UPDATE 3-Suntech raises shipping forecast, shares up

* Q2 EPS ex-items of 3 cts matches Wall St view

* Revenues up 95 pct to $625.1 mln

* Hikes shipment forecast for 2010

* Mulls entering wafer business

* Shares rise 2.1 pct

By Matt Daily

NEW YORK, Aug 18 (BestGrowthStock) – China’s Suntech Power Holdings
Co (STP.N: ) raised its shipment forecast for 2010 and said it
may begin manufacturing its own solar wafers, boosting its
shares.

Like others in the industry, Suntech saw strong demand in
Europe as developers rushed purchases ahead of cuts to
renewable energy subsidies in key markets such as Germany and
Italy.

The company’s second-quarter results were in line with
expectations, even though its gross profit margin in the second
quarter slipped to 18.2 percent from 19.5 percent in the first
quarter. Its margin may drop further in the third quarter, when
the company forecast it to be in the mid-to-high-teens
percentage range.

Suntech Chairman and Chief Executive Zhengrong Shi said
average selling prices for its panels would “tick down
slightly” in the third quarter, and that it was considering
moving into the solar wafer business.

“It is neccesary for us to do some in-house wafering to
maintain supply stability,” Shi told a conference call. “We
believe we should have cash to expand, but at this momenet we
have options. We are evaluating it.”

Suntech currently focuses on production of solar modules
and cells, which are made from polysilicon wafers. By producing
some of its own wafers it would gain greater control over the
input costs of a key component.

Still, the expansion of its operations up the supply chain
comes with risks, even though it could be a smart move, one
analyst said.

“I think its a good thing that they are saying they wlll
partially integrate, not fully integrate,” said Gary Hsueh,
analyst with Oppenheimer & Co.

“I think you’ve seen the companies who are vertically
integrated … are doing better,” he added.

MEETS WALL ST VIEW

The company, the largest Chinese maker of photovoltaic
equipment, reported a net loss of $174.9 million, or 97 cents
per American depositary share, compared with a year-earlier
profit of $10 million, or 6 cents per ADS.

The company had announced on August 6 that it would post a
quarterly loss because of the charges to shut down its
thin-film amorphous silicon operations in Shanghai and for a
stake in Shunda Holdings Co,

Excluding $1.00 per share in charges, earnings were 3 cents
a share, in line with the analysts’ average forecast, according
to Thomson Reuters I/B/E/S.

Revenue rose 95 percent to $625.1 million.

Like many other solar manufacturers, Suntech suffered
during the quarter from the weakness in the euro against the
U.S. dollar, which cost it about $61.4 million.

Suntech hiked its 2010 shipment target to 1.5 gigawatts
from 1.3 GW, which is more than double total shipments for
2009, as it expands its production capacity to 1.8 GW.

The company also said it signed supply agreements for large
projects in Thailand, India and Israel, and remained on track
to begin production in the United States in fourth quarter.

Shares in Suntech were up 2.1 percent to $9.18 per share on
the New York Stock Exchange, bringing its year-to-date loss to
45 percent.
(Reporting by Matt Daily; Editing by Lisa Von Ahn and Derek
Caney)

UPDATE 3-Suntech raises shipping forecast, shares up