1. DSTI is in the process of perfecting silicon-free solar panels used to convert sunlight to electricity; they use a pv technology called thin film, and in particular, CIGs(copper, indium, gallium, selenide) which while much cheaper than polysilicon (perhaps as little as 1/3 the cost) still provides close to the same efficiencies.The company was started in 1997, and they are currently "sold out until further notice."
2. Most of the current players in the solar industry use polycrystalline silicon for their products. Silicon is in short supply, and even though more silicon is expected to come online in about 2 years, demand is still expected to swamp supply, AND silicon will still be more costly than CIGS. The raw material shortage has slashed growth for the pv industry from more than 50% in 2004 to a projected 5-10% in 2006. CIGS thin film solar panels are much thinner and use far less raw material than common silicon solar panels, and
they can also be installed almost everywhere, due to another of their advantages, which is flexibility. This makes them perfect for new applications, one of the most important of which is BIP (Building Integrated Photovoltaics.) CIGS has also demonstrated excellent durability.
3. DSTI is in the process of making its first pilot shipments to its first customers, Blitzstrom from Germany (the contract is worth 60M$ untill 2008), and to MEG in China.
The company has three products, a standard low margin product called Terrafoil, and higher margin product called terrafoil sp, and a very high margin product call Lightfoil. Lightfoil will hopefully be used for HAA (High Altitude Airships) and DSTI has partnered with Auxilia in an attempt to quickly develop this technology for Lockheed and others, who have over $100 million in grant money to dole out on the technology.
4. DSTI is expanding rapidly and in the last year alone has increased employee counts from ~10 employees to what will probably be about 60-70 employees by June of 2006 (there are currently 50 employees, with a new office about to open.) One of their key new employees is John McCaffrey, a solar industry veteran, formerly of Evergreen Solar, who is the new vice president of technology. JM was responsible for implementing and overseeing the manufacturing growth of Evergreen Solar from a tiny microcap to its current heavyweight status, but apparently he saw something in DSTI that he liked enough to leave a billion dollar company like ESLR for a $70 million company like DSTI. The new office in Santa Clara, California, just down the road from other solar companies such as Miasole, Nanosolar, and Sunpower is yet another huge positive move for the company as they are bringing the control over their manufacturing process almost completely in-house. Solving the technological problems facing manufacturing CIGS in quantity and quality is the biggest hurdle and risk for DSTI but there are many many signals that they will be able to accomplish this aim with ease in the near term and the opening of the Santa Clara office to make better use of Silicon Valley engineering expertise coupled with McCaffrey's presence substantially reduces risk in this area.
5. DSTI's CEO is John Tuttle, formerly senior scientist in thin film and CIGS technology at the NREL (National Renewable Energy Lab). JT is not only dynamic, he oozes integrity and clearly possesses a passion for the pv industry, and he is considered one of the, if not THE expert, in CIGS. He was responsible for producing the top CIGS efficiencies in the laboratory of over 19%, has published numerous technical articles on the field, and is the holder of a number of patents.
"Seeing that DSTIZ is trading below the issue price of $5, an open-market warrant buy-back might be good for the balance sheet, but then it's an expense and not a source of financing."
Not sure what you mean. The ipo was $5 for one share of common, one of dstiw, and two of dsitz.
5. CIGS and thin film is clearly the new up and coming solar technology. It used to be that the primary risk to investing in DSTI was the real possibility that quality mass production of CIGS was not feasible. But suddenly many many big pockets are deciding that CIGS is the way to go. Not only DSTI, but Honda, Miasole, Heliovolt, Konarka, and Nanosolar are all working on CIGS or other thin-film technologies to replace the soon to be outdated silicon panels. Recent research and investment analysis is confirming this: see:http://biz.yahoo.com/prnews/060323/clth505.html?.v=29 and http://www.nanomarkets.net/products/prod_detail.cfm?prod=6&id=232 CEO Tuttle often refers to DSTI's technology as "disruptive." Can you dig it? Down the road +30% efficiencies are possible with multi-junction technology.
6. Valuation. They stock currently has a low float of only around 5.6 milion shares, and 6.5 millions total shares outstanding. That predicts high volatility. They have a
very very low Market Cap (currently $78 million) compared with other solar players; by comparison Evergreen Solar has a market cap around 1 billion, Energy Conversion Devices has a market cap of over 2 billion, as does Sunpower, and Suntech, from China has a market cap over 4 billion. Only Suntech and Sunpower are profitable. DSTI's roadmap calls for profitibility in around 2 years.
7. Insider interests are aligned with shareholder interests. The CEO is the largest holder of common stock. He sells 16K shares every quarter, but it is regular and planned and does not reflect market timing. He holds over 600K shares or around 10% of the company. Management salaries are very reasonable, under $200K/year. The new vp, McCaffrey has shares at around $15. Tuttle also seems to be quite concerned about shareholder interest and has shown NO tendency towards the quick and easy dilution that plagues many other public companies and their executives; as noted earlier, this is a CEO with a social passion and he possesses integrity.
8. Solar energy is one of the best, if not the very best, of the alternative energies. Peak Oil is on everyone's minds, and regardless of when the peak arrives, world demand for oil is growing and supply is barely keeping pace. Even without peak oil arriving in the next 5 years (as many are forecasting), global warming is perhaps an even more important macro-catalyst. Many of the alternatives to oil still contribute to global warming; solar does not. Reflecting these issues are many new initiatives that will support solar for many years and decades to come here in the US, to say nothing of the extemely strong demand for solar that is seen in Europe, Japan, and China. California recently passed a $3 billion (!) solar initiative that very few are able to take advantage of due to the previously mentioned silicon constraints. When DSTI's pv technology is available in less than a year, which will the market choose: high cost silicon pv tech with supply issues or revolutionary thin film and flexible CIGS? It's a no brainer, in our opinion. For an eye-opening presentation on the big picture regarding alternative energy in the coming years, this is one of the best, from Nathan Lewis of Cal Tech: http://nsl.caltech.edu/energy.html
9. The other big picture; DSTI has huge plans- Tuttle's vision is for gigawatt manufacturing that might include licensing the technology to others on a grand scale once we demonstrate the ability to replicate it. DSTI could very well be a huge mover and shaker in the coming years. the company's website is a good place to start to get more information on the gigawatt vision: http://www.daystartech.com/
10. DSTI as an investment/financials/timing. DSTI enjoys the potential of possibly growing tenfold in terms of share price over the next 2 years, if it executes on its manufacturing plan, and subsequently catches up with the valuations of ESLR and its peers. The company has no debt, and currently has $12 million in cash, and access to another ~$10 million in grants from the state of New York, which is very active in supporting DSTI. The Santa Clara office will require another $15 million and the first gen III line (large scale manufacturing line) will require another $10 million, and since DSTI wants to replicate that quickly once it is up and running, a financing will be announced shortly which should supply all the company's needed cash until it reaches profitability. There is no shortage of financing available to DSTI; many VC's are trying to throw money their way, but Tuttle is in the process of choosing the best option, which will probably be announced between late March and May. As a result the stock price has been under pressure and this time frame may be the best opportunity to invest in DSTI. Future dilution in DSTI over the next 3 years could realistically take the total number of outstanding shares to 14-15 million, but the stock price could also very realistically be at 1-2 billion in 3 years, or a share price between $70-140 with dilution factored in. Given DSTI's potential, the downside is relatively limited, and though there is some risk, the upside potential appears many many times greater than downside risk. A very reasonable one year target would appear to be $25-40.