Why I Am Restarting My YGE Position
Trader Mark
Still not a huge fan of the solar space but I am going to restart one position in the sector – Yingli Green Energy (YGE)has been one of the better operators in the space, and has one of thebetter combination of size and scale in the Chinese solar space. Thereare more speculative names that might return more, but this whole groupmoves together… unfortunately traders treat this like group like aderivative to oil but that’s the nature of the beast nowadays.
Yinglihas had a huge run, and recently topped out at $16 before pulling backto the $12s; it priced a share offering today at $13 and has held thatlevel which is a good sign. It also had some positive things to sayabout the sector earlier in the week. This is another "flip a coin"sector as all the names tend to move together – I was also considering ReneSola (SOL)which also had a good chart… a few others have decent charts butYingli is a clean play here as it sits right at its 20 day movingaverage with no gaps in its chart. And one of the better fundamentalstories in the space – but I am buying more on chart than fundamentalsnowadays. It’s been almost a year since we last held this name [Aug 6, 2008: Closing Yingli Green Energy] – we sold in the mid $16s then.
I started a 3.2% stakeat just over $13.00. This is a speculative play and if the marketbreaks down this will swoon… fast. I will set my stop below today’slow of $12.49, so $12.45 since there is a huge amount of "air" betweensupport levels here.
Here is what they had to say earlier this week
- Chinese solar panel maker Yingli Green Energy Holding Co Ltd (YGE) on Monday said it has seen a substantial increase in demand since the beginning of the yea.
- In a statement, Yingliforecast shipments would be up 70 percent in the second quarter fromthe previous period, citing progress in government solar incentives inthe United States and China, improved weather conditions in Europe and"a visible change of industry sentiment" since the Intersolar tradeshow in Germany last month.
- The solar industry has beenhit hard since the end of last year by a lack of available financingfor big projects and an oversupply of solar panels that has sent pricesinto a freefall.
- Yingli, which is based in Baoding, China, said bettermarket conditions combined with lower polysilicon prices gave thecompany confidence it could meet its second-quarter gross margin targetof 18 percent to 20 percent. (we used to aim for near 30% 12-18 months ago, but the bar is much lower nowadays)
- In recent weeks, however, solar players including U.S.-based SunPower Corp(SPWRA) and top Chinese panel maker Suntech Power Holdings Co Ltd (STP) have said they see encouraging signs of a recovery in the solar market.
They had 128M shares (ADS) going into the offering so 18.6M is meaningful but not a game changer. 3 of the 18.6M were from a shareholder however.
- YingliGreen Energy intends to use the net proceeds from the offering, afterdeducting underwriting discounts and offering expenses, to repaycertain existing indebtedness, including repayment of approximatelyUS$50.0 million in a loan facility provided to its subsidiary, YingliEnergy (China) Co., Ltd., by Asia Debt Management Hong Kong Limited,and for general corporate purposes.
Long Yingli Green Energy in fund and personal account
