Investment Report for the German Photovaltaic Industry (PDF)

Thesis (M.A.) from the year 2011 in the subject Economics - Finance, grade: 1, University of the West of England, Bristol, course: MSc Finance, language: English, abstract: I Executive Summary:


Macro-Economic Factors;
Germany has an attractive investment environment and the large economy experiences already an up-swing after the global recession. The political and social drive towards renewable energy combined with its excellent research environment make huge solar industry improvements and growth predictable. Furthermore, the German government has increased its renewable energy targets over the EU objectives. And this in turn has a positive impact on the solar industry.

Industry Development;
Despite the bearish PV market, long-term prospects are flourishing for solar technology. The bear-scenario resulted through the severe industry losses caused by price pressure from cheaper Asian producers. Though there is currently a slowdown in the industry huge growth potential with almost 200% growth worldwide in the next three years (Schramm & Licuanan, 2010) and by almost 700% in the next ten years (IEA, 2010),what facilitates profitable long-term investments.
Company Recommendations

- Solon's share bears a massive downside risk mainly through its high financial gearing caused by significant impairment losses in 2009. It is anticipated that Solon returns to profitability over the next two years and keeps a moderate growth course under the condition of successful refinancing.
- Payom's share is trading at a huge discount. The reasons are the investor's reluctance over Asian product distributors and the risk involved by entering into the large scale business.
- Systaic's share has experienced a massive downturn over the last year due to the liquidity problems and the involved risk of insolvency. The short-term challenge is to sell the project operations and to secure a re-financing agreement to stabilise the share price in the mid-term. In case of a failed re-financing Systac runs the risk of insolvency and a share price towards nil.
- Centrosolar share is trading at a discount which is based on its efficient and conservative policy of lower risk over greater sales. This is reflected in slower but smoother growth in the past and leads to the expectation of high profits in the future.