SunSi Energies, Inc. (OTC-BB: SSIE), an aspiring provider of trichlorosilane (TCS) to solar module makers, could benefit handsomely from increased solar demand in China, as companies like LDK Solar Co., Ltd. (NYSE: LDK) and JA Solar Co., Ltd. (Nasdaq: JASO) ramp up their production.
SunSi Energies, Inc. (OTC-BB: SSIE) is a development-stage company focused on acquiring trichlorosilane (TCS) production facilities in China. By offering the raw material used in photovoltaic solar modules, the company aims to become the only TCS pure play listed on a stock exchange, offering investors exposure to the top of the solar value chain.
Solar Demand Heats Up in Asia
Solar demand is starting to heat up in Asia as several countries press on to meet renewable energy standards and spur economic growth. China-based solar manufacturers like JA Solar Co., Ltd. (Nasdaq: JASO) have already stated that they are experiencing huge backlogs in orders for products to be delivered in 2011 after signing supply agreements for more than 500MW of capacity.
To meet this demand, solar module production in countries like China and Taiwan are expected to increase 48% to 5,515MW in 2010. And while prices are expected to fall 11% to $1.45 per watt by the fourth quarter, polysilicon remains the most expensive component for traditional solar power, which means that TCS – used in its production – remains a high margin product.
SunSi Ramps Up TCS Production Facilities
SunSi Energies, Inc. (OTC-BB: SSIE) has already set its plan in motion to become a leading supplier of TCS to China’s solar industry – which produces about half of the world’s modules. Earlier this month, the company completed its due diligence of the Zibo Baokai Commerce and Trade Co., Ltd. acquisition started in May 2010 and is now waiting for issuance of the business license to start production in China. The company plans to receive the license from the Chinese government this month and begin generating revenues ranging from $1.0 – 1.5 million per month.
Meanwhile, SunSi Energies is also pursuing a second target with 20,000 metric tons per year of production capacity. The company signed a letter of intent with Wendeng He Xie Silicon Co. in late August that would give it a 60% ownership stake in the firm. Along with an existing 40% shareholder, the firm will increase its total capacity to 60,000 metric tons per year by January 2012. The transaction itself is expected to close within three months after due diligence and a full audit.
SunSi Energies, Inc. (OTC-BB: SSIE) is well-positioned to profit from growing demand in China for TCS from module manufacturers. With many of these companies projecting a 48% increase in demand in 2010 and already-sold-out order books for 2011, investors can expect demand to remain robust as the company ramps up its production through two acquisitions that are in the final stages.
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