Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Equity Bottom-Up

Last month three of Taiwan's photovoltaic cell (PV cell) manufacturers -- <a href="https://www.smartkarma.com/entities/19988" target="_blank" data-smartkarma-citation="entities:19988:1">Gintech Energy Corp (3514 TT)</a>, <a href="https://www.smartkarma.com/entities/7267" target="_blank" data-smartkarma-citation="entities:7267:1">Neo Solar Power Corp (3576 TT)</a>, and <a href="https://www.smartkarma.com/entities/7714" target="_blank" data-smartkarma-citation="entities:7714:1">Solartech Energy Corp (3561 TT)</a> -- announced their intention to merge. Should the merger be completed on schedule by Q318, it should create a more competitive Taiwanese PV cell manufacturer that is much better positioned to take on larger rivals in Mainland China than any of the Taiwanese names are on their own. But can it create a true industry leader with superior levels of profitability?In this note we provide an overview of the proposed merger, a review of why it's necessary, and then an evaluation of the merger's odds of creating a globally competitive player. We also offer a brief update on the cycle as it's affecting the Taiwanese PV cell makers, plus the potential impacts of the proposed merger on Taiwanese competitors (and local raw materials suppliers). Even though the merged company may not ultimately match the competitiveness of its Chinese rivals, we believe the companies involved in the proposed merger -- whose combined market capitalization is about US$1 bn -- could warrant a re-rating on anticipated scale benefits and a near-term improvement in sector profitability. Meanwhile, rival PV cell makers in Taiwan and certain raw materials vendors could come under pressure from the creation of a larger, more competitive player on the island.

Last month three of Taiwan's photovoltaic cell (PV cell) manufacturers -- Gintech Energy Corp (3514 TT), Neo Solar Power Corp (3576 TT), and Solartech Energy Corp (3561 TT) -- announced their intention to merge. Should the merger be completed on schedule by Q318, it should create a more competitive Taiwanese PV cell manufacturer that is much better positioned to take on larger rivals in Mainland China than any of the Taiwanese names are on their own. But can it create a true industry leader with superior levels of profitability?In this note we provide an overview of the proposed merger, a review of why it's necessary, and then an evaluation of the merger's odds of creating a globally competitive player. We also offer a brief update on the cycle as it's affecting the Taiwanese PV cell makers, plus the potential impacts of the proposed merger on Taiwanese competitors (and local raw materials suppliers). Even though the merged company may not ultimately match the competitiveness of its Chinese rivals, we believe the companies involved in the proposed merger -- whose combined market capitalization is about US$1 bn -- could warrant a re-rating on anticipated scale benefits and a near-term improvement in sector profitability. Meanwhile, rival PV cell makers in Taiwan and certain raw materials vendors could come under pressure from the creation of a larger, more competitive player on the island.

Taiwan Solar Industry: 3-Way Merger Will Create a US$1 Bn Survivor -- But Will It Create a Winner?

<a href="https://www.smartkarma.com/entities/4507" target="_blank" data-smartkarma-citation="entities:4507:1">Gigasolar Materials Corp</a> (GSM) sales in June recovered to NT$1.47 bn, up 8% versus May and close to April's NT$1.5 bn. The May dip and subsequent recovery in June are both related to a January 2016 industrial accident at metal powder supplier <a href="https://www.smartkarma.com/entities/14050" target="_blank" data-smartkarma-citation="entities:14050:1">Dowa Holdings Co Ltd</a> which interrupted raw materials supplies in Q2. With Dowa's production largely back to pre-accident levels, we don't expect raw materials supply to be a problem for GSM going forward, and we remain positive on the company's medium-term…

Gigasolar Materials Corp (GSM) sales in June recovered to NT$1.47 bn, up 8% versus May and close to April's NT$1.5 bn. The May dip and subsequent recovery in June are both related to a January 2016 industrial accident at metal powder supplier Dowa Holdings Co Ltd which interrupted raw materials supplies in Q2. With Dowa's production largely back to pre-accident levels, we don't expect raw materials supply to be a problem for GSM going forward, and we remain positive on the company's medium-term…

Giga Solar June Sales Recover, as Expected; Customers' June Sales Dip

Taiwan

E-Ton Solar Tech Co., Ltd. develops and manufactures single and multi-crystalline solar cells.

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E Ton Solar Tech (3452 TT)

Taiwan Solar Industry: 3-Way Merger Will Create a US$1 Bn Survivor -- But Will It Create a Winner?

Last month three of Taiwan's photovoltaic cell (PV cell) manufacturers -- Gintech Energy Corp (3514 TT), Neo Solar Power Corp (3576 TT), and...

Daniel Hellberg

Giga Solar June Sales Recover, as Expected; Customers' June Sales Dip

Gigasolar Materials Corp (GSM) sales in June recovered to NT$1.47 bn, up 8% versus May and close to April's NT$1.5 bn. The May dip and subsequent...

Daniel Hellberg

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