SunSi Energies, Inc. (OTC-BB: SSIE), an aspiring provider of trichlorosilane to polysilicon and solar panel manufacturers around the world, including companies similar to MEMC Electric Materials, Inc. (NYSE: WFR) and LDK Solar Co., Ltd. (NYSE: LDK), sees sunny skies ahead with improving industry economics, a series of timely acquisitions, and end markets that continue to see strong demand.
SunSi Energies, Inc.’s (OTC-BB: SSIE, “the Company”) business model is to make a series of strategic acquisition in the Chinese trichlorosilane (TCS) market, thus giving it the scale and the critical mass necessary to draw the attention of the world’s largest solar companies. TCS is a key component used in the production of solar cells and modules worldwide. The Company is currently in the process of acquiring worldwide distribution rights to a key TCS production facility in China (Zibo Baokai Commerce and Trade Co. Ltd. “Baokai”), as well as working on the due diligence process of acquiring 60% of a state-of-the-art facility in China (Wendeng He Xie Silicon Co. Ltd.”Wendeng”). If these acquisitions are successfully consummated, Sunsi will effectively control approximately 45,000 metric tons (MT) of production, making it one of the largest TCS suppliers in China.
With respect to the acquisition of Baoakai, Company has completed its due diligence process and the U.S. GAAP audit. The Company is only awaiting the issuance of a government business license to complete the acquisition. Once the license is issued, the Company expects to begin generating approximately $1.0 -$1.5 million per month in revenue.
Additionally, the Company is in the process of raising funds to purchase 60% of Wendeng.
The current customer bases of Baoaki and Wendeng include two listed billion dollar companies.
As a result, investors may want to take note…
Trichlorosilane Economics Continue to Improve
Trichlorosilane production remains concentrated in China, where government incentives and the “go green” attitude of local authorities has led to tremendous growth opportunities. The buyers of TCS and other companies along the solar value chain are also enjoying solid growth in the country, as it moves away from coal power generation to solar power generation.
According to Energy & Capital Analyst, a solar industry publication, outside of China, the solar industry’s growth has been even more dramatic. In fact, the global solar industry has grown more than 849% since 2000, from an installed capacity of 877 MW in 2000 to more than 10,000 MW at the end of 2008. These figures represent a compounded annual growth rate (CAGR) of almost 40% at a time when many industries were facing growth limitations.
The outlook and industry forecast for the next four years shows no signs of slowing down either, according to Solarbuzz, a prominent solar industry publication. By 2012, the group projects that solar power generation will rise some 135% higher than 2007 levels to more than 19,620 MW of capacity. Among the countries leading the way over the next five years is China with a 35.8% CAGR, creating significant opportunities for SunSi Energies.
Greater Profit Opportunities at the Beginning of the Value Chain
As investors travel down the solar value chain, the Company believes there tends to be fewer competitors and higher profit margins. TCS’s demographic fits this profile with only 25 producers and less than 10 that have a production capacity over 2,000 metric tons per year. This leaves significant market opportunities for companies like SunSi Energies.
Since trichlorosilane is used in over 90% of all solar cells and modules worldwide, industry experts forecast and expect that TCS producers will do better than anyone else in the solar value chain, as it remains one of the most profitable components. Meanwhile, the Company believes the capital investment required at the beginning is considerably more than in other levels of the supply chain, which helps to limit competition and stabilize the landscape.
If these acquisitions are successfully completed, SunSi Energies will be uniquely positioned to capitalize on one of the fastest growing markets in the world. And as the only known projected pure play stock in the TCS sector investors may want to consider purchasing this stock now ahead of the curve.
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