quotedcleantech

Biofuels, hydropower and water bucked the negative sentiment

by Jon Mainwaring 

Whilst 2010 was a bad year for cleantech stocks in general, particularly for Europe-listed shares, there were some notable exceptions. The solar sector did very poorly, with one of Europe’s major solar firms, SolarWorld, seeing its share price halve during the year, and shares in former favourite Q-Cells losing more than 77% of their value. But, smaller players in the sector managed to pull off some impressive gains by the end of the year. Aleo Solar has a market cap of €223 million, making it a minnow compared to the big boys of the sector. But 2010 saw Aleo achieve an 86% gain in its share price, which ended the year at €17.02.

Aleo enjoyed a strong surge in its shares from the summer onwards, after it reported robust half-year sales and raising its 2010 revenue forecast. Later in the year the manufacturer of solar modules and systems, raised its revenue forecast again – from €480 million to €500 million. The first six months of the year saw Aleo benefit from what its CEO York zu Putlitz described as “pull-forward effects” caused by the amendment of Germany’s Renewable Energy Act, which had helped to create a boom in the country’s solar industry since it was introduced more than a decade ago. But Aleo has also mitigated any effects of further cuts in German support for the solar market by pursuing business abroad, and in the third quarter of the year more than half the firm’s revenue was generated outside Germany.

European Cleantech: Winners & Losers

WINNERS	Share Price* 31 Dec-10	% change 2010
Aleo Solar	17.02	+86.0
Andritz	68.79	+72.6
China Photovoltaic Group	12.84	+60.7
CropEnergies	5.68	+46.4
Verbio Vereinigte BioEnergie	4.18	+36.6
LOSERS
Roth & Rau	12.22	-60.0
Renewable Energy Corp	17.79	-60.2
Solon	2.19	-69.6
Poweo	4.14	-70.2
Q-Cells	2.55	-77.7

* All prices in euros apart from Renewable Energy Corporation (Norwegian krone)

Shares in ReneSola, the Chinese solar silicon manufacturer, ended their time on London’s Alternative Investment Market at 281.5p – some 90% higher than they had started the year – when the firm quit AIM for the New York Stock Exchange in November. ReneSola reported record revenues for its third quarter.

Another solar firm to see a substantial rise in its share price during 2010, albeit rather late on, was Alternext-listed China Photovoltaic Group. Its price almost doubled during December to €12.84, to end the year 60.7% ahead - with a market cap of over €60 million. China Photovoltaic’s shares surged after the company announced a contract to supply 200MW of high-performance PV modules to Donauer Solartecnik – a specialised wholesaler of solar energy products.  40MW of the modules are scheduled to be sold to Donauer in 2011.
However, good results were not always good for share prices in the European solar sector. A 22.3% increase in revenues and a 52.7% jump in profits during the first nine months of 2010 were not enough to prevent shares in solar manufacturing equipment vendor Centrotherm Photovoltaics from losing more than a third.

Germany’s ÖkoDAX index lost 35.4% of its value last year and would have dropped even further had it not been for the strong performances of biofuels businesses CropEnergies (up 46.4%) and Verbio Vereinigte BioEnergie (up 36.6%). Both companies saw significant improvements to their earnings.

While solar was the worst performer during 2010, wind energy shares were not immune. Shares in Denmark’s Vestas, still the leading company in the industry worldwide, lost more than 40% in value in 2010, while Spain’s Gamesa saw its shares halve in value.

Both firms experienced declines in revenues and profits. In addition, the effect of increasing future competition from Asian manufacturers, such as China’s GoldWind, had an effect on investor sentiment. Despite the disappointing year, both companies have reported positive news recently: Vestas finished 2010 with a record number of wind turbine sales in North America and Gamesa secured a Mexican order.

One sub-sector that appeared largely immune to the poor sentiment affecting cleantech stocks during 2010 was water and waste management. NYSE Euronext-listed firms Suez Environnement and Veolia Environnement both ended the year down by less than 6%, while Austrian water treatment specialist BWT’s shares increased by 15.6% during 2010.

Businesses exposed to the hydropower industry also had a reasonably good year. Vienna-listed Andritz, the world’s second-largest builder of hydropower plants, saw its shares rise by 72%. Fellow Austrian firm Verbund – the country’s leading electricity company and one of Europe’s largest businesses to produce electricity from hydropower – enjoyed a surge in its share price during December to end the year only 2.7% lower than at its outset.

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