Tough German winter chilled profits, but better weather and Chinese subsidies will help industry.Solar product manufacturers were blindsided by snow in the first quarter, but results should thaw in the spring.A cold winter with heavy snowfall in Germany led to a decline in installations in the world's biggest solar market. The second quarter should see an uptick in activity, Collins Stewart analyst Daniel Ries told Forbes. Germany accounts for 40.0% to 45.0% of total world demand.Last week, news that the Chinese government plans to subsidize solar power installations spread optimistic rays across the industry, energizing shares of companies that have suffered from weak pricing and tight credit markets. The Chinese government said sun-powered projects producing more than 50 kilowatts in energy output qualify for government-provided funding equal to 20 yuan ($2.92) per watt.
"This level of subsidy is substantial given that even in Germany panels are today being sold at close to 2 euros/Wp [$2.70]," said JPMorgan analyst Sandeep Deshpande, referring to watts peak, or maximum power output. "Thus the Chinese government will virtually fund the entire panel, which seems an extremely high upfront subsidy."
While Wall Street had been bracing itself for a sour start to the second quarter, a hopeful reading on housing and March auto sale number that, while gloomy, were not quite as disastrous as anticipated, lifted stocks with all three major indices gaining on the day.
And as the weather warms up, solar sector stocks got sunnier, too. American depositary receipts of JA Solar added 5.6%, or 19 cents, to close at $3.56, in New York on Wednesday. Evergreen increased 3.8%, or 8 cents, to $2.21, and LDK Solar rose 12.8%, or 81 cents, to $7.15.
Chinese companies also fared well, as Solarfun Power Holdings added 7.4%, and Trina Solar Limited 5.9%.
Bucking the upward trend was ReneSola, which lost 1.3%, or a nickel, to close at $3.95.
Source:Forbes.com
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