Chinese solar panel maker Suntech Power Holdings Company Ltd. (STP) is increasing its exposure in the growing U.S. solar market, where its sales grew 35% sequentially in the second quarter of 2010. The company is eyeing a 15% – 20% market share in the U.S. in 2010. The company expects demand for solar products in the U.S. and Canada to exceed 1 GW in 2010.
In lieu with its U.S. focus, Suntech Power opened its first U.S. manufacturing plant in Goodyear, Arizona. The new module production facility has a 30 MW of annual capacity. The facility will help the company to compete for solar projects in the U.S. that are not open to foreign manufacturers. Over the longer term the company is eyeing to expand its annual capacity to 120 MW and has enticed the local Arizona State University into solar research collaboration to enhance the quality of its panels.
Anticipating growing demand, Suntech has already started expanding the capacity of the new facility to 50MW by early 2011. The manufacturing facility will be used by Suntech Power, primarily to manufacture its 280W Vd-series modules, used for commercial and utility-scale electricity generation projects. All modules produced at the facility will meet the procurement norms per the American Recovery and Reinvestment Act (ARRA) projects.
Wuxi, China-based Suntech is a leading global solar energy company. Suntech designs, develops, manufactures and markets photovoltaic (PV) cells and modules. Consistent focus on new markets led to a spike in demand for the company’s products in emerging markets like Greece, Czech Republic, Benelux Region and Italy.
The company took a huge jump in its manufacturing capacity from 30 MW in fiscal 2003 to 1.1 GW in fiscal 2009. Looking ahead, the company plans to raise its capacity to 1.8 GW by fiscal-end 2010.
Suntech’s products are used in a variety of residential, commercial, industrial and public utility applications around the globe. The company also provides PV system integration services in China and U.S., and takes a further plunge into the development of utility scale solar power systems. Suntech Power’s predominantly China-based manufacturing base gives it a distinct cost advantage over its U.S. and European peers.
Our Neutral recommendation on the stock indicates that it would perform in line with the broader market. In the near term, we believe its Zacks #1 Rank (Strong Buy) peers like JinkoSolar Holding Co. Ltd. (JKS), China Sunergy Co. Ltd. (CSUN) and ReneSola Ltd. (SOL) are more promising compared to the Zacks #3 Rank (Hold) Suntech Power stock.
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