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Solar Energy to Shine in 2011

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2011-01-27 18:05 


Strategy Team, Saxo Capital Markets

SINGAPORE, Jan. 27, 2011 /PRNewswire-Asia/ — Despite the failure to make “progress” on climate change issues at the Cancun climate conference in Mexico, climate change and energy policy are still hot international topics. Saxo Capital Markets Pte Ltd expects the sun will shine on solar stocks in 2011 with a potential upside of at least 30 percent from current levels. The main drivers are strong demand, expansion of valuation multiples, a stable political outlook and lower production costs.

Solar stocks will rise like a Phoenix from the ashes

The latest years have been brutal for the solar and wind industry, as seen in the performance of the Guggenheim Solar ETF and First Trust Global Wind Energy ETF that track the solar and wind industries. The indices are still trading 60-70 percent lower compared to the summer of 2008 and even had a lousy performance for 2010.


Solar & Wind industry share price development (2008-2010)


Valuations on solar stocks have been held back by concerns that excess supply relative to demand will crush the industry’s profits.

Saxo believes the market is far too pessimistic and the latest outlook for 2011 demand from the leading solar companies First Solar and Trina Solar indicate higher demand in 2011 – even in Europe despite concern over subsidies and tighter budgets. As the 2011 quarterly earnings are released; they expect the market will change its mind on solar stocks and send P/E valuations much higher from current levels around 9.6. An industry for which demand is projected to grow 9.6 percent annually until 2030 should not be valued at 9.6 times earnings because earnings growth normally exceeds growth in volume (demand) due to higher operating efficiency and share buy-back programs later in an industry’s growth cycle.

Why does Saxo like solar more than wind?

When looking at the market pricing relative to expectations, the solar industry’s revenue is expected to grow 22.5 percent in 2011 compared to 15.4 percent for wind. Profits in the solar industry are expected to grow at 28.7 percent compared to 71 percent for wind. The high growth rate expectations for wind are due to the decline in 2010 profits. With 2011 forward P/E for the solar industry at 7.5 compared to 15 for wind, the margin of safety is way larger in solar stocks. The current forward P/E for solar stocks indicates that investors doubt the earnings growth rate in solar stocks; and this is where the upside lies. If the solar industry even gets close to 28.7 percent growth in earnings (anything over 15 percent might even suffice), this could send solar stock valuations way higher. On the other hand, the current forward P/E of 15 for wind on a 71 percent expected earnings growth makes wind stocks unattractive compared to solar stocks. If the wind industry does not deliver there will be pressure on wind stocks throughout 2011 unless expectations for 2012 earnings are revised significantly higher.


Solar & Wind industry EBITDA margin (2005-2010)


From the perspective of industry-profitability, solar energy is also more attractive than wind energy. Solar companies have historically produced slightly lower returns on equity compared to the wind industry with the drag coming from lower leverage and asset utilization. This is about to change as the solar industry is expected to deliver higher return on equity in 2010 and 2011 compared to wind, driven by increasing asset utilization and significantly higher profit margin.

Generally, the solar industry has higher operating (EBITDA) margins and less leverage compared to wind. This signals a healthier competitive situation and if the solar industry is able to increase asset utilization, return on equity could easily pass the 15 percent mark in 2012.

The extended tax grant program (1603) in the U.S. will support solar demand in 2011 and into 2012 and Saxo believes it will compensate the expected slowdown in Spain and Germany due to cutbacks on subsidies there.

With bullish expectations for 2011 from all solar companies, low valuations, increasing asset utilization and stable EBITDA margins, Saxo expects solar stocks are positioned to go much higher in 2011 when valuations multiples are expanding on strong earnings.

Risk assessment

Investing in solar stocks provides huge upside but this obviously comes with a couple of risk factors such as political, currency, demand and supply risk.

The political risk in solar investments is high because the industry is still heavily dependent on government subsidies. Germany is talking about cutting the feed-in tariffs for PV solar systems by 16 percent on July 1, 2011; political decisions are obviously an important risk factor. As the industry moves closer to grid parity the political risk will, however, slowly decrease which will lower the risk premium on solar stocks. With Obama’s extension of the tax grant program (1603) political stability in the U.S. is secured in the short-term and the road to strong growth in U.S. renewable energy in 2011 is paved.

The biggest risk to their forecast is a significant collapse in the Euro compared to Asian currencies, as 75 percent of global solar sales are in Europe, while production is located in Asia. If this happens then operating margins could be substantially squeezed. According to Bloomberg, the two most respected and accurate currency forecasters, Standard Chartered and Westpac Banking, are both short-term bearish on the Euro and expect it to decline to around $1.20-1.25 by mid-2011. Third quarter statements from solar companies indicate the industry believes U.S. demand will compensate the falling Euro and demand in the Eurozone.

Concerns over low demand in 2011 (particularly in Europe due to declining feed-in tariff environment and tighter budgets) and excess production of solar panels have previously prevented multiples to expand despite increasing aggregate earnings in the solar industry. The latest outlook for orders in 2011 somewhat contradict this concern. The extended tax cuts in the U.S. will also add support for solar demand.

Solar energy is the future

The solar industry has evolved from infancy into a rapidly growing industry with increasingly economics of scale. According to Exxon Mobil’s “Outlook for Energy — A View to 2030” renewable energy including solar is set to grow at 9.6 percent annually until 2030.

General Electric’s chief engineer, Jim Lyons, is predicting grid parity in sunny parts of the United States by around 2015 and that solar will eventually be bigger than wind. The biggest driver in achieving grid parity is production costs on solar panels. Renewable Energy Corporation and Q-Cells, the two biggest makers of solar cells expect to continue lowering costs for solar panels next year.

Life insurance companies are also a supporting driver for solar demand because they have entered the market as owners and are providing financing because solar parks provide a relatively stable income stream that is also independent of other assets classes. With internal rates of return on solar projects running around 8-10 percent with fairly low risk, this is a great opportunity for insurance companies to diversify their investment income.

The growth potential is enormous. The largest PV market in Europe is currently Germany and here solar only supplies around 0.3-0.5 percent of the total power production; so there is plenty of room for growth on a global basis.

Drop the ideology and go for performance

Whether global warming is a true trend or not renewable energy is here to stay because governments around the world want a cleaner and more fossil fuel independent energy source.

What Saxo has learned through the financial crisis is that when governments and central banks intervene in the markets it tends to do it forcefully and investors should not underestimate its impact on investment opportunities.

Saxo’s message is this: do not underestimate the will of governments to support the solar industry going forward. They do not prefer subsidies to certain sectors, but they have to be realistic about this. Solar is rapidly moving towards grid parity, demand is soaring, governments want this energy source, the solar industry will eventually become competitive without subsidies and its size will eventually dwarf the wind industry.  In 2011, the sun may shine on solar energy.


Saxo Capital Markets Pte. Ltd. (“Saxo Capital Markets”) is licensed as a Capital Market Services provider and an Exempt Financial Advisor, and is supervised by the Monetary Authority of Singapore.

The author(s) and Saxo Capital Markets are not responsible for any loss arising from any investment based on any recommendation, forecast or any other information contained herein. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Saxo Capital Markets that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially in leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated.

You should carefully consider whether trading in leveraged products is appropriate for you in the light of your financial circumstances. You should be aware that dealing in products that are highly leveraged carry significantly greater risk than non-geared investments such as share trading. As such, you could both gain and lose large amounts of money. You may sustain losses in excess of the moneys you initially deposit and also in excess of the margin required to establish and maintain any positions in leveraged products.

For further information, please see:

About Saxo Capital Markets

Saxo Capital Markets Pte Ltd is a wholly-owned subsidiary of Saxo Bank A/S, the online trading and investment specialist. It serves as the Asia Pacific headquarters and holds a Capital Markets Services license from the Monetary Authority of Singapore. Saxo Capital Markets also holds a Commodity Broker licence from The International Enterprise Singapore.

Clients can trade Forex, CFDs, Stocks, Futures, Options and other derivatives via SaxoWebTrader and SaxoTrader, its leading multi-asset online trading platforms.

For more information, please visit

Media contacts:

Saxo Capital Markets Pte Ltd
Celeste Fong
Tel: +65-6303-7713


SOURCE Saxo Capital Markets Pte Ltd


Written by asiafreshnews

February 7, 2011 at 11:38 am

Posted in Technology

QIAGEN Establishes Subsidiary in India to Accelerate Expansion

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2011-01-27 11:30 


— QIAGEN India Pvt. Ltd. will sell QIAGEN products directly in India, one of the fastest growing biotech and life sciences markets in Asia

— Growing healthcare and research sectors drive India’s need for molecular diagnostics and testing technologies for applied markets as well as pharmaceutical and academic R&D

— Revenue growth in India is expected to follow a similar trajectory to QIAGEN’s growth in China

GERMANTOWN, Md., HILDEN, Germany and NEW DELHI, Jan. 27, 2011 /PRNewswire-Asia/ — QIAGEN (Nasdaq: QGEN; Frankfurt, Prime Standard: QIA) today announced the formation of its India subsidiary, QIAGEN India Pvt. Ltd., and the beginning of direct sales in the country. Until now, QIAGEN products have been sold in India through distributor partnerships. QIAGEN has been active in India since 1995 and has developed numerous initiatives, partnerships and a strong network. The Company expects that this enhanced presence will further contribute to its position in the market. The new QIAGEN office, located in New Delhi, is a further milestone in QIAGEN’s strategy to expand its footprint in emerging, high-growth regions.

The Indian life sciences and biotech market is one of the fastest growing in the region.  In 2010, the domestic market in India grew to revenues of US$ 5 billion and is expected to approximately double by 2015. India’s domestic in vitro diagnostics market is projected to grow at 15% annually in the next several years and to accelerate going forward due to government incentive programs and infrastructure investment.

“India is a strategic market for the global expansion of QIAGEN, with 1.2 billion people and rapidly growing healthcare and R&D sectors,” said Peer Schatz, Chief Executive Officer of QIAGEN. “The great potential for our molecular diagnostic technologies to serve patients in India, along with the research needs of the country’s robust pharmaceutical segment, emerging applied testing market and a rapidly increasing academic market, makes India a perfect fit for our growth and geographic expansion goals. We are excited about the prospects for QIAGEN to grow more rapidly with a presence in this vast market.”

The move to a deeper engagement in India is a further milestone for QIAGEN in Asia where it entered China in 2004 and Japan in 1998. Since then, the Company has expanded to more than 500 employees in Asia, with 2009 revenue in the region exceeding US$ 135 million, and believes that it has market leading positions in its focus markets. In the coming years, QIAGEN expects a growth trajectory in India similar to its successful experience in China. The New Delhi office is expected to grow to a staff of more than 30 in 2011.

QIAGEN’s diverse product portfolio is well suited to serve India’s unique healthcare needs, as well as to advance pharmaceutical R&D in India. As with other developing countries, India faces a double burden of non-communicable and communicable diseases. Demographic changes and rising living standards have also led to an increase in chronic diseases. With one of the broadest offerings in molecular diagnostics for profiling, prevention, personalized healthcare and point of need testing, as well as one of the largest sample and assay technology portfolios for drug development, QIAGEN is well positioned to serve the growing Indian market.


QIAGEN N.V., a Netherlands holding company, is the leading global provider of sample and assay technologies. Sample technologies are used to isolate and process DNA, RNA and proteins from biological samples such as blood or tissue. Assay technologies are used to make such isolated bio-molecules visible. QIAGEN has developed and markets more than 500 sample and assay products as well as automated solutions for such consumables. The company provides its products to molecular diagnostics laboratories, academic researchers, pharmaceutical and biotechnology companies, and applied testing customers for purposes such as forensics, animal or food testing and pharmaceutical process control. QIAGEN’s assay technologies include one of the broadest panels of molecular diagnostic tests available worldwide. This panel includes the digene HPV Test, which is regarded as a “gold standard” in testing for high-risk types of human papillomavirus (HPV), the primary cause of cervical cancer, as well as a broad suite of solutions for infectious disease testing and companion diagnostics. QIAGEN employs nearly 3,600 people in over 35 locations worldwide. Further information about QIAGEN can be found at

Certain of the statements contained in this news release may be considered forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. To the extent that any of the statements contained herein relating to QIAGEN’s products, markets, strategy or operating results, and to expected growth of QIAGEN’s business in India in particular, are forward-looking, such statements are based on current expectations that involve a number of uncertainties and risks. Such uncertainties and risks include, but are not limited to, risks associated with management of growth and international operations (including the effects of currency fluctuations and risks of dependency on logistics), variability of operating results, the commercial development of the applied testing markets, clinical research markets and proteomics markets, nucleic acid-based molecular diagnostics market, and genetic vaccination and gene therapy markets, competition, rapid or unexpected changes in technologies, fluctuations in demand for QIAGEN’s products (including fluctuations due to the level and timing of customers’ funding, budgets, and other factors), our ability to obtain regulatory approval of our infectious disease panels, difficulties in successfully adapting QIAGEN’s products to integrated solutions and producing such products, the ability of QIAGEN to identify and develop new products and to differentiate its products from competitors’ products, market acceptance of QIAGEN’s new products and the integration of acquired technologies and businesses. For further information, refer to the discussions in reports that QIAGEN has filed with, or furnished to, the U.S. Securities and Exchange Commission (SEC).


Investor Relations Public Relations
Dr. Solveigh Mähler +49 2103 29 11710 Dr. Thomas Theuringer +49 2103 29 11826
Albert F. Fleury +1 301 944 7028 Mr. Brendan Green +86 21 3865 3824
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Written by asiafreshnews

February 7, 2011 at 10:49 am

Posted in Business & Finance