During its latest conference call with investors, SunPower Corporation (NASDAQ: SPWR) provided details of its new restructuring plan, including cost cutting initiatives, strengthening its balance sheet and closing its 700MW Philippines fab.
The company’s initiatives are indicative of worsening PV [Photovoltaic] market fundamentals, Axiom’s Gordon Johnson said in a report.
SunPower also guided to an increase in shipment to 1.3GW-1.6GW in 2017, from the 1.3GW projected for 2016. The company further indicated that the current supply/demand imbalance would improve in the second half of 2017.
Johnson has Sell ratings on SunEdison Inc (OTC: SUNEQ), GCL-Poly Energy Holdings Ltd, JA Solar Holdings Co., Ltd. (ADR) (NASDAQ: JASO), Trina Solar Limited (ADR) (NYSE: TSL), Yingli Green Energy Holding Co Ltd (ADR) (NYSE: YGE), Neo Solar Power Corp, Meyer Burger Technology AG, SMA Solar Technology AG and SolarEdge Technologies Inc (NASDAQ: SEDG).
Implications for PV Industry
Johnson cited the following reasons for SunPower’s restructuring being a bad sign for the PV industry:
- The company believes the US resi market has “corrected,” while this correction seems “far from over."
- Manufacturers continue to expand capacity, with price competition driving ASPs to new lows, which does not indicate the “production discipline” the company noted.
- China’s 2017 FiT reduction, which was revised higher, “could signal marginally less demand pull-in, but will likely still lead to a 2H17 demand cliff, while a leaked memo from Trump’s trans. team puts PV subsidies in the cross-hair, we posit demand could fall faster than supply rationalization,” Johnson wrote.
- Given the capital-intensity of SunPower’s PV projects, lower cost targets translate to lower growth.
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