First Solar (FSLR, Financial) is in advanced stages of negotiations with SunPower to develop a joint YieldCo vehicle which is estimated to add a range of key solar generation assets to the company’s already robust project portfolio.
This major joint venture allows two key companies to further develop their combined installed base of 16 gigawatts in the rapidly expanding solar industry.
The planned agreement between the two solar power generating companies is believed to significantly and mutually benefit both the solar majors with solid balance sheets and a range of diversified portfolio of solar power projects.
Improving efficiency
First Solar has recorded a new breakthrough in achieving the CadTel cell efficiency of 21.5%, exceeding its earlier record of 21%. In addition, First Solar has now enhanced its key cell efficiency by more than 400 basis points compared to the mid-2011 levels and highlights the prospective growth of its CadTel technology.
Moreover, the production PV modules of First Solar have achieved a reliability and supreme quality milestone by winning Atlas 25+ certification. This key certification depicts the highest level of efficiency, reliability and quality achieved by the company’s module technology.
This significant improvement in solar power generation technology by the introduction of CadTel technology which is further verified for supreme quality, efficiency and reliability from the mentioned unique certification suggests the solid know-how of First Solar in achieving breakthrough innovation.
First Solar achieved full fleet average conversion efficiency of 14.4% during the fourth quarter, representing 20 basis point development from the previous quarter and almost a 100 basis point enhancement from last year. There are several production lines that are leveraging its key technology and generating impressive results. To date, four of the total production lines have demonstrated a solid 15.8% efficiency on an average. Going forward, First Solar plans to expand the implementation of this technology into 2015 as well.
Lately, First Solar started the production of its TetraSun modules at its production facility in Malaysia. Its forecasted capacity for 2015 is nearly 50 megawatts and expects to further expand the manufacturing levels in accordance with the market demand.
The new production in Malaysia coupled with the improvement in solar conversion technology is believed to boost the company’s confidence in expanding its presence in several other neighboring countries.
Better times ahead
For 2015, First Solar expects to deliver net sales in the range of $3.8 billion to $4.3 billion and for 2016 net sales in the range of $3.8 billion to $4.5 billion.
This significant expansion in the estimated net sales and free cash flows for 2015 and 2016 signifies the strength of the company’s business model which is highly successful in delivering enhanced shareholder returns.
First Solar has also revealed its bold plans to switch focus towards industrial-scale rooftop installations with the continued decline in demand for large-scale solar farms.
First Solar has successfully explored the global utility markets particularly in the Middle East, South America and India, along with refining its business model to include the domestic rooftop installations.
At present, the company is competing for 15 commercial projects having net capacity of 45 MW and of which 15 MW is believed to be set aside for First Solar.
The company’s strategic shift towards developing industrial-scale rooftop installations in the key markets is estimated to significantly expand the top line and bottom line of the company with a minimum competition.
Conclusion
Overall, the investors are advised to invest into First Solar, Inc. looking at the satisfactory company valuations with the trailing P/E and forward P/E ratios of 15.63 and 15.79 respectively and better than the industry’s average P/E of 21.04. The profit margin of 11.70% looks attractive for the investors. Diluted EPS of 3.91 depicts healthy shareholder earnings. The company operations are also supported by its robust balance sheet with total cash of $1.99 billion compared to total debt of just $229.12 million, encouraging the company to invest into future growth opportunities.
