Guildford Securities Inc's Cleantech Industry Report

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Positive business tone from solar panel vendors during the Q12010 earnings season.

We expect a positive business tone from solar panel vendors during the Q12010 earnings season, despite the German government’s subsidy revision, which some had expected would negatively impact demand. With the global economy showing improvement in many regions, we forecast robust overall demand in 2010 versus 2009 figures and we look for vendors to offer positive guidance for 2Q10 and through the remainder of the year reflecting this positive demand picture.

We do expect factors such as non-receptive Copenhagen consensus and potential delays in global cap and trade implementation to inject some uncertainty in the near term, but we see little negative impact on the overall demand picture for solar panels and do not anticipate any unexpected price decline in solar panel pricing. Investors need to keep in mind that while demand in one or two larger markets could disappoint, demand across many smaller markets will likely offset any potential large market weakness.

Despite intact panel demand, we do not see that demand translating into price firming within the polysilicon market. We expect oversupply in the solar polysilicon market as Chinese vendors strive for meaningful market share. We firmly believe Chinese polysilicon vendors will achieve meaningful market share in the solar polysilicon market within the span of a few years.

Under this scenario, we continue to view GT Solar (SOLR – Buy) and Trina Solar (TSL – Buy) positively in terms of fundamentals and valuation. We would be aggressive buyers of TSL in the low 20s. But we continue to maintain our hold rating on MEMC Electronics (WFR – Hold), due to the lack of a compelling catalyst for any sustainable upside.

See attachment for full Cleantech Industry Report.

Source: Gilford Securities Inc.

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