Suntech Power (STP) has signed a two-year agreement with Enel, Italy’s largest power company, to supply 30MW of PV modules in late 2008 and 2009.
Trina Solar (TSL) also contracted with Enel and will supply a total of 17MW of PV modules starting in 2008, which includes 15 MW of scheduled delivery for 2009 at fixed prices.
Sounds good, but FBR doesn’t believe these contracts are much more than short-term positives for STP, TSL or the Italian market:
We see this morning’s news as (short-term) positive for all parties. We note that most of the products will be sold in 2009, and this year’s revenue guidances are not expected to change significantly because of these announcements.
We expect the Italian market to grow rapidly in rest of 2008 and throughout 2009, but to slow down in CY10 as it reaches the cap of 1.2 GW. Additionally, the economic downturn and the budget deficit this year in Italy, and the frequency with which governments turn these over, are serious concerns that should not be ignored. We will watch closely to see whether Romans can continue the massive €6.5 billion price tag of tariffs for the PV industry; it may reduce the tariffs as Germany and Spain have done.
FBR maintains MARKET PERFORM on Suntech Power (STP) and Trina Solar (TSL).
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