund TPG Capital, and raised US$103.22 million in principal amount to expand Comtec’s capacity. However, due to adverse market conditions, Comtec decided to repurchase 75% of the issued bonds at US$ 77.81 million to reduce its debt levels and pay in cash. This caused a fall in its share price by over 4%. Under the new agreement, TPG might get 7.7% of the share capital of Comtec if its warrants are fully exercised. Keith Li, analyst at CIMB Research, believes that Comtec will have little left over for expansion after payment to TPG. At the end of 2011, Comtec had a net cash balance of US$ 118.11 million.

Comtec expects the current market conditions to prevail in 2012 and believes that it can survive this adverse environment due to its strong financial position. China and the United States are the biggest potential markets for growth in the future besides Japan, Australia, Africa and the Middle East. Comtec will not expand its production capacity this year. With the current production capacity of 600MW, and 2011 production of 222.1MW, Comtec can easily meet an increase in demand this year.