Getting Giddy at Solarfun
This morning, shareholders of aptly named Solarfun (NASDAQ: SOLF) are off to quite the start. First the company reported an earnings beat, reporting $0.53 in earnings per ADR share on revenues of $258.5 million, compared with analyst expectations of $0.33 in EPS on revenues of $116.7 million. Solarfun raised their output guidance for the year by %15 from 650 megawatts to 750 MWs.
The good news didn’t stop there as news came out that Hanwha Chemical, a Korean conglomerate and chemical producer, purchased a nearly 50% stake on Solarfun shares (hat tip to Eric Savitz for the news). Hanwha’s investment was priced at $10.72 per ADR share of Solarfun. Following this morning’s dual catalysts, shares are trading at $11.53, up $1.28 or 12.52% from yesterday’s closing price.
The solar sector on the whole continues to enjoy an impressive comeback from a sluggish 2009 and today’s news out of Solarfun is demonstrative as to just how far the sector has come. In early 2009, shares of Solarfun traded as low as $2.27, but since that time, the company has come back with a return to profitability.
Not only are companies reporting better than expected earnings, but outside capital is finally looking to invest in this once hot sector. During the oil bubble days in 2008, valuations were very high compared to earnings and growth, while in 2009 uncertainty over the future of subsidies gave way to investor apathy towards the sector. With Hanwha’s investment in Solarfun, the tide is once again turning favorable towards the solar sector.