Reviewed by Arseny Lebedev BT 401 Due Diligence 12/3/2008
Table of Contents <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analy...
Definitions <ul><ul><li>“ PV ” – Photovoltaic  </li></ul></ul><ul><ul><li>“ Si ” – The silicon used in PV production. </li...
1. Pre-401 Summary Arseny Lebedev
Overview of PV 16-20% Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>B...
PV Market Snapshot Arseny Lebedev <ul><li>World solar photovoltaic (PV) market installations reached a record high of 2,82...
Suntech Overview <ul><li>Operations began in 2003 </li></ul><ul><li>Firm went public in 2005 (NYSE:STP) </li></ul><ul><li>...
Important Facts <ul><li>World in economic trouble. </li></ul><ul><li>STP has long term contracts. </li></ul><ul><li>STP is...
Changes in Comparables #1 Very similar operationally Vertically integrated for silicon production PV leader Arseny Lebedev...
Comparables Arseny Lebedev $Millions <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>B...
II. Financial Markets Arseny Lebedev
Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis...
Lifetime Stock Performance (STP) $80 $25 $8 80% Loss Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Ma...
Since Last May $40 to $8/share Qcells   Suntech   MEMC Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial ...
Analyst Coverage Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Busine...
Shareholders 64% of outstanding stock is held in the US Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial...
IV. Business Model Analysis Arseny Lebedev
PV Value Chain Majority of Revenue Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li><...
Products: PV Cells PV Modules Arseny Lebedev Priced in Watts, i.e. $4.00/Watt <ul><li>Pre-401 Summary </li></ul><ul><li>Fi...
Segments & Ratios Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Busin...
P&L Arseny Lebedev $Millions <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business ...
Capital Expenditures Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Bu...
3. Capital Structure Arseny Lebedev
Debt / Equity 3 rd  Quarter Arseny Lebedev 2 nd  Quarter <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status...
Other Debt Items Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Busine...
Derivatives Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Mo...
Leverage Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model...
Debt / Equity Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business ...
Cost of Capital Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Busines...
Utilized vs. Potential Capacity Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul...
Why so Debt Heavy ? Utilized/Unutilized Capacity Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market...
4. Governance Arseny Lebedev
Governance Nuggets <ul><li>Deals with companies owned by senior executives </li></ul><ul><li>Complicated company structure...
Corporate Structure Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Bus...
Board of Directors Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Busi...
Shareholders Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business M...
GAAP vs Non-GAAP, Misc Arseny Lebedev <ul><li>Depreciation is not included in quarterly statements, so estimation is diffi...
5. Valuation Arseny Lebedev
Market Valuation Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Busine...
Discounted Cash Flow Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Bu...
Assets 3 rd  Quarter Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Bu...
Asset Nuggets Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business ...
Inventory Turns Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Busines...
P/E History Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Mo...
Metrics Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model ...
More Ratios Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Mo...
5. Other Risks, Conclusion Arseny Lebedev
Risks <ul><li>US and Chinese Economy </li></ul><ul><ul><li>Politics </li></ul></ul><ul><li>Company Governance </li></ul><u...
Silicon Shortage 88% of global polysilicon supply comes from five companies. <ul><li>Hemlock </li></ul><ul><li>Wacker </li...
Polysilicon Prices Per Kilogram Source: Lehmen Brothers + Industry News Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><...
Invest Focuses Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business...
Conclusion (Investor POV) Arseny Lebedev <ul><li>Supply obligations = must find customers that can pay. </li></ul><ul><li>...
Questions? Thank you
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Suntech Power Capital Structure

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Part of a large due diligence presentation for school. This portion deals with some of STP's capital structure.

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  • Transcript of "Suntech Power Capital Structure"

    1. 1. Reviewed by Arseny Lebedev BT 401 Due Diligence 12/3/2008
    2. 2. Table of Contents <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>Arseny Lebedev
    3. 3. Definitions <ul><ul><li>“ PV ” – Photovoltaic </li></ul></ul><ul><ul><li>“ Si ” – The silicon used in PV production. </li></ul></ul><ul><ul><li>“ PV Cell ” – a device made from silicon wafer that converts sunlight into electricity. </li></ul></ul><ul><ul><li>“ PV Module ” – an assembly of PV cells that have been electrically interconnected and laminated in a durable and weather proof package for increased electrical output. </li></ul></ul><ul><ul><li>“ PV System ” – A package of one or more PV modules physically mounted and electrically interconnected with system components such as batteries and power electronics to produce or reserve electricity. </li></ul></ul>Arseny Lebedev
    4. 4. 1. Pre-401 Summary Arseny Lebedev
    5. 5. Overview of PV 16-20% Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    6. 6. PV Market Snapshot Arseny Lebedev <ul><li>World solar photovoltaic (PV) market installations reached a record high of 2,826 megawatts (MW) in 2007, representing growth of 62% over the previous year. </li></ul><ul><li>Price / Watt = ~$4.10 </li></ul>Current market size: $10-15 Bn Sources: SolarBuzz, Analysts <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    7. 7. Suntech Overview <ul><li>Operations began in 2003 </li></ul><ul><li>Firm went public in 2005 (NYSE:STP) </li></ul><ul><li>Initially financed by Chinese government </li></ul><ul><li>Top 3 producer of solar energy products </li></ul><ul><li>Finishing acquisition of MSK of Japan </li></ul>Dr. Zhengrong Shi Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    8. 8. Important Facts <ul><li>World in economic trouble. </li></ul><ul><li>STP has long term contracts. </li></ul><ul><li>STP is actively increasing capacity. </li></ul>Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    9. 9. Changes in Comparables #1 Very similar operationally Vertically integrated for silicon production PV leader Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    10. 10. Comparables Arseny Lebedev $Millions <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>Income Statement Quarterly 2007 2006 (Sep '08) MEMC Total Revenue $ 546.0 $ 1,921.8 $ 1,540.6 Gross Profit $ 269.7 $ 1,000.0 $ 689.0 Operating Income $ 227.5 $ 849.9 $ 558.3 Net Income $ 182.8 $ 826.2 $ 369.3 STP Total Revenue $ 594.4 $ 1,348.3 $ 598.9 Gross Profit $ 128.3 $ 274.1 $ 148.9 Operating Income $ 87.1 $ 171.6 $ 103.2 Net Income $ 55.9 $ 171.3 $ 106.0 Qcells Total Revenue $469.56 $1,125.78 $710.02 Gross Profit $130.03 $424.41 $273.09 Operating Income $69.40 $254.13 $166.41 Net Income $94.94 $191.44 $125.26
    11. 11. II. Financial Markets Arseny Lebedev
    12. 12. Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>“ Suntech slashed its revenue forecasts for the fourth quarter, blaming the euro's sudden fall against the dollar and delayed orders by customers who had trouble getting project financing.” – Steve Gelsi, MarketWatch
    13. 13. Lifetime Stock Performance (STP) $80 $25 $8 80% Loss Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    14. 14. Since Last May $40 to $8/share Qcells Suntech MEMC Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    15. 15. Analyst Coverage Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>Source: Marketwatch
    16. 16. Shareholders 64% of outstanding stock is held in the US Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    17. 17. IV. Business Model Analysis Arseny Lebedev
    18. 18. PV Value Chain Majority of Revenue Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    19. 19. Products: PV Cells PV Modules Arseny Lebedev Priced in Watts, i.e. $4.00/Watt <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    20. 20. Segments & Ratios Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    21. 21. P&L Arseny Lebedev $Millions <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>  FY 08 Q3 Q2 Q1 7-Dec 6-Dec 5-Dec 4-Dec     estimate 8-Nov 8-Jun 8-Mar (TTM) (TTM) (TTM) (TTM) Total Revenue $1,865.00 $594 $480 $435 $1,348 $599 $226 $85 Cost of Sales $1,398.75 $466 $364 $338 $1,047 $439 $154 $58 Gross Operating Profit $466.25 $128 $116 $96 $301 $160 $72 $27 Operating Profit before Depreciation (EBITDA) $251.78 $87 $77 $62 $199 $115 $47 $22 Total Net Income $ 216.94 $56 $65 $56 $ 171 $ 106 $ 31 $ 20
    22. 22. Capital Expenditures Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    23. 23. 3. Capital Structure Arseny Lebedev
    24. 24. Debt / Equity 3 rd Quarter Arseny Lebedev 2 nd Quarter <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    25. 25. Other Debt Items Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    26. 26. Derivatives Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    27. 27. Leverage Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    28. 28. Debt / Equity Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    29. 29. Cost of Capital Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    30. 30. Utilized vs. Potential Capacity Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    31. 31. Why so Debt Heavy ? Utilized/Unutilized Capacity Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>Total: 750 MW 2008 Total: 1 GW 2009
    32. 32. 4. Governance Arseny Lebedev
    33. 33. Governance Nuggets <ul><li>Deals with companies owned by senior executives </li></ul><ul><li>Complicated company structure </li></ul><ul><li>SEC filings are non-standard </li></ul><ul><ul><li>Many Non-GAAP # in filings </li></ul></ul><ul><ul><li>Depreciation ? </li></ul></ul>Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    34. 34. Corporate Structure Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    35. 35. Board of Directors Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>Name Title Expertise Shi, Zhengrong Chairman of the Board, CEO Technical Know-How Maynard, Jason Independent Director Finance Qiu, Zhi Zhong Independent Director Finance Zhang, Songyi Independent Director Finance Worley, Julian Independent Director Finance
    36. 36. Shareholders Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    37. 37. GAAP vs Non-GAAP, Misc Arseny Lebedev <ul><li>Depreciation is not included in quarterly statements, so estimation is difficult especially with new facilities opening soon. </li></ul><ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    38. 38. 5. Valuation Arseny Lebedev
    39. 39. Market Valuation Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    40. 40. Discounted Cash Flow Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    41. 41. Assets 3 rd Quarter Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    42. 42. Asset Nuggets Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    43. 43. Inventory Turns Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    44. 44. P/E History Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    45. 45. Metrics Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    46. 46. More Ratios Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    47. 47. 5. Other Risks, Conclusion Arseny Lebedev
    48. 48. Risks <ul><li>US and Chinese Economy </li></ul><ul><ul><li>Politics </li></ul></ul><ul><li>Company Governance </li></ul><ul><li>Silicon shortage (maybe) </li></ul>Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    49. 49. Silicon Shortage 88% of global polysilicon supply comes from five companies. <ul><li>Hemlock </li></ul><ul><li>Wacker </li></ul><ul><li>REC </li></ul><ul><li>Tokuyama </li></ul><ul><li>MEMC </li></ul>Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>Suppliers
    50. 50. Polysilicon Prices Per Kilogram Source: Lehmen Brothers + Industry News Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    51. 51. Invest Focuses Arseny Lebedev <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>
    52. 52. Conclusion (Investor POV) Arseny Lebedev <ul><li>Supply obligations = must find customers that can pay. </li></ul><ul><li>Asset troubles (?): </li></ul><ul><ul><li>Inventory </li></ul></ul><ul><ul><li>Receivables </li></ul></ul><ul><li>Poor investing performance (derivatives) </li></ul><ul><li>Silicon pricing </li></ul>Negatives Positives <ul><li>Massive capacity, new facilities </li></ul><ul><li>Silicon pricing </li></ul><ul><li>“ Undervalued” stock </li></ul>Short: Buy @ < $10 Long: Buy & Hold < $15 <ul><li>Pre-401 Summary </li></ul><ul><li>Financial Market Status </li></ul><ul><li>Business Model Analysis </li></ul><ul><li>Capital Structure </li></ul><ul><li>Governance </li></ul><ul><li>Valuation </li></ul><ul><li>Conclusion </li></ul>Disclaimer: I am an optimist. And STP shareholder.
    53. 53. Questions? Thank you

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