Knobias Clip Report (12-4-2007)

Submitted By Knobias ClipReport

Solar Sees Increased Attention on Energy Bill

Tuesday’s session saw continued talk of Fed rate cuts, financials seeing increased selling pressure, speculation regarding gaming consolidation, and solar names on the rise again. This alternate energy sector saw a barrage of news from many located in the China market which spilled over into a sympathy related rally for the whole space.

Solarfun Power Holding Company Limited (SOLF) began the rally when shares gained over 39% following news that the Company had reached an agreement with Good Energies Inc., a renewable energy investor, to sell some 66.7 million ordinary shares and 281,011 American Depository Shares to the investor. Included in the investment were almost 50% of the shares held by SOLF’s chairman and CEO, Yonghua Lu. It was noted that Lu would retain a 16.1% stake in the Company. The deal effectively raises Good Energies’ holdings to 34.7% from only 6.3% of the Company before the deal. It also will allow Good Energies to have additional control of the board of directors.

The deal left some investors worrying about the CEO’s faith in the Company. There aren’t many instances of CEO’s liquidating 50% of their holdings. Even rarer was the security gaining over 40%.

Canadian Solar Inc. (CSIQ) also was in on the action as speculation circulated of a potential partnership circulated the floors. The Company has been highlighted a few times with their growing top line and more recently by raising $75 million in a 144A private placement. Shares gained some 17% on the day with over 5 million shares traded.

LDK Solar Co Ltd (LDK) shares saw a 31% increase on Tuesday. The Company had become embattled in an inventory disagreement with a former employee. Shares had seen their price fall from highs of over $75 in late September to lows in the $26 area in late November. On November 15th the Company announced guidance for sales of $165 to $170 million. Earnings were expected to be between 37c and 41c.

No official news had been reported over the past few days but a story circulated that noted the Company had raised some $700 million in debt and had retained all of their customers throughout the inventory discrepancy. The Company earlier had noted that the investigation into inventories reporting had continued. They were expected to announce their findings in early December. With that on the horizon, the shares could see additional attention.

Also contributing to the heightened attention to the sector was the proposed energy bill. The legislation was seen as a negative catalyst last month as news that the Democrats were proposing a stripping out of alternative energy tax cuts to gain favor of the Republicans to override any presidential veto. With the bill possibly being on the agenda in the coming days, investors would certainly be wise to watch many in the solar area.




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