Suntech Power Holdings Company Ltd. (STP) introduced a new 60 cell multi-crystalline photovoltaic (PV) Module Rooftop Systems targeted towards the Residential and Commercial segments. The new variant of PV module will be marketed under the product name Wd and is lighter than the existing 72 cell module variant of the company.

Suntech Power’s new module variant comes with positive peak power tolerance of 0/+5 watts (W), thus guarantying assured power output. The new module variant weighing approximately 20kg is ideal for customers with ample roof space but could not sustain the heavier 72 cell module variant. The company introduced the 60 cell module variant with two power ratings – 220W and 225W.

Wuxi, China-based Suntech is a leading solar energy company in the world. The company designs, develops, manufactures and markets PV cells and modules. Looking forward, Suntech expects more than 50% spike in shipments in the third quarter over the second quarter of fiscal 2009. However, it sees no further room for margin expansion in the near term. The company has revised its fiscal 2009 shipment guidance to approximately 600MW from the earlier guidance range of 600MW – 700MW.

At present, Suntech is trading at a premium to its comparable peers in terms of price-to-book and price-to-sales on account of its leadership position in cell conversion efficiency and improving module manufacturing cost. However, falling ASPs, pruned expansion plans in light of lower demand and dilutive stock issuances make Suntech’s valuation unappealing in the near term.

Thus, we maintain our Neutral recommendation on the shares.

Zacks Investment Research
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