You are on page 1of 15

EQUITY RESEARCH

COMPANY UPDATE
Solar Power
July 31, 2012

Suntech Power Holdings

Closing Price (7/30/12):


12-Month Target Price:
52-Week Range:
Market Cap (MM):
Shares O/S (MM):
Float (MM):
Shares Short (MM):
Avg. Vol. (MM)
Book Value/Share:
Dividend/Yield:
Risk Profile:

$1.34
$0.00
$1.30 - $7.77
$243
181.0
128.0
18.3
2.4
$4.60
$0.00 / 0.0%
High

Maxim Group
FYE: Dec
1Q
2Q
3Q
4Q
FY
Maxim Group
FYE: Dec
F2011A: GAAP
F2012E: GAAP
F2013E: GAAP
F2014E: GAAP
LT Earnings Growth

Revenues ($M)
F2012E
F2013E
$409.5A
$473
$436
$508
$530
$543
$630
$528
$2,006
$2,021
Current Prior
Current
EPS
EPS
P/E
($1.71)
NM
($1.92) ($1.10)
NM
($1.37) ($0.86)
NM
($1.08) ($1.14)
NM
NM

Maxim Group
FYE: Dec
1Q
2Q
3Q
4Q
FY
Consensus-First Call
FYE: Dec
1Q
2Q
3Q
4Q
FY

Quarterly GAAP EPS


F2012E
F2013E
($0.73A)
($0.46)
($0.43)
($0.39)
($0.33)
($0.29)
($0.43)
($0.22)
($1.92)
($1.37)
Quarterly GAAP EPS
F2012E
F2013E
($0.73A)
($0.30)
($0.37)
($0.27)
($0.18)
($0.23)
($0.22)
($0.20)
($1.27)
($0.67)

Aaron Chew
achew@maximgrp.com

(212) 895-3568

Francesco Citro, Ph.D.


fcitro@maximgrp.com

(212) 895-3809

Sell

(STP NYSE $1.34)


As Cracks Form at the Seams, Rising Capital Requirements
May Leave No Way Out but Recapitalization that Evaporates
Equity; Lowering PT to $0.00, from $0.50, and Maintaining Sell
While STPs disclosure of possible fraud at GSF may not itself tip the scales of its
balance sheet, we believe it represents the first crack at the seams and suggests
complications in its refinancing of $541m debt due next March. Even assuming
relief, we see it as temporary and believe the only solution is a recapitalization
that exchanges debt for equity. With replacement value of $1.1b offset by $1.7b of
net debt, we foresee zero value left for equity and lower our PT to $0, from $0.50.
With Balance Sheet at Boiling Point, Recapitalization Likely on the Horizon:
Pressured from (1) $541m in debt due March 2013, (2) $274m in free cash flow
losses in 2011, and now (3) 554m in risk from the loss of GSF collateral, STP is
starving for cash, in our view, with its balance sheet at the tipping point. Even with
refinancing, relief should prove temporary with unsubsidized solar economics
yielding cash burn that we estimate its balance sheet can no longer support. In line
with our July 25, 2012 Coup de Grace report, rather than traditional bankruptcy, a
recapitalization that massively dilutes current equity is the most likely solution.
Skeletons in the Closet from the Shadowy History of GSF Return to Haunt:
With its cash drain unplugged and its debt maturity looming, further problems
emerged with Global Solar Fund [GSF], an entity owned 86% by STP (and 14%
by LP GSF Capitalultimately owned by Javier Romero, who worked with
STP Spain) created in 2008 to develop projects and, in our view, as a distribution
channel for its modules. Along with equity investment of 156m, STP also
guaranteed 554m in project debt, which GSF Capital collateralized with German
bonds that STP now suspects dont exist. Aside from implications for Mr. Romero,
the off-balance sheet deals and poor due diligence, in our view, raises eyebrows.
GSF Fraud May Not Trigger Liability but Likely to Tip the Scales: While the
fraud concerns the collateral backing the project debt and not the project itself,
where there is smoke, there is usually fire. This not only undermines STPs efforts
to refinance, in our view, but also the value of GSFs projects and plans to
monetize it. At the $4.00/W ASP required to recover its investment, we estimate
its 145 MW would raise $435m but generate an IRR of only 5% on Italys June
2011 FiT, underscoring the troubles it has faced selling these projects since 2011.
Net of $541m Debt Due 2013, $123m in Cash Supports 1 Year of Losses: With
STPs unrestricted cash of $474m less than the $541m due next March, even the
use of $190m in restricted cash would be insufficient to cover the ($150m) free
cash flow loss implied by normalized solar economics with gross margin at ~10%.
With its cash outlook deteriorated, we expect historically accommodative Chinese
lenders to be increasingly wary of committing further capital to STP.
With $1.1b Replacement Cost Less than Debt, Even a White Night May Leave
No Equity: In light of its capital needs, we believe STPs only escape may be a
white night conglomerate that absorbs its operations, maintains employment, and
keeps modules shipping. Even as the Wuxi, Jangxi, or national government may
orchestrate an SOE acquisition of STP, with replacement cost of $1.1b less than
net debt of $1.7b, we expect little value left for equity and doubt a Chinese bailout
will offer extra capital to fund a premium for a largely Western shareholder base.
With Equity Likely to Evaporate, Price Target Drops to $0.00 from $0.50: To
reflect our expectations for a recapitalization over the next few quarters that wipes
out current shareholders, we lower our PT to $0 from $0.50 and maintain our Sell.

Maxim Group LLC, 405 Lexington Avenue, New York, NY 10174


SEE PAGES 13 - 15 FOR IMPORTANT DISCLOSURES AND DISCLAIMERS

Suntech Power Holdings (STP)

STP's Equity Investment in GSF ( millions)

Figure 1: STPs Total Equity Investment in GSF Exceeded 155 Million


90
81.1
80
70
60

55.9

50
40
30
18.7

20
10

2008

2009

2010

2011

Source: Suntech Power Holdings and Maxim Group estimates

Figure 2: Sales to GSF Accounted for 7% of Revenue in Each of 2009 and 2010
8.0%

$3,500
7.1%

$34

GSF as % of STP Revenue

7.0%

$3,000

$197

6.0%

$2,500
5.0%
$2,000
4.0%

$0
$116
$2,980

3.0%

2.0%

$1,000

$1,786
$1,490

1.1%
$500

1.0%

0.0%

$1,500

$2,569

STP Revenue ($ millions)

7.2%

0.0%

2008

$0

2009

Revenue from Core Module Sales

2010
Revenue from GSF

2011
GSF as % of Total

Source: Suntech Power Holdings and Maxim Group estimates

Maxim Group LLC

Suntech Power Holdings (STP)

STP's Accounts Receivable from GSF ($ millions)

Figure 3: With the Decline in A/R from GSF, Risks Seemed to Have Fallen
$120
$105

$112

$108

$110
$104

$100

$94

$80
$60

$60

$45
$40
$27
$20

$26
$20

$19

4Q11

4Q11

$10

$1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

Source: Suntech Power Holdings

Figure 4: STPs Investment Requires a System ASP of 4.97/W for Recovery


in millions except per Watt
STP's Equity Investment in GSF
+ GSF Project Debt
= Total GSF Project Investment
/ Estimated MWs Connected
= System ASP to Recover Investment

156
554
710
143
4.97

Source: Suntech Power Holdings and Maxim Group estimates

Figure 5: Net of the $541m March 2013 Debt Maturity, STP Has <One Year of Cash
Restricted Cash Balance
+ Unrestricted Cash Balance
= STP's Total Cash Balance

1Q12
$473.7
$190.1
$663.8

- Face Value of Convertible Debt Outstanding


= STP's Cash Net of Debt Repayment

$541.0
$122.8

/ Normalized Free Cash Flow Loss


= Years of Cash

$150.0
0.8

in millions

Source: Suntech Power Holdings and Maxim Group estimates

Maxim Group LLC

Suntech Power Holdings (STP)

Figure 6: Normalized Solar Pricing Points to More than ($60m) in Annual Operating Losses
Int. Wafers

Ext. Wafers

Total

Revenue:
Cell/Module Production Capacity 2012YE (MWs)
x Avg. Module ASP
= Normalized STP Revenue

1,600
$0.65
$1,040

800
$0.65
$520

2,400
$0.65
$1,560

Gross Profit:
Poly Price ($/kg)
x Poly Consumption Ratio (g/W)
/ 1000 grams per Watt
= Poly Cost ($/W)

$18
5.7
1,000
$0.10

+ Wafer Conversion Cost


= Total Wafer Cost ($/W)

$0.14
$0.24

$0.22

+ Cell Conversion Cost


+ Module Conversion Cost Target ($/W)
= Total Module Production Cost ($/W)

$0.14
$0.22
$0.60

$0.14
$0.22
$0.58

Avg. Module ASP ($/W)


- Module Production Cost ($/W)
= Gross Profit ($/W)

$0.65
$0.60
$0.05

$0.65
$0.58
$0.07

/ Module ASP ($/W)


= Gross Margin (%)

$0.65
7.7%

$0.65
10.8%

$1,040
7.7%
$80

$520
10.8%
$56

Operating and Net Income:


Normalized STP Revenue ($m)
x Gross Margin (%)
= Normalized STP Gross Profit

$1,560
8.7%
$136

- Opex (12% of Sales)


= Normalized Operating Profit

$218
($82)

- Interest Expense
= Normalized Pre-Tax Income

$140
($222)

Operating and Free Cash Flow:


Normalized Pre-Tax Income
+ D&A
+ Non-Cash Interest Expense
+ Stock Comp
= Operating Cash Flow

($222)
$160
$$13
($50)

- Capital Expenditures (80% of 2012 Run Rate)


= Implied Free Cash Flow

($100)
($150)

Source: Suntech Power Holdings and Maxim Group estimates

Maxim Group LLC

Suntech Power Holdings (STP)


Figure 7: Replacement Cost of Capacity Less Debt Implies Equity Value of Less than $0.30/Share
Capacity (MWs)
x Estimated Capex ($/W)
= Replacement Value

Ingot/Wafer
1,600
$0.30
$480

Cell/Module
2,400
$0.25
$600

+ Estimated Value of Brand and Sales Infrastructure ($m)


- Risk of GSF Liability (25% of total debt guarantee of 554m)
- Net Debt ($m)

Cell/Module
2,400
$0.03
$72

Total

$1,152
$500
($173)
($1,668)

= Implied Equity Value ($m)

($190)

/ Shares Outstanding (m)


= Implied Equity Valuation per Share

181.6
($1.04)

Source: Suntech Power Holdings and Maxim Group estimates

Maxim Group LLC

Suntech Power Holdings (STP)

Figure 8: For GSFs 87 MW of Projects Connected in June, ASP of $4.00 Yields IRR of 5%
Feed-in-Tariff: Italy Model June 2011
System ASP ($W)
ASP ($/W)
System ($/W)

System ASP (/W)

$1.78
$4.00

Exchange Rates
0.80
1.25

Module
1.42

c-Si

YEAR 0

Outflows:
Total Cost of System ( / Watt)
x 1000 Watts per kW
x Size of Installation (kWs)
= Upfront Cost of Installation

Italy Feed-in-Tariff Rates (June 2011)

Installation Type
Feed-in-Tariff Rate
Annual Growth (Decline) in F-i-T
Duration of Agreement (Yrs.)
2
Solar Insolation (kWh/m )

Rooftop
0.28
0.0%
20
1,400

40%

YEAR 1

YEAR 2

YEAR 3

Installed Cost ($/Watt)


Size of Installation (kWs)
Annual O&M Costs ($/Watt)
Assumed O&M Inflation
Annual Performance Degradation
Efficiency Loss

10

YEAR 4

YEAR 5

YEAR 6

YEAR 7

YEAR 8

YEAR 9

3.20
5000
$0.018
2.0%
(0.5%)
(18.0%)

YEAR 10

YEAR 11

YEAR 12

YEAR 13

YEAR 14

YEAR 15

0.344
0.319
0.306
0.291
0.277
0.264

YEAR 16

YEAR 17

YEAR 18

YEAR 19

YEAR 20

3.20
1,000
5,000
( 15,986)

Inverter Replacement

(1,000)

Size of Installation (kWs)


x Annual O&M Cost per Watt
= Annual O&M Cost
Total Outflows

( 15,986)

Inflows:
Annual Electricity Generation (kWh)
x Feed-in-Tariff Rate (/kWh)
= Feed-in-Tariff Revenue
Total Inflows

Total Pre-Tax Cash Flow

< 3 kW
3 - 20 kW
20 - 200 kW
200 kW - 1 MW
1 MW - 5 MW
> 5 MW

Other Variables
Tax Rate
Depreciation Years

$ in 000s; Electricity in kWh

Variables

System
3.20

0.0

( 15,986.3)

Taxes:
Depreciation
Taxable Income

5,000
0.018
( 0.090)

5,000
0.018
( 0.092)

5,000
0.019
( 0.094)

5,000
0.019
( 0.096)

5,000
0.019
( 0.097)

5,000
0.020
( 0.099)

5,000
0.020
( 0.101)

5,000
0.021
( 0.103)

5,000
0.021
( 0.105)

5,000
0.022
( 0.108)

5,000
0.022
( 0.110)

5,000
0.022
( 0.112)

5,000
0.023
( 0.114)

5,000
0.023
( 0.116)

5,000
0.024
( 0.119)

5,000
0.024
( 0.121)

5,000
0.025
( 0.124)

5,000
0.025
( 0.126)

5,000
0.026
( 0.129)

5,000
0.026
( 0.131)

($0)

($0)

($0)

($0)

($0)

($0)

($0)

($0)

($0)

($0)

($0)

($1,000)

($0)

($0)

($0)

($0)

($0)

($0)

($0)

($0)

5,740,000
$0.28
1,590.0

5,711,300
$0.28
1,582.0

5,682,744
$0.28
1,574.1

5,654,330
$0.28
1,566.2

5,626,058
$0.28
1,558.4

5,597,928
$0.28
1,550.6

5,569,938
$0.28
1,542.9

5,542,089
$0.28
1,535.2

5,514,378
$0.28
1,527.5

5,486,806
$0.28
1,519.8

5,459,372
$0.28
1,512.2

5,432,075
$0.28
1,504.7

5,404,915
$0.28
1,497.2

5,377,890
$0.28
1,489.7

5,351,001
$0.28
1,482.2

5,324,246
$0.28
1,474.8

5,297,625
$0.28
1,467.4

5,271,137
$0.28
1,460.1

5,244,781
$0.28
1,452.8

5,218,557
$0.28
1,445.5

1,590.0

1,582.0

1,574.1

1,566.2

1,558.4

1,550.6

1,542.9

1,535.2

1,527.5

1,519.8

1,512.2

1,504.7

1,497.2

1,489.7

1,482.2

1,474.8

1,467.4

1,460.1

1,452.8

1,445.5

1,589.9

1,581.9

1,566.2

1,558.3

1,542.8

1,527.4

1,519.7

1,512.1

504.6

1,497.0

1,489.6

1,482.1

1,474.7

1,467.3

1,460.0

1,452.7

1,445.4

1,445.4

( 1,598.6)
( 63.6)

( 1,598.6)
( 71.2)

( 1,598.6)
( 78.9)

1,512.1

504.6

1,497.0

1,489.6

1,482.1

1,474.7

1,467.3

1,460.0

1,452.7

( 25.4)

( 50.0)

( 82.5)

( 122.8)

( 170.9)

( 226.7)

( 290.3)

( 361.6)

( 440.5)

Annual Tax Expense

( 604.9)

( 201.8)

( 598.8)

( 595.8)

( 592.8)

( 589.9)

( 586.9)

( 584.0)

( 581.1)

( 578.2)

907.3

302.7

898.2

893.7

889.3

884.8

880.4

876.0

871.6

867.2

467

770

1,668

2,562

3,451

4,336

5,216

6,092

6,964

7,831

( 15,986.3)

Unlevered IRR

( 15,986)

1,589.9

1,581.9

1,574.0

( 14,396)

( 12,814)

( 11,240)

1,566.2
( 9,674)

1,558.3
( 8,116)

( 1,598.6) ( 1,598.6)
( 48.1)
( 55.9)

1,535.1

( 8.7)

Cumulative Cash Flow

( 1,598.6) ( 1,598.6) ( 1,598.6)


( 24.6)
( 32.5)
( 40.3)

1,550.5

Net Operating Losses

Total After-Tax Cash Flow

( 1,598.6) ( 1,598.6)
( 8.7)
( 16.7)

1,574.0

1,550.5
( 6,565)

1,542.8
( 5,023)

1,535.1
( 3,488)

1,527.4
( 1,960)

1,519.7
( 440)

4.9%

Source: Suntech Power Holdings and Maxim Group estimates

Maxim Group LLC

Suntech Power Holdings (STP)

Figure 9: If Done by September, GSFs Other 56 MW Only Yield 3.5% IRR at $4.00 ASP
Feed-in-Tariff: Italy Model Sept. 2011
System ASP ($W)
ASP ($/W)
System ($/W)

System ASP (/W)

$1.78
$4.00

Exchange Rates
0.80
1.25

Module
1.42

c-Si

YEAR 0

Outflows:
Total Cost of System ( / Watt)
x 1000 Watts per kW
x Size of Installation (kWs)
= Upfront Cost of Installation

Italy Feed-in-Tariff Rates (Sept. 2011)

Installation Type
Feed-in-Tariff Rate
Annual Growth (Decline) in F-i-T
Duration of Agreement (Yrs.)
2
Solar Insolation (kWh/m )

Rooftop
0.24
0.0%
20
1,400

40%

YEAR 1

YEAR 2

YEAR 3

Installed Cost ($/Watt)


Size of Installation (kWs)
Annual O&M Costs ($/Watt)
Assumed O&M Inflation
Annual Performance Degradation
Efficiency Loss

10

YEAR 4

YEAR 5

YEAR 6

YEAR 7

YEAR 8

YEAR 9

3.20
5000
$0.018
2.0%
(0.5%)
(18.0%)

YEAR 10

YEAR 11

YEAR 13

YEAR 14

YEAR 15

YEAR 16

YEAR 17

YEAR 18

YEAR 19

YEAR 20

(1,000)

Size of Installation (kWs)


x Annual O&M Cost per Watt
= Annual O&M Cost
Total Outflows

( 15,986)

Inflows:
Annual Electricity Generation (kWh)
x Feed-in-Tariff Rate (/kWh)
= Feed-in-Tariff Revenue
Total Inflows

0.0

( 15,986.3)

Taxes:
Depreciation
Taxable Income

5,000
0.018
( 0.090)

5,000
0.018
( 0.092)

5,000
0.019
( 0.094)

5,000
0.019
( 0.096)

5,000
0.019
( 0.097)

5,000
0.020
( 0.099)

5,000
0.020
( 0.101)

5,000
0.021
( 0.103)

5,000
0.021
( 0.105)

5,000
0.022
( 0.108)

5,000
0.022
( 0.110)

5,000
0.022
( 0.112)

5,000
0.023
( 0.114)

5,000
0.023
( 0.116)

5,000
0.024
( 0.119)

5,000
0.024
( 0.121)

5,000
0.025
( 0.124)

5,000
0.025
( 0.126)

5,000
0.026
( 0.129)

5,000
0.026
( 0.131)

($0)

($0)

($0)

($0)

($0)

($0)

($0)

($0)

($0)

($0)

($0)

($1,000)

($0)

($0)

($0)

($0)

($0)

($0)

($0)

($0)

5,740,000
$0.24
1,394.8

5,711,300
$0.24
1,387.8

5,682,744
$0.24
1,380.9

5,654,330
$0.24
1,374.0

5,626,058
$0.24
1,367.1

5,597,928
$0.24
1,360.3

5,569,938
$0.24
1,353.5

5,542,089
$0.24
1,346.7

5,514,378
$0.24
1,340.0

5,486,806
$0.24
1,333.3

5,459,372
$0.24
1,326.6

5,432,075
$0.24
1,320.0

5,404,915
$0.24
1,313.4

5,377,890
$0.24
1,306.8

5,351,001
$0.24
1,300.3

5,324,246
$0.24
1,293.8

5,297,625
$0.24
1,287.3

5,271,137
$0.24
1,280.9

5,244,781
$0.24
1,274.5

5,218,557
$0.24
1,268.1

1,394.8

1,387.8

1,380.9

1,374.0

1,367.1

1,360.3

1,353.5

1,346.7

1,340.0

1,333.3

1,326.6

1,320.0

1,313.4

1,306.8

1,300.3

1,293.8

1,287.3

1,280.9

1,274.5

1,268.1

1,394.7

1,387.8

( 1,598.6) ( 1,598.6)
( 203.9)
( 210.9)

1,380.8

( 203.9)

( 414.8)

( 632.6)

Annual Tax Expense

( 15,986.3)

Cumulative Cash Flow

Unlevered IRR

( 15,986)

1,373.9

1,367.0

( 1,598.6) ( 1,598.6) ( 1,598.6)


( 217.8)
( 224.7)
( 231.6)

Net Operating Losses

Total After-Tax Cash Flow

YEAR 12

0.316
0.289
0.271
0.245
0.243
0.231

3.20
1,000
5,000
( 15,986)

Inverter Replacement

Total Pre-Tax Cash Flow

< 3 kW
3 - 20 kW
20 - 200 kW
200 kW - 1 MW
1 MW - 5 MW
> 5 MW

Other Variables
Tax Rate
Depreciation Years

$ in 000s; Electricity in kWh

Variables

System
3.20

( 857.3) ( 1,088.9)
-

1,394.7

1,387.8

1,380.8

1,373.9

( 14,592)

( 13,204)

( 11,823)

( 10,449)

1,367.0
( 9,082)

1,360.2

1,346.6

1,339.9

( 1,598.6) ( 1,598.6)
( 238.4)
( 245.2)

( 1,598.6)
( 252.0)

( 1,598.6)
( 258.7)

( 1,598.6)
( 265.4)

( 1,327.3) ( 1,572.5)

( 1,824.5) ( 2,083.3)

( 2,348.7)
-

1,360.2
( 7,722)

1,353.4

1,353.4
( 6,368)

1,346.6
( 5,022)

1,339.9
( 3,682)

1,333.2

1,333.2
( 2,349)

1,326.5

319.9

1,313.3

1,306.7

1,300.2

1,293.7

1,287.2

1,280.8

1,274.4

1,268.0

1,326.5

319.9

1,313.3

1,306.7

1,300.2

1,293.7

1,287.2

1,280.8

1,274.4

1,268.0

( 1,022.2)

( 702.3)

( 525.3)

( 522.7)

( 520.1)

( 517.5)

( 514.9)

( 512.3)

( 509.7)

( 507.2)

788.0

784.0

780.1

776.2

772.3

768.5

764.6

760.8

86

870

1,650

2,426

3,198

3,967

4,731

5,492

1,326.5
( 1,022)

319.9
( 702)

3.5%

Source: Suntech Power Holdings and Maxim Group estimate

Maxim Group LLC

Suntech Power Holdings (STP)

Figure 10: STP Operating Model (1/2)


2010
1Q
Revenue:
Global PV Market (MWs)
x STP Unit Market Share
Total STP Unit Shipments

2Q

2011
3Q

4Q

1Q

2Q

2012E
3Q

4Q

1Q

2Q

2013E
3Q

4Q

1Q

2Q

3Q

2009

2010

2011E

2012E

2013E

2014E

19,755
8.0%
1,572

24,941
8.4%
2,096

29,742
7.7%
2,290

39,408
7.0%
2,759

50,836
6.0%
3,050

4Q

302.3

338.2

423.8

507.7

492.5

500.8

579.5

523.2

382.5

478.1

624.1

805.5

634.5

689.6

703.4

731.0

7,490
9.4%
704.0

Shipments:
Cells
Modules
Systems

294.7
7.6

333.0
5.2

422.1
1.7

496.5
11.2

477.7
14.8

488.3
12.5

562.1
17.4

507.5
15.7

371.0
11.5

468.5
9.6

611.6
12.5

789.4
16.1

621.8
12.7

675.8
13.8

689.4
14.1

716.4
14.6

6.8
675.1
22.1

1546.3
25.7

2035.6
60.4

2240.5
49.6

2703.4
55.2

2989.5
60.7

ASPs:
Cells
Modules
Systems
Blended ASP ($/W)

$$1.89
$4.11
$1.95

$$1.81
$4.00
$1.85

$$1.75
$4.17
$1.75

$$1.81
$3.96
$1.86

$$1.75
$2.77
$1.78

$$1.62
$3.12
$1.66

$$1.36
$2.73
$1.40

$$1.19
$1.64
$1.20

$$1.07
$1.24
$1.07

$$0.91
$1.22
$0.91

$$0.84
$1.19
$0.85

$$0.77
$1.17
$0.78

$$0.74
$1.15
$0.74

$$0.73
$1.13
$0.74

$$0.72
$1.11
$0.73

$$0.71
$1.10
$0.72

$1.03
$2.40
$2.99
$2.41

$$1.81
$4.03
$1.85

$$1.47
$2.54
$1.50

$$0.87
$1.20
$0.88

$$0.72
$1.12
$0.73

$$0.69
$1.07
$0.71

-%
97.5%
2.5%
100.0%

-%
98.5%
1.6%
100.0%

-%
99.6%
0.4%
100.0%

-%
97.8%
2.2%
100.0%

-%
97.0%
3.0%
100.0%

-%
97.5%
2.5%
100.0%

-%
97.0%
3.0%
100.0%

-%
97.0%
3.0%
100.0%

-%
97.0%
3.0%
100.0%

-%
98.0%
2.0%
100.0%

-%
98.0%
2.0%
100.0%

-%
98.0%
2.0%
100.0%

-%
98.0%
2.0%
100.0%

-%
98.0%
2.0%
100.0%

-%
98.0%
2.0%
100.0%

-%
98.0%
2.0%
100.0%

1.0%
95.9%
3.1%
100.0%

-%
98.4%
1.6%
100.0%

-%
97.1%
2.9%
100.0%

-%
97.8%
2.2%
100.0%

-%
98.0%
2.0%
100.0%

-%
98.0%
2.0%
100.0%

(13.7%)
9.2%
(13.0%)

(4.0%)
(2.6%)
(5.0%)

(3.8%)
4.1%
(5.1%)

4.0%
(5.0%)
6.1%

(3.5%)
(30.0%)
(4.3%)

(7.4%)
12.5%
(6.9%)

(16.3%)
(12.5%)
(15.7%)

(12.4%)
(40.0%)
(14.0%)

(10.4%)
(24.0%)
(10.9%)

(15.0%)
(2.0%)
(14.8%)

(7.0%)
(2.0%)
(6.9%)

(8.0%)
(2.0%)
(7.8%)

(5.0%)
(2.0%)
(4.9%)

(1.0%)
(1.5%)
(1.0%)

(1.0%)
(1.5%)
(1.0%)

(1.0%)
(1.0%)
(1.0%)

(63.7%)
(38.3%)
#NAME?
(38.0%)

(24.6%)
34.6%
(23.3%)

(18.8%)
(37.0%)
(18.7%)

(40.9%)
(52.6%)
(41.7%)

(16.6%)
(6.7%)
(16.4%)

(5.0%)
(5.0%)
(3.1%)

$$557.0
$31.1
$588.0

$$604.2
$21.0
$625.1

$$736.6
$7.1
$743.7

$$900.9
$44.2
$945.1

$$836.1
$40.9
$877.0

$$791.7
$39.0
$830.7

$$762.4
$47.4
$809.8

$$603.3
$25.7
$629.0

$$395.2
$14.3
$409.5

$$424.3
$11.7
$435.9

$$515.0
$14.9
$529.9

$$611.6
$18.9
$630.4

$$457.6
$14.6
$472.2

$$492.4
$15.6
$508.0

$$497.3
$15.7
$512.9

$$511.6
$16.1
$527.7

$7.0
$1,620.2
$66.1
$1,693.3

-$
$2,798.6
$103.3
$2,901.9

-$
$2,993.4
$153.1
$3,146.5

-$
$1,946.1
$59.7
$2,005.8

-$
$1,959.0
$61.9
$2,020.9

-$
$2,099.7
$64.7
$2,164.4

$$-

$$-

$$-

$$-

$60
6.0
1,000
$0.36

$65
6.0
1,000
$0.39

$65
6.0
1,000
$0.39

$47
6.0
1,000
$0.28

$30
6.0
1,000
$0.18

$27
6.0
1,000
$0.16

$25
6.0
1,000
$0.15

$24
6.0
1,000
$0.14

$23
5.9
1,000
$0.14

$22
5.9
1,000
$0.13

$21
5.9
1,000
$0.12

$20
5.9
1,000
$0.12 1

$$-

$$-

$59
6.0
1,000
$0.36

$26
6.0
1,000
$0.15

$21
5.9
1,000
$0.13

$19
5.9
1,000
$0.11

$$$$-

$$$$-

$$$$-

$$$$-

$0.25
$0.20
$0.34
$0.79

$0.22
$0.20
$0.34
$0.76

$0.22
$0.20
$0.33
$0.75

$0.22
$0.19
$0.34
$0.75

$0.22
$0.19
$0.33
$0.74

$0.19
$0.18
$0.32
$0.69

$0.17
$0.18
$0.28
$0.63

$0.15
$0.18
$0.26
$0.59

$0.15
$0.18
$0.25
$0.58

$0.15
$0.18
$0.24
$0.57

$0.14
$0.18
$0.24
$0.55

$0.13
$0.17
$0.23
$0.53

$$$$-

$$$$-

$0.23
0.20
0.34
$0.76

$0.18
0.18
0.29
$0.65

$0.14
0.18
0.24
$0.56

$0.13
0.16
0.24
$0.53

% of Shipments:
Cells
Modules
Systems
Total
Y/Y % Change
Cell ASPs
Module ASPs
System ASPs
Blended ASPs
Revenue:
Cells
Modules
Systems
Total Revenue
Cost of Goods Sold:
Internal Wafers:
Polysilicon Cost:
Avg. Cost of Polysilicon ($/kg)
x Polysilicon Conversion (kg/watt)
/ 1000 grams in kg
= Polysilicon Cost ($/W)
Conversion Cost:
+ Poly-to-Wafer Conversion Cost
+ Wafer-to-Cell Conversion Cost
+ Cell-Module Conversion Cost
= Total Poly-Module Conversion Cost ($/W)
Module Production Cost from Internal Wafers ($/W)

$-

$-

$-

$-

$1.15

$1.15

$1.14

$1.03

$0.92

$0.85

$0.78

$0.73

$0.72

$0.70

$0.67

$0.65

$-

$-

$1.12

$0.80

$0.68

$0.64

x MWs of Internal Wafer-Module Production


= Total Internal COGS

$-

$-

$-

$-

150
$172.5

250
$287.5

300
$343.2

400
$412.8

120
$110.2

280
$238.2

400
$311.5

400
$293.1

400
$286.3

406
$284.3

425
$286.4

438
$283.5

$-

$-

1,100
$1,216.0

1,200
$953.0

1,669
$1,140.5

1,525
$981.1

$1.16

$0.89

$0.67

$0.33

$0.25

$0.22

External Wafers:
External Wafer Cost:
Ext. Wafer Price/Watt

$0.86

$0.88

$0.87

$0.95

$0.85

$0.80

$0.57

$0.50

$0.42

$0.38

$0.28

$0.30

$0.28

$0.26

$0.24

$0.23

Blended Wafer Cost

$0.86

$0.88

$0.87

$0.95

$0.78

$0.71

$0.59

$0.50

$0.41

$0.36

$0.30

$0.30

$0.28

$0.27

$0.25

$0.24

Conversion Cost:
+ Wafer-to-Cell Conversion Cost
+ Cell-Module Conversion Cost
= Non-Silicon Processing Cost

$0.21
$0.35
$0.56

$0.21
$0.31
$0.52

$0.20
$0.32
$0.52

$0.19
$0.32
$0.51

$0.20
$0.34
$0.54

$0.20
$0.34
$0.54

$0.20
$0.33
$0.53

$0.19
$0.34
$0.53

$0.19
$0.33
$0.52

$0.18
$0.32
$0.50

$0.18
$0.28
$0.46

$0.18
$0.26
$0.44

$0.18
$0.25
$0.43

$0.18
$0.24
$0.42

$0.18
$0.24
$0.41

$0.17
$0.23
$0.40

$0.24
$0.36
$0.60

$0.20
$0.32
$0.52

$0.20
$0.34
$0.54

$0.18
$0.29
$0.47

$0.18
$0.24
$0.41

$0.16
$0.24
$0.40

External Production Cost ($/W)


+ Shipping & Other Costs
= Total COGS per Watt from External Wafers

$1.42

$1.40

$1.39

$1.46

$1.39

$1.34

$1.10

$1.03

$0.94

$0.88

$0.74

$0.74

$0.71

$0.68

$0.65

$0.63

$1.21

$0.80

$0.67

$0.62

$1.40

$1.39

$1.46

$1.39

$1.34

$1.10

$1.03

$0.94

$0.88

$0.74

$0.74

$0.71

$0.68

$0.65

$0.63

$1.76
$0.05
$1.80

$1.42

$1.42

$1.42

$1.21

$0.80

$0.67

$0.62

x MWs of External Wafer Purchases


= Total External Wafer COGS

302.3
$430.0

338.2
$472.4

423.8
$587.7

507.7
$738.9

342.5
$476.0

250.8
$336.1

279.5
$308.5

123.2
$126.9

262.5
$246.7

198.1
$174.3

224.1
$165.8

405.5
$300.1

234.5
$166.5

283.4
$192.7

278.4
$181.0

293.5
$184.9

704.0
$1,270.5

1,572.0
$2,229.0

996.0
$1,247.6

1,090.1
$886.9

1,089.8
$725.1

1,525.1
$945.5

$1.42

$1.40

$1.39

$1.46

$1.32

$1.25

$1.12

$1.03

$0.93

$0.86

$0.76

$0.74

$0.71

$0.69

$0.66

$0.64

$1.80

$1.42

$1.18

$0.80

$0.68

$0.63

$31.1
140.0%
$43.5

$21.0
140.0%
$29.4

$7.1
300.0%
$21.2

$44.2
85.0%
$37.6

$40.9
(11.8%)
$45.8

$39.0
(33.1%)
$52.0

$47.4
36.6%
$30.1

$25.7
(5.0%)
$27.0

$14.3
(49.6%)
$21.3

$11.7
95.0%
$11.1

$14.9
95.0%
$14.2

$18.9
95.0%
$17.9

$14.6
95.0%
$13.8

$15.6
95.0%
$14.8

$15.7
95.0%
$14.9

$16.1
95.0%
$15.3

$91.5
92.0%
$84.1

$103.3
127.4%
$131.7

$153.1
101.1%
$154.8

$59.7
101.1%
$60.4

$61.9
101.1%
$62.6

$64.7
101.1%
$65.4

Blended Cost/Watt
Systems:
Systems Revenue
x (1 - Systems Gross Margin)
= Estimated Systems COGS
Inventory Impairment/Other Provisions
Total Cost of Goods Sold
Gross Profit ($/W):
Operating Income:
Selling Expenses
+ G&A Expenses
+ R&D Expenses
= Total Operating Expenses

$20.2

$-

$28.8

$-

$-

$-

$-

$-

$-

$-

$-

$28.9

$55.4

$28.8

$-

$-

$473.5

$501.8

$608.9

$776.5

$694.3

$705.1

$702.0

$566.7

$407.1

$423.6

$491.5

$611.1

$466.6

$491.8

$482.3

$483.7

$1,354.6

$2,360.7

$2,668.1

$1,933.3

$1,924.4

$1,992.1

$114.5

$7.2

$123.3

($3.4)

$134.8

$7.2

$168.6

$17.9

$182.7

$5.7

$125.6

$29.5

$107.8

$62.3

$2.4

$12.3

$38.5

$19.3

$5.6

$16.2

$30.7

$44.0

$338.8

$541.3

$478.4

$72.5

$96.5

$172.4

$20.0
$21.5
$9.6
$51.0

$26.9
$26.8
$9.0
$62.7

$31.5
$28.9
$11.9
$72.2

$37.7
$30.8
$10.0
$78.4

$36.0
$41.9
$10.3
$88.2

$38.6
$36.7
$8.7
$84.0

$45.5
$73.0
$11.7
$130.2

$42.5
$76.0
$8.0
$126.5

$33.6
$79.1
$8.9
$121.6

$26.2
$39.2
$8.7
$74.1

$31.8
$37.1
$7.9
$76.8

$37.8
$34.7
$7.6
$80.1

$28.3
$37.8
$8.0
$74.1

$30.5
$31.8
$7.1
$69.3

$30.8
$25.6
$5.9
$62.3

$31.7
$22.2
$5.3
$59.1

$58.9
$76.9
$29.0
$164.8

$116.1
$107.9
$40.4
$264.4

$162.6
$227.6
$38.7
$428.9

$129.4
$190.1
$33.1
$352.6

$121.3
$117.3
$26.3
$264.9

$129.9
$125.5
$28.1
$283.5

EBIT

$63.5

$60.6

$62.6

$90.2

$94.5

$41.6

($22.4)

($64.2)

($119.2)

($61.8)

($38.4)

($60.7)

($68.5)

($53.1)

($31.7)

($15.1)

$174.0

$276.9

$49.5

($280.1)

($168.4)

($111.2)

EPS:
Non-Operating Expenses (Income)
= Net Income (x-1x Items)

$42.8
$20.7

$52.0
$8.6

$49.3
$13.3

$29.7
$60.5

$62.6
$31.9

$75.4
($33.8)

$137.0
($159.4)

$84.6
($148.8)

$13.8
($133.0)

$17.0
($78.8)

$20.9
($59.2)

$17.3
($78.0)

$16.1
($84.6)

$18.8
($71.9)

$22.5
($54.1)

$25.3
($40.4)

$88.4
$85.6

$173.8
$103.1

$359.6
($310.1)

$68.9
($349.0)

$82.6
($251.0)

$82.6
($199.5)

182.3
$0.11

179.6
$0.05

181.3
$0.07

196.1
$0.37

182.5
$0.17

180.4
($0.19)

180.6
($0.88)

180.7
($0.82)

181.0
($0.73)

181.4
($0.43)

181.9
($0.33)

182.3
($0.43)

182.8
($0.46)

183.2
($0.39)

183.7
($0.29)

184.2
($0.22)

172.5
$0.50

181.6
$0.58

181.0
($1.71)

181.6
($1.92)

183.5
($1.37)

184.4
($1.08)

/ Diluted Shares Outstanding


= Diluted EPS (x-1x Items)

Source: Suntech Power Holdings and Maxim Group

Maxim Group LLC

Suntech Power Holdings (STP)

Figure 11: STP Operating Model (2/2)


Operating Metrics:
Margins:
Gross Profit
/ Revenue
= Consolidated Gross Margin %
Module Gross Margin (x-Inventory Charge)
Systems Gross Margin
EBIT
/ Revenue
= Operating Margin %
Expenses as % of Revenue:
Selling Expenses
G&A Expenses
R&D Expenses
Total Opex as % of Revenue
% of Totals:
Total Revenue:
Cell
Module
Systems
Total
Operating Expenses:
Selling Expenses
G&A
R&D
Total
Depreciations as % of Total COGS

2010

External Wafer Cost per Watt


Internal Wafer Cost per Watt
Blended Wafer Cost per Watt
Non-Silicon Costs
Total COGS
Gross Profit
Opex
EBIT
Y/Y % Growth:
Shipments
Module ASPs
System ASPs

2012E

2013E

2010

2011E

2012E

2013E

2014E

$123.3
$625.1
19.7%
21.8%
(40.0%)

$134.8
$743.7
18.1%
20.2%
(200.0%)

$168.6
$945.1
17.8%
18.0%
15.0%

$182.7
$877.0
20.8%
22.4%
5.0%

$125.6
$830.7
15.1%
17.5%
5.0%

$107.8
$809.8
13.3%
14.5%
5.0%

$62.3
$629.0
9.9%
10.5%
5.0%

$2.4
$409.5
0.6%
2.4%
5.0%

$12.3
$435.9
2.8%
2.8%
5.0%

$38.5
$529.9
7.3%
7.3%
5.0%

$19.3
$630.4
3.1%
3.0%
5.0%

$5.6
$472.2
1.2%
1.1%
5.0%

$16.2
$508.0
3.2%
3.1%
5.0%

$30.7
$512.9
6.0%
6.0%
5.0%

$44.0
$527.7
8.3%
8.4%
5.0%

$338.8
$1,693.3
20.0%
21.9%
8.0%

$541.3
$2,901.9
18.7%
20.4%
(27.4%)

$478.4
$3,146.5
15.2%
16.0%
(1.1%)

$72.5
$2,005.8
3.6%
3.8%
(1.1%)

$96.5
$2,020.9
4.8%
5.0%
(1.1%)

$172.4
$2,164.4
8.0%
8.2%
(1.1%)

$63.5
$588.0
10.8%

$60.6
$625.1
9.7%

$62.6
$743.7
8.4%

$90.2
$945.1
9.5%

$94.5
$877.0
10.8%

$41.6
$830.7
5.0%

($22.4)
$809.8
(2.8%)

($64.2)
$629.0
(10.2%)

($119.2)
$409.5
(29.1%)

($61.8)
$435.9
(14.2%)

($38.4)
$529.9
(7.2%)

($60.7)
$630.4
(9.6%)

($68.5)
$472.2
(14.5%)

($53.1)
$508.0
(10.5%)

($31.7)
$512.9
(6.2%)

($15.1)
$527.7
(2.9%)

$174.0
$1,693.3
10.3%

$276.9
$2,901.9
9.5%

$49.5
$3,146.5
1.6%

($280.1)
$2,005.8
(14.0%)

($168.4)
$2,020.9
(8.3%)

($111.2)
$2,164.4
(5.1%)

3.4%
3.7%
1.6%
8.7%

4.3%
4.3%
1.4%
10.0%

4.2%
3.9%
1.6%
9.7%

4.0%
3.3%
1.1%
8.3%

4.1%
4.8%
1.2%
10.1%

4.6%
4.4%
1.0%
10.1%

5.6%
9.0%
1.4%
16.1%

6.8%
12.1%
1.3%
20.1%

8.2%
19.3%
2.2%
29.7%

6.0%
9.0%
2.0%
17.0%

6.0%
7.0%
1.5%
14.5%

6.0%
5.5%
1.2%
12.7%

6.0%
8.0%
1.7%
15.7%

6.0%
6.3%
1.4%
13.7%

6.0%
5.0%
1.2%
12.2%

6.0%
4.2%
1.0%
11.2%

3.5%
4.5%
1.7%
9.7%

4.0%
3.7%
1.4%
9.1%

5.2%
7.2%
1.2%
13.6%

6.5%
9.5%
1.7%
17.6%

6.0%
5.8%
1.3%
13.1%

6.0%
5.8%
1.3%
13.1%

-%
95%
5%
100.0%

-%
97%
3%
100.0%

-%
99%
1%
100.0%

-%
95%
5%
100.0%

-%
95%
5%
100.0%

-%
95%
5%
100.0%

-%
94%
6%
100.0%

-%
96%
4%
100.0%

-%
97%
3%
100.0%

-%
97%
3%
100.0%

-%
97%
3%
100.0%

-%
97%
3%
100.0%

-%
97%
3%
100.0%

-%
97%
3%
100.0%

-%
97%
3%
100.0%

-%
97%
3%
100.0%

0%
96%
4%
100.0%

-%
96%
4%
100.0%

-%
95%
5%
100.0%

-%
97%
3%
100.0%

-%
97%
3%
100.0%

-%
97%
3%
100.0%

39.2%
42.1%
18.7%
100.0%

42.9%
42.7%
14.4%
100.0%

43.6%
40.0%
16.4%
100.0%

48.0%
39.3%
12.7%
100.0%

40.8%
47.5%
11.7%
100.0%

46.0%
43.7%
10.4%
100.0%

34.9%
56.1%
9.0%
100.0%

33.6%
60.1%
6.3%
100.0%

27.6%
65.0%
7.3%
100.0%

35.3%
52.9%
11.8%
100.0%

41.4%
48.3%
10.3%
100.0%

47.2%
43.3%
9.4%
100.0%

38.2%
51.0%
10.8%
100.0%

44.0%
45.8%
10.3%
100.0%

49.4%
41.2%
9.5%
100.0%

53.6%
37.5%
8.9%
100.0%

35.7%
46.7%
17.6%
100.0%

43.9%
40.8%
15.3%
100.0%

37.9%
53.1%
9.0%
100.0%

36.7%
53.9%
9.4%
100.0%

45.8%
44.3%
9.9%
100.0%

45.8%
43.0%
11.2%
100.0%

6.9%

7.2%

7.4%

7.2%

7.7%

8.2%

10.2%

11.2%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

2010

2011

2012E

2013E

15.8%
(13.7%)
9.2%
0.8%

11.9%
(4.0%)
(2.6%)
6.3%

25.3%
(3.8%)
4.1%
19.0%

19.8%
4.0%
(5.0%)
27.1%

(3.0%)
(3.5%)
(30.0%)
(7.2%)

1.7%
(7.4%)
12.5%
(5.3%)

15.7%
(16.3%)
(12.5%)
(2.5%)

(9.7%)
(12.4%)
(40.0%)
(22.3%)

(26.9%)
(10.4%)
(24.0%)
(34.9%)

25.0%
(15.0%)
(2.0%)
6.5%

30.5%
(7.0%)
(2.0%)
21.6%

29.1%
(8.0%)
(2.0%)
19.0%

(21.2%)
(5.0%)
(2.0%)
(25.1%)

8.7%
(1.0%)
(1.5%)
7.6%

2.0%
(1.0%)
(1.5%)
1.0%

3.9%
(1.0%)
(1.0%)
2.9%

(8.1%)
-%
(8.1%)
0.0%
6.4%

1.6%
-%
1.6%
(7.1%)
6.0%

(1.1%)
-%
(1.1%)
0.0%
21.3%

9.1%
-%
9.1%
(1.9%)
27.5%

(10.1%)
-%
(17.8%)
5.9%
(10.6%)

(5.9%)
-%
(9.2%)
0.0%
1.6%

(28.8%)
-%
(16.2%)
(1.1%)
(0.4%)

(12.3%)
(17.7%)
(15.1%)
(0.7%)
(19.3%)

(16.0%)
(20.6%)
(17.6%)
(1.9%)
(28.2%)

(9.5%)
(12.0%)
(12.2%)
(3.8%)
4.0%

(26.3%)
(9.1%)
(16.0%)
(8.0%)
16.0%

7.1%
(8.1%)
(2.8%)
(4.3%)
24.3%

(6.7%)
(2.4%)
(4.3%)
(2.3%)
(23.6%)

(7.1%)
(2.1%)
(4.2%)
(2.3%)
5.4%

(7.7%)
(5.7%)
(6.3%)
(2.4%)
(1.9%)

(4.2%)
(6.0%)
(5.4%)
(2.4%)
0.3%

(17.4%)
(165.8%)
(27.0%)

7.7%
1067.8%
(4.5%)

9.2%
849.5%
3.2%

25.1%
524.3%
44.2%

8.3%
876.2%
4.8%

(31.3%)
(520.0%)
(56.0%)

(14.2%)
4520.0%
(153.8%)

(42.2%)
(470.0%)
186.6%

(96.1%)
(590.0%)
85.7%

413.7%
(4849.5%)
(48.2%)

211.9%
173.4%
(37.9%)

(49.8%)
222.5%
58.2%

165.5%
(32.0%)
(16.8%)

172.4%
(25.9%)
(12.0%)

106.8%
(23.8%)
(1.4%)

94.4%
(17.2%)
5.1%

62.9%
(7.4%)
(32.6%)

48.1%
(10.6%)
(22.1%)

36.7%
(22.3%)
(34.5%)

3.1%
(34.5%)
(58.7%)

(22.3%)
(39.1%)
(55.1%)

(4.5%)
(44.1%)
(60.9%)

7.7%
(37.9%)
(56.2%)

53.9%
(34.8%)
(28.5%)

5.1%

7.2%

9.2%

13.9%

0.0%

0.0%

2009

2010

2011E

2012E

2013E

2014E

42.1%
(38.3%)
-

123.3%
(24.6%)
34.6%

33.3%
(18.8%)
(37.0%)

9.3%
(40.9%)
(52.6%)

20.5%
(16.6%)
(6.7%)

10.6%
(5.0%)
(5.0%)

(71.0%) 189.6%
89.0%
43.5%
(693.0%) (578.7%) (802.5%) (421.7%)
12.8%
(22.5%) (40.4%) (52.3%)

65.9%
(30.9%)
(7.8%)

44.2%
(19.5%)
(7.3%)

12.7%
(14.3%)
(6.8%)

Source: Suntech Power Holdings and Maxim Group estimates

Maxim Group LLC

2009

$114.5
$588.0
19.5%
22.8%
(40.0%)

Growth:
Q/Q % Growth:
Shipments
Module ASPs
System ASPs
Revenue

2011

(9.2%)
(7.8%)
(5.9%)

Suntech Power Holdings (STP)

Figure 12: STP Income Statement


Quarterly
2010

2011

2012E

2013E

Annual
2011E 2012E

2009

2010

2013E

2014E

Total Revenues

1Q
$588.0

2Q
$625.1

3Q
$743.7

4Q
$945.1

1Q
$877.0

2Q
$830.7

3Q
$809.8

4Q
$629.0

1Q
$409.5

2QE
$435.9

3QE
$529.9

4QE
$630.4

1QE
$472.2

2QE
$508.0

3QE
$512.9

4QE
$527.7

FY
$1,693.3

FY
$2,901.9

FY
$3,146.5

FY
$2,005.8

FY
$2,020.9

FY
$2,164.4

Cost of Goods
Gross Profit

$473.5
$114.5

$501.8
$123.3

$608.9
$134.8

$776.5
$168.6

$694.3
$182.7

$705.1
$125.6

$702.0
$107.8

$566.7
$62.3

$407.1
$2.4

$423.6
$12.3

$491.5
$38.5

$611.1
$19.3

$466.6
$5.6

$491.8
$16.2

$482.3
$30.7

$483.7
$44.0

$1,354.6
$338.8

$2,360.7
$541.3

$2,668.1
$478.4

$1,933.3
$72.5

$1,924.4
$96.5

$1,992.1
$172.4

Selling Expenses
G&A
R&D
Operating Expenses

$20.0
$21.5
$9.6
$51.0

$26.9
$26.8
$9.0
$62.7

$31.5
$28.9
$11.9
$72.2

$37.7
$30.8
$10.0
$78.4

$36.0
$41.9
$10.3
$88.2

$38.6
$36.7
$8.7
$84.0

$45.5
$73.0
$11.7
$130.2

$42.5
$76.0
$8.0
$126.5

$33.6
$79.1
$8.9
$121.6

$26.2
$39.2
$8.7
$74.1

$31.8
$37.1
$7.9
$76.8

$37.8
$34.7
$7.6
$80.1

$28.3
$37.8
$8.0
$74.1

$30.5
$31.8
$7.1
$69.3

$30.8
$25.6
$5.9
$62.3

$31.7
$22.2
$5.3
$59.1

$58.9
$76.9
$29.0
$164.8

$116.1
$107.9
$40.4
$264.4

$162.6
$227.6
$38.7
$428.9

$129.4
$190.1
$33.1
$352.6

$121.3
$117.3
$26.3
$264.9

$129.9
$125.5
$28.1
$283.5

$ in millions

Operating Income

$63.5

$60.6

$62.6

$90.2

$94.5

$41.6

($22.4)

($64.2)

($119.2)

($61.8)

($38.4)

($60.7)

($68.5)

($53.1)

($31.7)

($15.1)

$174.0

$276.9

$49.5

($280.1)

($168.4)

($111.2)

Interest Expense
Interest Income
FX Gain (Loss)
Other Income (Expense)
Non-Operating Income (Expense)

($23.4)
$0.9
($24.5)
$2.8
($44.4)

($23.8)
$1.2
($61.4)
$24.3
($59.7)

($26.2)
$3.2
$42.0
($74.1)
($55.1)

($25.9)
$2.4
($2.8)
($0.4)
($26.8)

($32.4)
$2.1
$29.9
($56.9)
($57.3)

($34.5)
$2.0
$11.7
($41.4)
($62.2)

($37.7)
$2.0
($56.3)
($50.1)
($142.1)

($38.7)
$1.3
($23.5)
$15.4
($45.5)

($34.1)
$1.9
$5.8
$23.4
($3.0)

($34.0)
$1.6
$$($32.4)

($34.0)
$1.6
$$($32.4)

($34.0)
$1.4
$$($32.6)

($34.0)
$1.3
$$($32.7)

($34.0)
$1.2
$$($32.9)

($34.0)
$1.0
$$($33.0)

($34.0)
$0.9
$$($33.1)

($103.3)
$9.6
$8.6
$2.6
($82.5)

($99.4)
$7.6
($46.7)
($47.5)
($186.0)

($143.3)
$7.4
($38.2)
($133.0)
($307.1)

($136.2)
$6.5
$5.8
$23.4
($100.5)

($136.2)
$4.4
$0.0
$0.0
($131.7)

($136.2)
$4.4
$0.0
$0.0
($131.7)

Pretax Income - Operations

$19.2

$0.9

$7.4

$63.4

$37.2

($20.6)

($164.5)

($109.7)

($122.2)

($94.2)

($70.8)

($93.3)

($101.2)

($86.0)

($64.7)

($48.2)

$91.5

$90.9

($257.6)

($380.6)

($300.1)

($242.9)

Income Tax Expense (Benefit)

$3.2

($5.1)

($2.7)

$2.3

$5.5

$16.8

($50.5)

($19.0)

$6.1

($15.5)

($11.7)

($15.4)

($16.7)

($14.2)

($10.7)

($8.0)

$2.5

($2.4)

($47.2)

($36.5)

($49.5)

($43.8)

Equity in (loss) Affiliate Earnings

$4.6

$2.9

$3.3

$-

$0.4

$4.0

($45.1)

($58.0)

($4.6)

$-

$-

$-

$-

$-

$-

$-

($3.3)

$10.8

($98.7)

($4.6)

$0.0

$0.0

Net Income

$20.6

$8.9

$13.4

$61.1

$32.1

($33.4)

($159.1)

($148.7)

($132.9)

($78.7)

($59.1)

($77.9)

($84.5)

($71.8)

($54.0)

($40.3)

$89.0

$93.3

($210.4)

($344.0)

($250.6)

($199.1)

Minority Interests

$0.1

($0.3)

($0.2)

($0.6)

($0.2)

($0.4)

($0.3)

($0.1)

($0.1)

($0.1)

($0.1)

($0.1)

($0.1)

($0.1)

($0.1)

($0.1)

($0.1)

($1.0)

($1.0)

($0.4)

($0.4)

($0.4)

Net Income (Loss) (to Shareholders)

$20.7

$8.6

$13.3

$60.5

$31.9

($33.8)

($159.4)

($148.8)

($133.0)

($78.8)

($59.2)

($78.0)

($84.6)

($71.9)

($54.1)

($40.4)

$85.6

$103.1

($310.1)

($349.0)

($251.0)

($199.5)

Diluted EPS (x-1x Items)- Non GAAP


Basic EPS (x-1x time Items) - Non GAAP

$0.11
$0.12

$0.05
$0.05

$0.07
$0.07

$0.37
$0.34

$0.17
$0.18

($0.19)
($0.19)

($0.88)
($0.88)

($0.82)
($0.82)

($0.73)
($0.73)

($0.43)
($0.43)

($0.33)
($0.33)

($0.43)
($0.43)

($0.46)
($0.46)

($0.39)
($0.39)

($0.29)
($0.29)

($0.22)
($0.22)

$0.50
$0.50

$0.60
$0.57

($1.71)
($1.72)

($1.92)
($1.92)

($1.37)
($1.37)

($1.08)
($1.08)

Basic Shares
Diluted Shares Outstanding

179.3
182.3

179.6
179.6

179.6
181.3

179.8
196.1

180.2
182.5

180.4
180.4

180.6
180.6

180.7
180.7

181.0
181.0

181.4
181.4

181.9
181.9

182.3
182.3

182.8
182.8

183.2
183.2

183.7
183.7

184.2
184.2

169.7
172.5

179.6
181.6

180.4
181.0

181.6
181.6

183.5
183.5

184.4
184.4

One-time Items:
Impairment Charges
Restructuring Charges
Discontinued Operations
Other Charges
Reported Net Income (incl. Charges)

$$$$$20.7

($128.5)
($54.6)
($0.4)
$($174.9)

$$$$19.8
$33.1

$$$$322.9
$383.4

$$($2.9)
$$29.0

($211.9)
$($13.8)
$($259.5)

($461.8)
$$($21.1)
($642.3)

$$$$($148.8)

$$$$($133.0)

$$$$($78.8)

$$$$($59.2)

$$$$($78.0)

$$$$($84.6)

$$$$($71.9)

$$$$($54.1)

$$$$($40.4)

$$-

($128.5)
($54.6)

($673.7)
$-

$$-

$$-

$$-

$$85.6

$342.7
$262.7

$($251.0)

$($199.5)

Reported EPS (Incl. Charges)

$0.11

($0.97)

$0.18

$2.02

$0.16

($1.44)

($3.56)

($0.82)

($0.73)

($0.43)

($0.33)

($0.43)

($0.46)

($0.39)

($0.29)

($0.22)

$0.50

$1.45

($5.55)

($1.92)

($1.37)

($1.08)

% of Sales
Gross Margin
Operating Income Margin
Net Income Margin

19.5%
10.8%
4%

19.7%
9.7%
1%

18.1%
8.4%
2%

17.8%
9.5%
6%

20.8%
10.8%
4%

15.1%
5.0%
(4%)

13.3%
(2.8%)
(20%)

9.9%
(10.2%)
(24%)

0.6%
(29.1%)
(32%)

2.8%
(14.2%)
(18%)

7.3%
(7.2%)
(11%)

3.1%
(9.6%)
(12%)

1.2%
(14.5%)
(18%)

3.2%
(10.5%)
(14%)

6.0%
(6.2%)
(11%)

8.3%
(2.9%)
(8%)

20.0%
10.3%
5%

18.7%
9.5%
4%

15.2%
1.6%
(10%)

3.6%
(14.0%)
(17%)

4.8%
(8.3%)
(12%)

8.0%
(5.1%)
(9%)

Selling Expenses
G&A
R&D
Total Operating Expenses

3%
4%
2%
9%

4%
4%
1%
10%

4%
4%
2%
10%

4%
3%
1%
8%

4%
5%
1%
10%

5%
4%
1%
10%

6%
9%
1%
16%

7%
12%
1%
20%

8%
19%
2%
30%

6%
9%
2%
17%

6%
7%
2%
15%

6%
6%
1%
13%

6%
8%
2%
16%

6%
6%
1%
14%

6%
5%
1%
12%

6%
4%
1%
11%

3%

4%

5%

6%

6%

6%

2%
5%

1%
5%

1%
6%

2%
8%

1%
7%

1%
7%

Tax Rate

($21.1)
$($1,004.9) ($349.0)

16%

NM

NM

4%

15%

NM

31%

17%

NM

17%

17%

17%

17%

17%

17%

17%

3%

(3%)

18%

10%

17%

17%

Q/Q % Growth
Revenues
COGS
Gross Profit
Operating Expenses
Operating Income

0.8%
6.4%
(17.4%)
(1.3%)
(27.0%)

6.3%
6.0%
7.7%
22.9%
(4.5%)

19.0%
21.3%
9.2%
15.1%
3.2%

27.1%
27.5%
25.1%
8.6%
44.2%

(7.2%)
(10.6%)
8.3%
12.4%
4.8%

(5.3%)
1.6%
(31.3%)
(4.8%)
(56.0%)

(2.5%)
(0.4%)
(14.2%)
55.0%
(153.8%)

(22.3%)
(19.3%)
(42.2%)
(2.8%)
186.6%

(34.9%)
(28.2%)
(96.1%)
(3.9%)
85.7%

6.5%
4.0%
413.7%
(39.1%)
(48.2%)

21.6%
16.0%
211.9%
3.7%
(37.9%)

19.0%
24.3%
(49.8%)
4.2%
58.2%

(25.1%)
(23.6%)
(71.0%)
(7.4%)
12.8%

7.6%
5.4%
189.6%
(6.5%)
(22.5%)

1.0%
(1.9%)
89.0%
(10.1%)
(40.4%)

2.9%
0.3%
43.5%
(5.2%)
(52.3%)

Y/Y % Growth
Revenues
COGS
Gross Profit
Operating Expenses
Operating Income
Net Income (Loss)
Diluted EPS - (x-1x Items)

86%
83%
103%
45%
200%
1059%
897%

95%
92%
107%
62%
188%
(14%)
(17%)

57%
57%
60%
84%
40%
(55%)
(55%)

62%
75%
22%
52%
4%
38%
53%

49%
47%
60%
73%
49%
54%
54%

33%
41%
2%
34%
(31%)
(493%)
(491%)

9%
15%
(20%)
80%
(136%)
(1301%)
(1306%)

(33%)
(27%)
(63%)
61%
(171%)
(346%)
(323%)

(53%)
(41%)
(99%)
38%
(226%)
(517%)
(520%)

(48%)
(40%)
(90%)
(12%)
(248%)
133%
132%

(35%)
(30%)
(64%)
(41%)
71%
(63%)
(63%)

0%
8%
(69%)
(37%)
(5%)
(48%)
(48%)

15%
15%
134%
(39%)
(43%)
(36%)
(37%)

17%
16%
32%
(6%)
(14%)
(9%)
(10%)

(3%)
(2%)
(20%)
(19%)
(18%)
(9%)
(10%)

(16%)
(21%)
128%
(26%)
(75%)
(48%)
(49%)

(12%)
(14%)
(1%)
3%
(5%)
164%
145%

71%
74%
60%
60%
59%
20%
21%

8%
13%
(12%)
62%
(82%)
(401%)
(385%)

(36%)
(28%)
(85%)
(18%)
(666%)
13%
12%

1%
(0%)
33%
(25%)
(40%)
(28%)
(29%)

7%
4%
79%
7%
(34%)
(21%)
(21%)

Source: Suntech Power Holdings and Maxim Group estimates

Maxim Group LLC

10

Suntech Power Holdings (STP)

Figure 13: STP Balance Sheet


2009
Assets:
Cash & Equivalents
Restricted Cash
Short-Term Investments
Inventories
Accounts Receivable, Net
Accounts Receivable from GSF, Net
Value-Added Tax Recoverable
Advances to Suppliers
Other Current Assets

2010

2011

2012E

2013E

1Q
$406.0
$179.1
$$242.7
$160.4
$104.9
$87.1
$70.5
$255.5

2Q
$760.5
$180.4
$$269.7
$183.7
$108.4
$78.4
$53.8
$200.8

3Q
$655.7
$158.4
$200.0
$284.5
$308.3
$112.1
$52.5
$43.4
$280.9

4Q
$833.2
$124.9
$200.8
$280.1
$274.2
$110.2
$41.2
$48.8
$242.6

1Q
$677.2
$162.8
$$314.1
$363.7
$104.0
$58.9
$50.2
$268.4

2Q
$765.6
$82.2
$$381.5
$310.8
$94.2
$50.9
$68.4
$275.0

3Q
$946.2
$153.5
$$447.4
$384.0
$59.7
$61.5
$83.2
$272.5

4Q
$872.5
$142.5
$$558.2
$505.5
$10.4
$92.4
$84.4
$146.4

1Q
$782.6
$118.1
$$550.2
$670.9
$44.7
$61.6
$119.3
$220.9

2Q
$648.2
$119.7
$$571.4
$835.4
$27.3
$78.0
$104.9
$171.9

3Q
$458.4
$109.3
$$696.3
$759.3
$25.8
$100.2
$92.5
$177.3

4Q
$492.4
$216.6
$$516.5
$455.8
$19.5
$90.8
$84.4
$222.3

1Q
$473.7
$190.1
$$508.4
$390.2
$19.3
$66.2
$115.8
$220.3

2QE
$572.4
$190.1
$$457.7
$392.3
$19.3
$34.9
$105.9
$139.5

3QE
$450.1
$190.1
$$476.9
$466.3
$18.7
$42.4
$103.2
$159.0

4QE
$359.2
$190.1
$$517.0
$523.3
$17.8
$50.4
$91.7
$189.1

1QE
$416.6
$190.1
$$425.0
$458.0
$16.0
$35.4
$93.3
$132.2

2QE
$286.2
$190.1
$$431.8
$497.9
$14.4
$35.6
$103.3
$162.6

3QE
$241.4
$190.1
$$420.6
$512.9
$13.0
$33.3
$91.6
$153.9

4QE
$204.4
$190.1
$$432.7
$538.3
$11.7
$26.4
$82.2
$158.3

$1,506.3

$1,835.8

$2,095.9

$2,156.0

$1,999.3

$2,028.6

$2,408.0

$2,412.3

$2,568.3

$2,556.8

$2,419.1

$2,098.3

$1,984.0

$1,912.1

$1,906.8

$1,938.5

$1,766.6

$1,721.9

$1,656.8

$1,644.1

$720.8
$163.6
$80.9
$225.4
$216.4
$195.3
$56.2
$$104.1

$733.7
$165.2
$83.6
$229.1
$203.6
$182.0
$55.9
$$102.6

$766.5
$172.4
$88.0
$240.4
$187.9
$174.5
$55.0
$$118.8

$777.6
$166.7
$86.1
$251.4
$193.6
$188.1
$54.7
$$109.6

$816.6
$162.7
$84.2
$331.0
$180.5
$187.4
$54.3
$$107.4

$846.7
$171.8
$85.3
$234.3
$163.5
$184.6
$54.2
$$105.4

$1,004.4
$179.4
$91.3
$259.2
$165.1
$203.5
$53.7
$$108.0

$1,326.2
$156.0
$278.0
$545.9
$94.1
$213.8
$53.0
$$137.7

$1,420.3
$145.9
$278.0
$556.7
$93.3
$212.8
$53.0
$$152.5

$1,523.9
$147.8
$280.3
$560.4
$86.6
$128.0
$$$151.6

$1,538.1
$24.6
$$516.6
$75.2
$172.3
$$$146.0

$1,569.2
$23.0
$$454.2
$67.6
$185.1
$$$152.2

$1,539.2
$21.1
$$449.5
$66.8
$154.4
$$$163.6

$1,533.8
$21.1
$$449.5
$68.8
$169.4
$$$149.5

$1,527.4
$21.1
$$449.5
$70.9
$162.2
$$$149.5

$1,532.4
$21.1
$$449.5
$73.0
$152.8
$$$149.5

$1,555.5
$21.1
$$449.5
$73.0
$130.6
$$$149.5

$1,577.6
$21.1
$$449.5
$75.2
$127.9
$$$149.5

$1,598.5
$21.1
$$449.5
$77.4
$130.2
$$$149.5

$1,618.3
$21.1
$$449.5
$79.8
$101.6
$$$149.5

$3,269.0

$3,591.5

$3,899.3

$3,983.7

$3,923.3

$3,874.5

$4,472.5

$5,217.0

$5,480.9

$5,435.4

$4,891.9

$4,549.6

$4,378.6

$4,304.2

$4,287.3

$4,316.7

$4,145.9

$4,122.6

$4,083.1

$4,063.9

$791.7
$239.3
$153.4
$228.9

$806.8
$214.8
$120.1
$178.6

$847.6
$219.6
$196.8
$216.4

$800.4
$224.0
$264.2
$229.5

$835.5
$4.2
$384.3
$213.3

$939.2
$4.2
$366.1
$229.5

$1,024.2
$0.4
$394.6
$617.5

$1,400.8
$0.4
$457.0
$511.8

$1,626.6
$4.2
$474.2
$484.2

$1,665.7
$3.8
$521.2
$579.0

$1,582.6
$3.8
$632.0
$545.0

$1,558.6
$3.8
$542.2
$476.9

$1,574.6
$579.9
$511.3
$442.1

$1,574.6
$$487.1
$233.0

$1,574.6
$$501.3
$265.4

$1,574.6
$$580.6
$293.3

$1,574.6
$$466.6
$214.6

$1,574.6
$$486.9
$216.4

$1,574.6
$$472.6
$202.6

$1,574.6
$$464.4
$193.5

$1,413.3

$1,320.4

$1,480.4

$1,518.1

$1,437.3

$1,538.9

$2,036.8

$2,369.9

$2,589.3

$2,769.7

$2,763.4

$2,581.5

$3,107.9

$2,294.7

$2,341.3

$2,448.5

$2,255.8

$2,277.9

$2,249.8

$2,232.5

$464.5
$$43.0
$$$$119.9

$589.9
$$45.6
$$$$115.4

$136.3
$509.8
$50.1
$$$$156.6

$138.0
$516.9
$55.2
$$3.5
$33.1
$106.1

$132.4
$524.2
$60.1
$$$$138.7

$142.7
$531.8
$65.1
$$$$124.2

$159.6
$543.3
$71.9
$$$$179.3

$163.3
$551.2
$81.0
$$$$171.4

$202.7
$555.4
$88.8
$$$$145.2

$202.3
$563.7
$82.4
$$$$155.4

$211.5
$572.2
$89.7
$$$$165.0

$161.2
$580.9
$94.1
$$$$167.2

$131.2
$46.5
$96.8
$$$$193.0

$131.2
$590.5
$99.7
$$$$435.2

$131.2
$595.2
$102.7
$$$$423.2

$131.2
$600.0
$105.8
$$$$415.6

$131.2
$604.8
$108.9
$$$$514.1

$131.2
$609.6
$112.2
$$$$532.6

$131.2
$614.3
$115.6
$$$$567.2

$131.2
$619.1
$119.1
$$$$597.4

$2,040.7

$2,071.3

$2,333.1

$2,370.9

$2,292.8

$2,402.7

$2,990.8

$3,336.9

$3,581.3

$3,773.5

$3,801.8

$3,584.9

$3,575.4

$3,551.3

$3,593.6

$3,701.1

$3,614.9

$3,663.5

$3,678.1

$3,699.2

$10.2
$1.6
$820.2
$332.9
$63.4

$12.2
$1.7
$1,100.1
$342.9
$63.4

$14.6
$1.7
$1,113.8
$372.6
$63.4

$14.7
$1.8
$1,114.7
$416.7
$64.9

$13.8
$1.8
$1,112.6
$437.4
$64.9

$14.5
$1.8
$1,128.1
$262.5
$64.9

$19.9
$1.8
$1,099.5
$295.6
$64.9

$12.5
$1.8
$1,122.0
$679.0
$64.9

$10.7
$1.8
$1,114.2
$708.0
$64.9

$8.8
$1.8
$1,137.9
$448.5
$64.9

$8.8
$1.8
$1,208.4
($193.8)
$64.9

$6.4
$1.8
$1,234.2
($342.6)
$64.9

$6.4
$1.8
$1,234.2
($475.6)
$64.9

$6.4
$1.8
$1,234.2
($554.4)
$64.9

$6.4
$1.8
$1,234.2
($613.6)
$64.9

$6.4
$1.8
$1,234.2
($691.6)
$64.9

$6.4
$1.8
$1,234.2
($776.3)
$64.9

$6.4
$1.8
$1,234.2
($848.1)
$64.9

$6.4
$1.8
$1,234.2
($902.3)
$64.9

$6.4
$1.8
$1,234.2
($942.6)
$64.9

Total Stockholders' Equity (Deficit)

$1,228.3

$1,520.2

$1,566.2

$1,612.7

$1,630.5

$1,471.8

$1,481.7

$1,880.2

$1,899.6

$1,661.9

$1,090.1

$964.7

$831.7

$752.9

$693.7

$615.7

$531.0

$459.1

$405.0

$364.7

Total Liabilities & Shareholders' Equity

$3,269.0

$3,591.5

$3,899.3

$3,983.7

$3,923.3

$3,874.5

$4,472.5

$5,217.0

$5,480.9

$5,435.4

$4,891.9

$4,549.6

$4,407.1

$4,304.2

$4,287.3

$4,316.7

$4,145.9

$4,122.6

$4,083.1

$4,063.9

1Q
$2.59
$7.83
$7.32

2Q
$4.41
$8.81
$8.32

3Q
$4.70
$8.60
$8.12

4Q
$5.67
$8.85
$8.37

1Q
$3.72
$8.95
$8.48

2Q
$4.26
$8.20
$7.72

3Q
$5.22
$8.17
$7.67

4Q
$4.45
$9.59
$8.17

1Q
$4.29
$10.41
$8.89

2Q
$3.59
$9.21
$7.66

3Q
$2.54
$6.04
$6.04

4Q
$2.73
$5.34
$5.34

1Q
$2.62
$4.60
$4.60

2QE
$3.16
$4.15
$4.15

3QE
$2.47
$3.81
$3.81

4QE
$1.97
$3.38
$3.38

1QE
$2.28
$2.91
$2.91

2QE
$1.56
$2.51
$2.51

3QE
$1.31
$2.20
$2.20

4QE
$1.11
$1.98
$1.98

1.1
0.9
0.3

1.4
1.2
0.6

1.4
1.2
0.6

1.4
1.2
0.7

1.4
1.2
0.5

1.3
1.1
0.5

1.2
1.0
0.5

1.0
0.8
0.4

1.0
0.8
0.3

0.9
0.7
0.2

0.9
0.6
0.2

0.8
0.6
0.2

0.6
0.5
0.2

0.8
0.6
0.2

0.8
0.6
0.2

0.8
0.6
0.1

0.8
0.6
0.2

0.8
0.6
0.1

0.7
0.5
0.1

0.7
0.5
0.1

Working Capital
Days Sales Outstanding
Days of Inventory
Accounts Payable Turnover
Payable Days

$92.9
75.7
84.2
1.7
53.2

$515.5
81.9
92.9
2.2
41.4

$615.5
80.0
65.8
2.0
45.5

$637.8
59.3
56.7
1.4
64.9

$561.9
71.6
59.7
1.2
73.0

$489.7
58.3
68.4
1.4
65.7

$371.3
53.7
66.1
1.5
58.3

$42.4
49.1
64.7
1.7
53.0

($21.0)
73.4
71.3
1.5
61.5

($212.9)
93.5
72.9
1.4
66.5

($344.3)
87.3
89.3
1.1
81.0

($483.2)
68.0
82.0
1.0
86.1

($1,123.9)
90.0
112.4
0.8
113.0

($382.6)
85.0
97.3
0.9
103.5

($434.5)
82.4
87.3
1.0
91.8

($510.0)
77.2
76.1
1.1
85.5

($489.2)
90.4
82.0
1.0
90.0

($556.0)
90.8
79.0
1.0
89.1

($593.0)
92.3
78.5
1.0
88.2

($588.3)
93.8
80.5
1.0
86.4

Net Debt / EBITDA


Net Debt / Equity
Total Debt / Total Capital

4.8x
74.1%
54.9%

4.8x
44.1%
51.5%

8.9x
57.4%
52.2%

3.0x
44.7%
51.0%

2.3x
40.3%
47.9%

2.3x
52.3%
52.4%

1.7x
42.4%
53.8%

3.0x
58.5%
52.9%

3.6x
78.3%
55.7%

4.1x
100.3%
59.4%

5.5x
165.3%
68.5%

8.3x
165.4%
70.5%

-78.0x
200.6%
73.7%

-13.2x
203.7%
75.3%

-13.0x
239.4%
76.8%

-15.1x
285.3%
78.9%

-16.2x
320.9%
81.3%

-13.4x
400.5%
83.5%

-11.0x
466.3%
85.1%

-11.5x
529.4%
86.4%

NOPAT
Return on Invested Capital
Return on Assets
Return on Average Equity

$21.2
8.1%
6.4%
(1.1%)

$21.2
4.4%
1.0%
(6.7%)

$44.6
2.2%
(0.3%)
(5.0%)

$84.4
7.5%
(1.5%)
6.0%

$60.4
8.8%
2.4%
7.3%

$65.7
10.5%
2.8%
6.9%

$65.3
11.4%
(1.9%)
5.7%

$87.9
10.1%
(1.7%)
5.9%

$89.0
10.0%
5.8%
6.5%

$24.8
9.0%
4.0%
4.6%

$28.1
8.3%
(10.5%)
(7.8%)

($45.2)
3.2%
(20.9%)
(21.8%)

($125.3)
(3.7%)
(24.0%)
(34.8%)

($46.2)
(6.0%)
(20.6%)
(43.1%)

($26.7)
(8.2%)
(9.1%)
(47.1%)

($45.3)
(8.5%)
(7.9%)
(44.2%)

($51.8)
(6.1%)
(7.1%)
(44.1%)

($38.9)
(5.6%)
(7.0%)
(48.5%)

($21.0)
(5.4%)
(6.9%)
(52.5%)

($7.1)
(4.0%)
(6.0%)
(51.2%)

Total Current Assets


Prop., Plant, & Equipment
Intangible Assets (net)
Goodwill
Investments in Affiliates
Amount Due from Related Parties, Net of Current
Long-Term Prepayments
Long-Term Loans to Suppliers
Deferred Tax Assets (net)
Other Non-Current Assets
Total Assets
Liabilities & Shareholders' Equity
Short-Term Debt
Convertible Notes (Current portion)
Accounts Payable
Other Current Liabilities
Total Current Liabilities
Long-Term Debt
Convertible Notes
Accrued Warranty Costs
Other Financial Liabilities
Retirement Benefit Obligations
Deferred Tax Liabilities
Other Long-Term Liabilities
Total Liabilities
Minority Interest
Common Stock
Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Income

Balance Sheet Analysis:


Cash Per Share
Book Value Per Share
Tangible Book Value Per Share
Current Ratio
Quick Ratio
Cash Ratio

Source: Suntech Power Holdings and Maxim Group estimates

Maxim Group LLC

11

Suntech Power Holdings (STP)

Figure 14: STP Cash Flow Statement


Quarterly
2009
Cash Flow from Operations:
Net Income (x-Minority Interest)

2010

2QE

3QE

4QE

1QE

2Q

3QE

4QE

1Q

2Q

3Q

4Q

1QE

2QE

3QE

4QE

1QE

2QE

3QE

4QE

FY

FY

FY

FY

FY

$2.1

$9.6

$30.2

$43.8

$20.6

($174.5)

$33.2

$384.0

$32.1

($259.1)

($642.3)

($148.7)

($132.9)

($78.7)

($59.1)

($77.9)

($84.5)

($71.8)

($54.0)

($40.3)

$85.6

$263.3

($1,018.0)

($348.6)

($250.6)

$1.4
$15.7
$11.3
($1.5)
$($0.0)
$14.8
$0.8
$($2.4)
$3.3
($2.4)
($0.2)
$2.0
$0.0
($0.3)
$0.9
$($33.3)

$1.1
$21.0
$12.9
($1.5)
$($0.0)
$14.8
$0.8
$($2.4)
$3.3
($0.5)
($0.2)
$2.0
$0.0
($0.3)
$0.9
$$85.0

$3.0
$18.7
$8.6
($10.1)
$$$7.2
($2.5)
$$$3.3
($4.6)
($0.2)
($2.8)
$($0.3)
$0.8
$($22.7)

$6.0
$20.5
$7.5
($9.5)
$1.0
$23.1
($3.4)
$$136.9
$$$18.3
$($23.8)
$$$$($16.4)

$3.2
$26.7
$9.4
($10.1)
$($2.3)
$7.2
($2.5)
($73.9)
$$3.3
($23.1)
($0.2)
$74.1
$($0.3)
$0.8
$($118.4)

$2.7
$19.0
$6.4
($10.7)
$0.1
($2.3)
$17.9
($4.9)
$$$6.7
($241.4)
($0.4)
$2.3
$($0.6)
$1.6
$($116.9)

$3.7
$38.2
$8.1
($9.7)
$$1.4
$5.7
$$1.4
$$($0.4)
$$56.5
$7.6
$$$($279.3)

$3.4
$31.6
$8.3
($7.0)
$$2.8
$29.5
$1.4
$$$($4.0)
$$41.1
$13.8
$$$$140.1

$3.3
$36.7
$8.5
($47.5)
$$19.2
$20.2
$$460.4
$$($3.0)
$$10.8
$$$$88.0
$18.5

$2.1
$35.1
$8.6
($9.0)
$$20.0
($18.4)
$10.5
$$$58.1
$($15.4)
$6.4
$$$3.6
$300.4

$2.8
$39.4
$8.9
$5.5
$$25.5
$3.7
$5.9
$$$$4.6
$($16.4)
($2.4)
$$$$42.9

$2.9
$40.4
$8.9
$$$$$$$$$$$$$$$$160.0

$2.9
$41.4
$8.9
$$$$$$$$$$$$$$$($81.4)

$3.0
$42.4
$8.9
$$$$$$$$$$$$$$$($19.9)

$3.1
$43.5
$8.9
$$$$$$$$$$$$$$$$153.1

$3.2
$44.6
$8.9
$$$$$$$$$$$$$$$($48.6)

$3.2
$45.7
$8.9
$$$$$$$$$$$$$$$$17.9

$3.3
$46.8
$8.9
$$$$$$$$$$$$$$$$10.9

$6.6
$66.4
$47.5
($6.0)
$($0.1)
$59.1
$3.1
$($9.5)
$13.3
$3.3
($0.8)
$8.0
$($1.2)
$3.6
$$13.9

$14.9
$84.9
$31.9
($40.4)
$1.1
$18.5
$28.9
($9.8)
$63.0
$$13.3
($250.8)
($0.8)
$49.8
$($1.2)
$3.2
$($274.4)

$12.5
$141.6
$33.5
($73.2)
$$43.4
$37.0
$11.9
$461.8
$$$50.7
$$93.0
$27.8
$$$91.6
$179.7

$11.6
$163.6
$35.6
$5.5
$$25.5
$3.7
$5.9
$$$$4.6
$($16.4)
($2.4)
$$$$101.6

$12.8
$180.6
$35.6
$$$$$$$$$$$$$$$$133.3

($32.2)
($128.5)
$1.0
$15.8
$3.4
$21.6
($0.2)
$4.2
$4.1
($1.6)
$76.4
$4.5
$0.4
($2.3)

$9.7
$36.1
$1.0
($12.3)
($11.3)
$10.7
($0.2)
$4.2
($21.7)
($1.6)
$67.3
$5.0
$0.4
($2.3)

($34.1)
($83.3)
$0.2
$13.1
($1.4)
($17.7)
($25.8)
$$0.7
$2.2
$120.1
$5.1
$0.4
($2.3)

($67.4)
$62.7
($1.8)
$17.0
($18.2)
$8.0
($6.6)
$$2.8
$1.9
($18.2)
$5.3
$0.4
($2.3)

($65.8)
($38.7)
$0.2
($1.6)
($14.9)
($10.5)
$2.5
$($18.9)
($2.6)
$28.5
$5.4
$0.4
($2.3)

($107.5)
($78.1)
$2.2
$66.1
$1.9
($28.2)
$2.3
$($18.2)
($7.6)
$47.9
$10.0
$4.9
($12.8)

$8.0
($165.4)
$$0.8
($34.9)
$30.8
($74.5)
$$1.0
($14.8)
$17.3
$10.3
$4.9
($62.7)

($21.2)
($164.5)
$$6.7
$14.4
($16.4)
$49.0
$$84.8
$0.9
$47.0
$10.5
$4.9
$123.9

($124.9)
$76.1
$$11.4
$12.4
($22.2)
($5.4)
$($44.3)
$5.6
$110.8
$10.8
$4.9
($16.6)

$179.8
$303.5
$$7.6
$8.1
$9.4
($45.0)
$($12.8)
($6.2)
($89.8)
$11.1
$4.9
($70.2)

$8.1
$65.6
$$0.8
($31.4)
$24.6
$2.0
$$30.7
($11.4)
($30.9)
$11.3
$4.9
($31.4)

$50.7
($2.1)
$($2.0)
$9.9
$31.3
$80.8
$($15.0)
$14.1
($24.2)
$11.6
$4.9
$-

($19.2)
($74.0)
$($2.1)
$2.7
($7.5)
($19.5)
$$7.2
$$14.2
$11.9
$4.9
$-

($40.0)
($56.9)
$($2.1)
$11.5
($8.0)
($30.2)
$$9.4
$$79.2
$12.2
$4.9
$-

$92.0
$65.2
$$($1.7)
$15.0
$56.9
$$22.1
$($114.0)
$12.5
$4.9
$-

($6.9)
($39.9)
$($2.2)
($10.0)
($0.1)
($30.4)
$$2.8
$$20.3
$12.8
$4.9
$-

$11.2
($15.1)
$($2.3)
$11.6
$2.2
$8.7
$($2.3)
$($14.3)
$13.2
$4.9
$-

($12.1)
($25.3)
$($2.3)
$9.4
$7.0
($4.4)
$$28.6
$($8.2)
$13.5
$4.9
$-

($104.4)
($171.6)
$3.9
$77.1
($6.6)
$34.5
($0.9)
$16.7
$19.0
($6.3)
$146.3
$13.7
$1.6
($9.1)

($274.8)
($137.4)
$0.7
$94.6
($32.5)
($48.4)
($27.6)
$($33.6)
($6.0)
$178.3
$25.8
$6.1
($19.6)

$41.7
$49.7
$$26.5
($0.0)
$1.6
($75.9)
$$28.7
($14.5)
$85.2
$42.7
$19.6
($25.6)

($0.5)
($67.5)
$($5.4)
($7.3)
$40.4
$33.2
$$32.3
$2.7
$38.4
$47.1
$19.6
($31.4)

$84.2
($15.0)
$($6.8)
$9.4
$24.0
$30.8
$$51.2
$($116.2)
$52.0
$19.6
$-

Share-Based Compensation
$2.0
$2.1
$15.3
$14.4
Depreciation & Amortization
Amortization of Debt Discount
$11.7
$11.6
Deferred Taxes
($1.5)
($1.5)
Loss on Disposal of PP&E
$$Provision for Doubtful Accounts
($0.0)
($0.0)
Provision for Inventories
$14.8
$14.8
Provision for Purchase Commitments
$0.8
$0.8
Impairment Provision for Long-Term Investments
$$Gain on Convertible Notes Repurchase
($2.4)
($2.4)
Amortization of Long-Term Prepayments
$3.3
$3.3
Equity in Loss (Earnings) of Affiliates
$3.9
$2.3
(Gain) Loss on Short-Term Investments
($0.2)
($0.2)
Loss on Financial Derivatives, Net
$2.0
$2.0
(Gain) Loss on Long-Term Securities
$0.0
$0.0
Imputed Interest Income for Loan to Suppliers and LT Prepayment
($0.3)
to Suppliers
($0.3)
Amortizaton of Imputed Interest Income
$0.9
$0.9
Write-Off of Unamortized MEMC Warrant Costs
$$Changes in Operating Assets and Liabilities
$38.6
($76.4)
Inventories
Accounts Receivable
Other Receivable
Amounts Due from Related Parties
Advances to Suppliers
Value-Added Tax Recoverable
Other Current Assets
Interest-Free Loans to Suppliers
Long-Term Prepayments
Other Non-Current Assets
Accounts Payable
Accrued Warranty Costs
Other Long-Term Liabilities
Other Payables:
Net Cash Flow Provided by (Used in) Operating Activities

Annual
2009

1QE

($23.4)
($52.3)
$1.0
$61.9
($5.6)
($10.1)
($0.2)
$4.2
$29.3
($1.6)
$35.8
$1.6
$0.4
($2.3)

($58.5)
($26.8)
$1.0
$11.6
$6.8
$12.3
($0.2)
$4.2
$7.3
($1.6)
($33.2)
$2.6
$0.4
($2.3)

2010

2011

2012E

2013E

2011

2012E

2013E

$90.9

($18.9)

$40.2

$180.7

$19.1

($14.3)

($72.7)

$63.4

($134.7)

$1.9

($27.2)

$253.3

($12.5)

$133.5

($87.3)

($43.5)

$124.0

($63.7)

$21.7

$29.7

$292.9

($4.6)

$93.3

($9.8)

$111.8

Cash Flow from Investing Activities:


Purchases of PP&E
Acquisition of Subsidiaries, Net of Cash Acquired
Purchases of Intangible Assets
Proceeds from Sales of PP&E
Net Proceeds from Redemption of Investment Securities
Purchase of Investment Securities
Government Grants
Net Proceeds from Redemption of Financial Derivatives
Increase in Long-Term Equity Investment
Increase in Investment Deposits
Other Net Proceeds from Investments
Decrease (Increase) in Restricted Cash

($60.9)
($1.4)
($0.3)
$0.4
$$$1.5
($3.9)
($7.9)
($0.1)
$($108.1)

($20.9)
($1.4)
($0.3)
$0.4
$($200.0)
$1.5
($3.9)
($7.9)
($0.1)
$($1.2)

($25.4)
($1.4)
($0.3)
$0.4
$$$1.5
($3.9)
($7.9)
($0.1)
$$21.9

($34.2)
($1.4)
($0.3)
$0.4
$$$1.5
($3.9)
($7.9)
($0.1)
$$33.4

($72.4)
($1.3)
($0.1)
$0.7
$50.4
$$($9.8)
$$$($2.2)

($92.6)
($1.3)
($0.1)
$0.7
$5.7
$$8.1
$$$$66.1
$-

($85.0)
($1.3)
($0.1)
$0.7
$50.4
$$($9.8)
($79.3)
$($30.0)
($2.2)

($26.0)
($1.3)
($0.1)
$0.7
$95.1
$$($19.7)
($42.7)
$($36.1)
($4.4)

($128.5)
$$$$$$($46.2)
$$($36.8)
$24.4

($119.9)
$$$$$$($54.9)
$$$6.2
($1.6)

($80.8)
$$$$$$($13.1)
$$$0.9
$10.4

($37.6)
$$$$$$$9.4
$$$7.9
($107.3)

($22.6)
$$$$$$$10.3
$$($15.5)
$26.5

($35.0)
$$$$$$$$$$$-

($35.0)
$$$$$$$$$$$-

($47.4)
$$$$$$$$$$$-

($66.6)
$$$$$$$$$$$-

($66.6)
$$$$$$$$$$$-

($66.6)
$$$$$$$$$$$-

($66.6)
$$$$$$$$$$$-

($141.4)
($5.4)
($1.2)
$1.5
$($200.0)
$6.1
($15.5)
($31.5)
($0.5)
$($54.0)

($276.0)
($5.0)
($0.2)
$2.9
$201.6
$$8.1
($39.3)
($122.0)
$$($8.7)

($366.8)
$$$$$$($104.8)
$$($21.8)
($74.1)

($140.0)
$$$$$$$10.3
$$($15.5)
$26.5

($266.5)
$$$$$$$$$$$-

Net Cash Flow Provided by (Used in) Investing Activities

($180.6)

($233.8)

($15.1)

($12.4)

($34.6)

($13.3)

($156.5)

($34.3)

($187.1)

($170.2)

($82.6)

($127.6)

($1.3)

($35.0)

($35.0)

($47.4)

($66.6)

($66.6)

($66.6)

($66.6)

($441.9)

($238.6)

($567.5)

($118.7)

($266.5)

Cash Flows from Financing Activities:


Proceeds from Exercise of Stock Options
Gross Proceeds from Issuance of Ordinary Shares
Offering Expense Incurred
Proceeds from Short-Term Bank Borrowings
Repayment of Short-Term Bank Borrowings
Proceeds from Long-Term Bank Borrowings
Repayment of Long-Term Bank Borrowings
Proceeds from Issuance of Convertible Notes
Payment of Convertible Notes Issuance Expenses
Payment of Convertible Notes Repurchase
Contribution from Minority Shareholder of a Subsidiary
Proceeds from Sales and Lease-Back Transactions
Payments Under Financial Leases

$0.4
$$$214.7
($78.7)
$($5.7)
$$($159.6)
$$21.0
$-

$0.4
$287.5
($10.4)
$194.2
$$135.3
$$$$$$$-

$0.4
$$$($179.5)
$$$50.0
($0.9)
$$$($3.7)

$0.4
$$$297.4
($266.6)
$($17.0)
$$$$$$-

$0.2
$0.2
$0.2
$$$$$$$511.9
$580.7
$752.9
($621.0) ($475.7) ($313.1)
$67.9
$67.9
$67.9
($58.9) ($58.9) ($58.9)
$$$$$$($55.3)
$($55.3)
$0.5
$1.5
$0.5
$17.7
$$17.7
($4.7)
$($4.7)

$0.2
$$$675.6
($677.5)
$67.9
($58.9)
$$($110.6)
($0.6)
$35.4
($9.5)

$$$$225.8
$$39.4
$$$$$$($27.9)

$$$$39.1
$$($0.4)
$$$$$$0.2

$$$$($83.1)
$9.2
$$$$$$($12.7)

$$$$0.9
($24.0)
$($50.3)
$$$$$($14.1)

$$$$($0.9)
$($17.5)
$$$$$$17.0

$$$$$$$$$$$$$-

$$$$$$$$$$$$$-

$$$$$$$$$$$$$-

$$$$$$$$$$$$$-

$$$$$$$$$$$$$-

$$$$$$$$$$$$$-

$$$$$$$$$$$$$-

$1.4
$287.5
($10.4)
$706.3
($524.8)
$135.3
($22.7)
$50.0
($0.9)
($159.6)
$$21.0
($3.7)

$0.8
$$$2,521.0
($2,087.3)
$271.7
($235.7)
$$($221.2)
$1.9
$70.7
($18.9)

$$$$265.8
($107.1)
$48.6
($50.7)
$$$$$($41.5)

$$$$($0.9)
$($17.5)
$$$$$$17.0

$$$$$$$$$$$$$-

Net Cash Flow Provided by (Used in) Financing Activities

($8.0)

$607.0

($133.7)

$14.1

($141.7)

$115.6

$407.1

($78.0)

$237.3

$38.9

($86.6)

($87.5)

($1.4)

$-

$-

$-

$-

$-

$-

$-

$479.4

$303.0

$115.1

($1.4)

$-

Other Adjustments
Effect of Exchange Rate Changes
Net Change in Cash & Cash Equivalents

($2.9)
($1.3)
($101.8)

$1.5
($1.3)
$354.5

$5.1
($1.3)
($104.8)

($3.7)
($1.3)
$177.4

($0.0)
$1.2
($156.0)

$0.0
$0.4
$88.4

$1.5
$1.2
$180.6

($27.0)
$2.1
($73.8)

$($5.5)
($90.0)

$($5.0)
($134.3)

$$6.8
($189.6)

$($4.2)
$34.0

$($3.5)
($18.7)

$$$98.5

$$($122.3)

$$($90.9)

$$$57.4

$$($130.3)

$$($44.9)

$$($36.9)

$($5.0)
$325.4

($25.4)
$4.9
$64.7

$($7.8)
($366.9)

$($3.5)
($133.4)

$$($154.7)

Cash & Cash Equivalents (BoP)


Cash & Cash Equivalents (EoP)

$507.8
$406.0

$406.0
$760.5

$760.5
$655.7

$655.7
$833.2

$833.2
$677.2

$677.2
$765.6

$765.6
$946.2

$946.2
$872.5

$872.5
$782.5

$782.5
$648.1

$648.1
$458.5

$458.5
$492.6

$492.6
$473.9

$473.9
$572.4

$572.4
$450.1

$450.1
$359.2

$359.2
$416.6

$416.6
$286.2

$286.2
$241.4

$241.4
$204.4

$507.9
$833.2

$833.2
$898.0

$898.0
$531.1

$531.1
$397.7

$397.7
$242.9

Cash Flow Metrics:


Cash Flow from Operating Activities
- Capital Expenditures
Free Cash Flow

$90.9
($60.9)
$30.0

($18.9)
($20.9)
($39.8)

$40.2
($25.4)
$14.8

$180.7
($34.2)
$146.5

$19.1
($72.4)
($53.3)

($14.3) ($72.7)
($92.6) ($85.0)
($106.9) ($157.7)

$63.4
($26.0)
$37.4

($134.7)
($128.5)
($263.2)

$1.9
($119.9)
($118.0)

($27.2)
($80.8)
($108.0)

$253.3
($37.6)
$215.7

($12.5)
($22.6)
($35.1)

$133.5
($35.0)
$98.5

($87.3)
($35.0)
($122.3)

($43.5)
($47.4)
($90.9)

$124.0
($66.6)
$57.4

($63.7)
($66.6)
($130.3)

$21.7
($66.6)
($44.9)

$29.7
($66.6)
($36.9)

$292.9
($141.4)
$151.5

($4.6)
($276.0)
($280.6)

$93.3
($366.8)
($273.5)

($9.8)
($140.0)
($149.8)

$111.8
($266.5)
($154.7)

/ Average Shares Outstanding


= Free Cash Flow per Share

156.8
$0.19

172.6
($0.23)

182.1
$0.08

182.3
$0.80

182.3
($0.29)

179.6
($0.60)

181.3
($0.87)

196.1
$0.19

182.5
($1.44)

180.4
($0.65)

180.6
($0.60)

180.7
$1.19

181.0
($0.19)

181.4
$0.54

181.9
($0.67)

182.3
($0.50)

182.8
$0.31

183.2
($0.71)

183.7
($0.24)

184.2
($0.20)

172.5
$0.88

181.6
($1.54)

181.0
($1.51)

181.6
($0.82)

183.5
($0.84)

Cash Flow from Operating Activities


/ Average Shares Outstanding
= Operating Cash Flow per Share

$90.9
156.8
$0.58

($18.9)
172.6
($0.11)

$40.2
182.1
$0.22

$180.7
182.3
$0.99

$19.1
182.3
$0.11

($14.3)
179.6
($0.08)

($72.7)
181.3
($0.40)

$63.4
196.1
$0.32

($134.7)
182.5
($0.74)

$1.9
180.4
$0.01

($27.2)
180.6
($0.15)

$253.3
180.7
$1.40

($12.5)
181.0
($0.07)

$133.5
181.4
$0.74

($87.3)
181.9
($0.48)

($43.5)
182.3
($0.24)

$124.0
182.8
$0.68

($63.7)
183.2
($0.35)

$21.7
183.7
$0.12

$29.7
184.2
$0.16

$292.9
172.5
$1.70

($4.6)
181.6
($0.03)

$93.3
181.0
$0.52

($9.8)
181.6
($0.05)

$111.8
183.5
$0.61

Source: Suntech Power Holdings and Maxim Group estimate

Maxim Group LLC

12

Suntech Power Holdings (STP)


DISCLOSURES

Source: Investars.com

Maxim Group LLC Stock Rating System

Expe cte d Pe rformance *

As of:

7/31/2012

% of Cove rage
Unive rse

% of Rati ngs
for which Firm provi de d

with Rating

Banking Se rvice s in the last 12 months

Buy

Expected total return of 15% or more over next 12 months

70.6%

14.6%

Hold

Expected total return of plus or minus 14% over next 12 months

21.3%

0.0%

Se ll

Expected total negative return of at least 15% over next 12 months

7.4%

0.0%

* Relative to Nasdaq Com posite.


An Under Review (UR) rating represents a stock that the Firm has tem porarily placed under review due to a material change.

Maxim makes a market in Suntech Power Holdings.


We, Aaron Chew and Francesco Citro, attest that the views expressed in this research report accurately
reflect our personal views about the subject security and issuer. Furthermore, no part of our compensation
was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this
research report.
The research analyst(s) primarily responsible for the preparation of this research report have received
compensation based upon various factors, including the firms total revenues, a portion of which is
generated by investment banking activities.
Price Target and Investment Risks:
Aside from general market and other economic risks, specific risks particular to our Sell rating on Suntech
Power Holdings would arise if: (1) global solar PV unit demand growth exceeds expectations, (2) cost
improvements in the years ahead outpace our forecasts, (3) free cash flow materializes on higher operating
cash flow and/or lower capex needs, and/or (4) they are acquired at a premium.
Valuation Methods: With no near-term earnings or cash flow on the horizon, valuation is tough. Given the
lack of operating earnings and cash flow, we value STP not on operations but assets. With gross
replacement value of $1.1 billion less net debt of $1.7 billion implying no value left for equity, we expect a
recapitalization on the horizon and wipe out equity for current shareholders and thus set a price target of $0.

Maxim Group LLC

13

Suntech Power Holdings (STP)


RISK RATINGS
Risk ratings take into account both fundamental criteria and price volatility.
Speculative
Fundamental Criteria: This is a risk rating assigned to early-stage companies with minimal to no revenues,
lack of earnings, balance sheet concerns, and/or a short operating history. Accordingly, fundamental risk is
expected to be significantly above the industry.
Price Volatility: Because of the inherent fundamental criteria of the companies falling within this risk
category, the price volatility is expected to be significant with the possibility that the investment could
eventually be worthless.
Speculative stocks may not be suitable for a significant class of individual investors.
High
Fundamental Criteria: This is a risk rating assigned to companies having below-average revenue and
earnings visibility, negative cash flow, and low market cap or public float. Accordingly, fundamental risk is
expected to be above the industry.
Price volatility: The price volatility of companies falling within this category is expected to be above the
industry.
High-risk stocks may not be suitable for a significant class of individual investors.
Medium
Fundamental Criteria: This is a risk rating assigned to companies that may have average revenue and
earnings visibility, positive cash flow, and is fairly liquid.
Accordingly, both price volatility and fundamental risk are expected to approximate the industry average.
Low
Fundamental Criteria: This is a risk rating assigned to companies that may have above-average revenue and
earnings visibility, positive cash flow, and is fairly liquid.
Accordingly, both price volatility and fundamental risk are expected to be below the industry.

Maxim Group LLC

14

Suntech Power Holdings (STP)

DISCLAIMERS
Some companies that Maxim Group LLC follows are emerging growth companies whose securities
typically involve a higher degree of risk and more volatility than the securities of more established
companies. The securities discussed in Maxim Group LLC research reports may not be suitable for some
investors. Investors must make their own determination as to the appropriateness of an investment in any
securities referred to herein, based on their specific investment objectives, financial status and risk tolerance.
This communication is neither an offer to sell nor a solicitation of an offer to buy any securities mentioned
herein. This publication is confidential for the information of the addressee only and may not be reproduced
in whole or in part, copies circulated, or disclosed to another party, without the prior written consent of
Maxim Group, LLC (Maxim).
Information and opinions presented in this report have been obtained or derived from sources believed by
Maxim to be reliable, but Maxim makes no representation as to their accuracy or completeness. The
aforementioned sentence does not apply to the disclosures required by NASD Rule 2711. Maxim accepts no
liability for loss arising from the use of the material presented in this report, except that this exclusion of
liability does not apply to the extent that such liability arises under specific statutes or regulations applicable
to Maxim. This report is not to be relied upon in substitution for the exercise of independent judgment.
Maxim may have issued, and may in the future issue, other reports that are inconsistent with, and reach
different conclusions from, the information presented in this report. Those reports reflect the different
assumptions, views and analytical methods of the analysts who prepared them and Maxim is under no
obligation to ensure that such other reports are brought to the attention of any recipient of this report.
Past performance should not be taken as an indication or guarantee of future performance, and no
representation or warranty, express or implied, is made regarding future performance. Information, opinions
and estimates contained in this report reflect a judgment at its original date of publication by Maxim and are
subject to change without notice. The price, value of and income from any of the securities mentioned in
this report can fall as well as rise. The value of securities is subject to exchange rate fluctuation that may
have a positive or adverse effect on the price or income of such securities. Investors in securities such as
ADRs, the values of which are influenced by currency volatility, effectively assume this risk. Securities
recommended, offered or sold by Maxim: (1) are not insured by the Federal Deposit Insurance Company;
(2) are not deposits or other obligations of any insured depository institution; and 3) are subject to
investment risks, including the possible loss of principal invested. Indeed, in the case of some investments,
the potential losses may exceed the amount of initial investment and, in such circumstances, you may be
required to pay more money to support these losses.

ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST

Maxim Group LLC

15