Date: 22/5/12
Broker: Westhouse
Company: PV Crystalox
Share price: 9.79p
Target price: 13p
Recommendation: Buy (from neutral)
Crystalline silicon wafers PV Crystalox (PVCS) says that wafer shipments will be more than 30% lower in the first half of 2012 but an out of court cash settlement has added to the cash pile. This means that the shares are trading at a discount to cash and Westhouse has changed its recommendation from neutral to buy.
Westhouse reckons that PVCS will ship between 55MW and 75MW of wafers, against previous expectations of 80MW-100MW. The broker has increased its forecast 2012 operating loss by 8% to €27 million. Revenues will slump from €210 million to 39 million but the operating loss will more than halve thanks to cost savings. The earnings outlook remains negative for solar PV suppliers and wafer overcapacity and aggressive pricing from Chinese suppliers means there is no short-term likelihood of a return to profit.
PVCS was awarded a €90 million out of court settlement via the International Court of Arbitration and Westhouse forecasts net cash of €75m at the end of 2012, which is equivalent to 14.5p a share. This is forecast to fall to €72 million at the end of 2013.
On top of this, Westhouse believes that PVCS’ ingot production technique is valuable. The target price of 13p a share does not take account of this and represents an 11.5% discount to cash at the end of 2012.
