"breakthrough … from a tiny company deep in China’s heartland"

Another tease from Robert Hsu and his Chinese stock advisory service, sent in by a reader — this time, the breakthrough is in solar power, and the tease lays the groundwork with two keys:

One, China is in desperate need of power (mention Three Rivers Dam, oil exploration in Africa, thirst for growth). They have huge incentives to go with alternative and clean energy. No argument there.

And two, China can use cheap resources (people) for manufacturing. Also hard to dispute.

That leads him to …

A photovoltaic cell manufacturer in China, that avoids the polysilicon price spikes by using monocrystalline silicon, and uses cheap factory labor to build their cells.

Let me make a confession: Although I’m an investor in a major polysilicon manufacturer, MEMC Electronic Materials (WFR), I have no idea what the difference is between polysilicon and monocrystalline silicon (though my WFR investment is up more than 200% — maybe I should try to sell you a newsletter!). Hsu says the one this company uses is much cheaper, I’ll take his word for it.

Some other hints:

The price rose 9.2% “last Monday” (I think this must be March 12 by the email date)

Revenue has surged 564% in the last nine months.

The stock has “jumped 110%” (no mention of the time frame) … and “there’s plenty more where THAT came from.”

And the final clue … the one that we could have probably used to answer this quite easily without all of the bove … this company is listed on the New York Stock Exchange.

So really, since we already know this isn’t Suntech Power (which HSU brags about separately in this email), there’s only one company it can be … we might not even have to turn on the Stock Gumshoe Thinkolator Machine …

… drum roll please ….

Robert Hsu’s next alternative energy play in China is Trina Solar, Ltd. (TSL)

See, there are only two Chinese solar companies listed on the New York Stock Exchange, Suntech being the other one.

And the other stuff fits as well, of course — the 110% gain is since the company’s IPO on the NYSE in December. And the shares did jump up just shy of 10% last Monday (though they gave back those gains pretty quick).

I don’t know whether TLS or STP is a stronger investment — from what I quickly saw in researching this, STP also uses that “monocrystalline silicon” Hsu mentioned, though I also know they’re major buyers of polysilicon from MEMC Electronic Materials. So I don’t know whether that concept is just a red herring, or if the two kinds of silicon are really fundamentally different at all. You could also go with a company like First Solar, whick I understand uses different raw materials entirely (though I haven’t bothered to find out what they are).

But I do know that, thanks to your friendly Stock Gumshoe, you don’t have to subscribe to an expensive newsletter just to find out what company Robert Hsu is pushing today.

The author will always disclose any direct long or short equity, debt or option position in any stocks written about as of the day of publication, and will not trade in any stocks mentioned for three days (72 hours) after publication. Full disclaimer is at the bottom of the page.

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1. Amorphous silicon cells vs Monocrystalline silicon cells the basics:

   Amorphous Silicon Cells are composed of silicon atoms in a thin homogenous layer rather than a crystal structure. Amorphous silicon absorbs light more effectively than crystalline silicon, so the cells can be thinner. Amorphous silicon is also known as a “thin film” PV technology and it can be deposited on a wide range of substrates, both rigid and flexible. Amorphous cells are less efficient than crystalline based cells, with typical efficiencies of around 6%, but they are easier and therefore cheaper to produce.

   Monocrystalline Silicon Cells are made from very pure monocrystalline silicon. The silicon has a single and continuous crystal lattice structure with almost no defects or impurities. The principle advantage of monocrystalline cells are their high efficiencies, typically around 15%, although the manufacturing process required to produce monocrystalline silicon is complicated, resulting in slightly higher costs than other technologies.

   [Reply]

   Posted by butcherbird | April 5, 2007, 3:48 pm

2. Thanks! Always good to get an education — and I’m glad to see that my readers are smarter than I am!

   [Reply]

   Posted by One Guy | April 5, 2007, 6:12 pm

3. Might want to take a look at SOL..re:this industry

   [Reply]

   Posted by Michael | April 28, 2008, 11:23 pm

4. I’m pretty sure monocrystalline silicon ingots for solar panels are made FROM polysilicon, which makes your analysis very very wrong and in fact harmful.

   [Reply]

   Posted by lochmonster | October 16, 2008, 1:36 am