China Sunergy Co. (CSUN)

Stock of the Day
China Sunergy Co. Ltd. (CSUN)
Friday’s Opening Price: CSUN – $16.15

Sector: Technology
Industry: Semiconductor (Solar)
52-week Price: $4.83 – $19.23

2007 “Stock of the Day” stocks gained an average of 43% (32 total stocks).

010408_csun_wkly.png

China Sunergy (CSUN) is part of a booming solar industry that includes stocks such as the ones listed below; all head lined by FSLR, a stock that is up more than 700% over the past year or so. This industry is said to grow from about $15 billion to more than $69 billion over the next 5-10 years. Growth like that will flow down to the group leaders such as the ones below. FSLR, STP and YGE are currently the leaders. I am actually looking to get my hands on a few shares of Yingli Green Energy Holding (YGE) and will present a case study analysis (stock of the day) next week. The next pullback will be the ideal entry and that looks to be coming over the next several weeks (an entry between $30 and $35 is looking fine). Enough of YGE!

China Sunergy Co., Ltd. and its subsidiaries engage in the design, development, manufacture, and marketing of solar cells in China. The company manufactures solar cells from silicon wafers utilizing crystalline silicon solar cell technology to convert sunlight directly into electricity through a process, known as the photovoltaic effect.

The is my first Chinese stock coverage of the new year, extending a trend that was very successful in 2007 with stocks like BIDU, JASO, EDU, MR, PTR and FSLR. I don’t know if CSUN will follow through but the company looks interesting. However, the more I do this analysis tonight (Thursday night), the more I like YGE.

Recent revenue, net income and future earnings all catch my attention and can play major roles in the driving force of the stock’s future price.

Sister Stocks (Top Rated Industry by IBD):
FSLR – $265.87
STP – $88.22
SOLF – $36.95
YGE – $38.02 (another stock I am looking to add)

Potential Trade Set-up:

Ideal Entry: $12.00 (currently $16.15)
Risk is set at 1.0% of total portfolio or $1,000 of $100k
Stop Loss is 12% or $10.56
Number of Shares: 700
Position Size is $8,400
Risk is $1.44
Target is $27 (based on former peaks and bottoms)
Reward-to-Risk is 9-to-1 with ideal entry, much less with current price

Institutional Analysis:
Held by Institutions: 36
Money Market: 29
Mutual Fund: 6
Other: 1

New Positions: 15
Positions Sold: 16
Shares Held: 4.70 mil
Shares Held Previous Period: 4.83 mil

Shares Bought: 3.4 mil
Shares Sold: 3.5 mil
Value of Shares Bought: $60.8 mil
Value of Shares Sold: $63.2 mil

Top Institutional holders; Shares Held:
Citadel Limited Partnership; 1,511,891
Credit Suisse; 780,922
WRA Investments, LLC; 350,000
F&C Asset Management PLC; 349,800
AXA; 230,000

Key Fundamental Numbers:
Market Cap.: $667.97M
Outstanding Shares: 39.56M
Float: N/A
P/E (TTM): N/A
PEG Ratio: N/A
Price to Sales Ratio: 2.99x
Price to Book Ratio: 3.84x
Total Debt/Total Capital: 41.79%
Quick Ratio: 1.52x
Operating Profit Margin: 5.46%
Net Profit Margin: 3.38%
3-yr Sales Rate: 416%

Earnings:
Yearly (2009): $0.43E
Yearly (2008): ($0.06E)
Yearly (2007): ($0.16E)

Quarterly earnings are expected to go from ($0.14) in Q2 of FY07 to $0.02 by Q4 FY08 with progressive increases each quarter. The company did miss analyst targets for Q3 FY07 but the future still looks brighter.

Revenue (millions):
Yearly (2006): 149,521
Yearly (2005): 13,750

Net Income (millions):
Yearly (2006): 11,814
Yearly (2005): (306)
Yearly (2004): (959)

Next Up: YGE (a much stronger chart in my opinion)
010408_yge_wkly.png

Comments

  1. Hi Chris
    Nice analysis. I am really looking forward to your take on YGE. Please post it soon.
    Thanks for bringing JASO on my radar . Made some money on that one .
    You blog is getting better every day. Keep up the good work.
    Thanks
    Dian

  2. Hey Chris,

    Thanks for the analysis. It is awesome.

    Felix

  3. zenprofit says:

    Chris: I look forward to watching your recs over the next year. It is shaping up to be a very tough one to make money in.

    Keep up the great job.

    Zack

  4. Zack,
    It’s only tough if you view it that way. We’ll see what the year brings. No judgement yet.

  5. Happy New Year Chris,

    Just wanted to see if your stop has been triggered yet for the big stinker BX. I think mine is going to go tomorrow. Just wondering if you were going to liquidate that one if it hasnt already busted. Im still trying to see how you field stocks such as this one.

    Cheers,

    Mike

  6. Mike,
    I am out of the stock due to the stop but I did pick up several Jan09 call options.

  7. Any comments on this article from December 20th last year?

    Thanks

    **************************

    Investor Alert: KGS Continues Investigation Into China Sunergy Co. Ltd. — Encourages Investors to Contact KGS With Information Related to Securities Actions
    PrimeNewswire – December 20, 2007 3:49 PM ET

    Related Quotes
    Symbol Last Chg
    CSUN Trade 13.279 -2.401
    Quotes delayed at least 15 minutes

    Kahn Gauthier Swick, LLC (“KGS”) encourages investors who have information related to the securities action against China Sunergy Co. Ltd. (“China Sunergy” or the “Company”) (Nasdaq:CSUN) now pending in the United States District Court for the Southern District of New York to contact KGS.

    If you have information related to the alleged illegal and improper Initial Public Offering of China Sunergy stock on May 17, 2007, please e-mail or call KGS Managing Partner Lewis Kahn, without obligation or cost to you, toll free 1-866-467-1400, ext. 100, via cell phone after hours at 504-301-7900, or by email at lewis.kahn@kgscounsel.com.

    Because plaintiffs in this action are allowed no discovery until after the court rules on defendants’ filing of a motion to dismiss, information provided by shareholders, investors and/or the general public may be critical in allowing the successful resolution of this action. Moreover, because of the critical importance of this action, we encourage those with information to contact KGS immediately (including those who may have attempted to contact KGS previously).

  8. Hey man,

    CSUN is an interesting choice, specially from you. Even if we don’t look at the loss today, when pretty much all solar sector got hammered, CSUN was under tremendous pressure on Thursday and Friday last week and gave up a lot.
    Personally I have a position in CSUN, I had entered on 12/19 because of the tremendous volume and last Thursday I was thinking that things are not looking good, and then I saw your article. Do you really think CSUN has good fundamentals? I think I read somewhere that it came out with loss last quarter.

  9. Abhi,
    My ideal entry is: $12.00
    “Ideal Entry: $12.00” as noted clearly in the analysis.

  10. Alan B.
    The stock jumped 50% after that article. We’ll see.

    Everyone,
    It’s a trade, not a mate. If it works, it works, if not, sell. The ideal entry is down near $12, exactly where it is headed.

    But as I said, I prefer YGE after I did the CSUN analysis (and that one is not ready yet either).

  11. One last thing on the “light” side:
    The next time I trust a lawyer will be the first so let the courts do their thing and I will follow the chart.

  12. Chris,

    Thanks for the resonse.

    Unfortunately, I trusted a lawyer and got skinned. I won’t need any more education with Lawyers. You are fortunate to learn the lesson without the mass pain.

    Looks like it may be closing in on the buy target today. I appreciate the analysis.

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