Falling average selling prices for solar wafers continue to hit PV Crystalox Solar, which manufactures multicrystalline silicon ingots and wafers for solar power systems. The latest profit warning from the company suggests that trading is getting even more difficult, prompting a halving of the share price over the past month.
The company has been hit by a sharp fall in solar installations in Germany in the first half of 2011, resulting from the cuts in feed-in tariffs by the German government.
Although PV Crystalox has been pouring cash into expanding its capacity, further investment is likely to be deferred given the present market climate. The company had €55 million in the bank at the end of 2010, but this may have fallen since then and a cash outflow is expected this year.
Broker Peel Hunt forecasts that PV Crystalox will break even in the second half of 2011 and may not do any better in 2012. The company has already warned that trading conditions will be taken into account when it considers whether or not to pay a dividend this year. Given the current outlook, it would not be surprising if the dividend were not to be paid.
Peel Hunt believes that a 30% discount to net book value of 58p a share is warranted, but the share price has fallen even more sharply.
Market cap: £107.3m
12-month high/low: 66.75p/24.25p
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