China Sunergy Co. Limited (CSUN) is in the volatile solar industry which has seen its fortunes reverse course in 2010 as the industry has slowly recovered from the global recession. China Sunergy is cheap, trading at just 7.2x forward estimates, well below its industry at 13.4x.
China Sunergy manufactures solar cell and module products in China. is a specialized manufacturer of solar cells from silicon wafers and other module products in China. It sells the products to Chinese and overseas module manufacturers and system integrators.
Update on a Legal Dispute
On July 9, China Sunergy said it was considering an appeal to a recent Norwegian District Court ruling against it regarding its dispute with REC Wafer Norway AS.
The $50 million bank guarantee is still blocked from being withdrawn by REC Wafer due to the China Sunergy seeking an injunction from the Supreme Court of Norway.
Renegotiation Over Two Acquisitions
On July 2, the company announced it had entered into renegotiations regarding its proposed acquisitions of two module manufacturers in China due to recent economic fluctuations.
It said it was trying to maximize shareholder value.
Zacks Consensus Estimates Rising Into the Report
China Sunergy is scheduled to report second quarter results on Aug 6. Analysts are much more optimistic on the solar sector right now than they were in the previous year.
The Zacks Consensus is rising ahead of the number as 1 estimate was revised higher in the last week.
Analysts are now looking for 16 cents, up 3 cents in the last 7 days. The most accurate estimate is even more bullish, looking for 24 cents, or a surprise of 50%.
The 2010 Zacks Consensus has also jumped in the last week by 9 cents to 61 cents.
This is a huge improvement over 2009, where the company lost 45 cents a share.
Analysts are a bit more cautious about 2011, however. 1 estimate has moved higher in the last week, pushing it up 5 cents to 53 cents, but this is still an earnings decline of 12% from 2010.
Second Quarter Outlook
At the end of the first quarter, the company maintained its full year production guidance of between 280MW and 350MW of solar products.
It predicted solar product shipments of 80MW and 90MW for the second quarter.
No Recovery For the Stock
The stock hasn’t done much in the last 2 years but the solar industry has been beaten and battered by the global slowdown.
Value Fundamentals
By any of the value metrics, China Sunergy is a value stock. Not only does it have a low P/E, but its price-to-book ratio is just 1.1, well under the industry average of 1.5.
Its price-to-sales ratio of 0.6 is also well below the industry average of 1.1.
The PEG ratio is also a juicy 0.7.
China Sunergy is a Zacks #1 Rank (strong buy) stock.
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