Markets

28 renewable energy focus March/April 2008

Stocks plunge amid sell-off TOM GREENWOOD OF NEW ENERGY FINANCE TAKES THE

REINS OF THE “MARKETS” COLUMN, AND ANALYSES THE

MIXED FORTUNES EXPERIENCED BY THE NEX IN DECEMBER

AND JANUARY.

The months of December and January were turbulent times for world stock

markets with all the major indices losing signifi cant value during January.

The NEX was no diff erent. After a strong December which actually saw the

index gain around 8%, an improvement over the previous two months,

January saw the NEX fall 28% in the fi rst four weeks before recovering to

around 85% of its 1 December value.

The NEX lost value during the sell-off faster than the S&P 500, Nasdaq, or

Amex Oil indices, refl ecting the volatility associated with a clean energy

sector that has a high proportion of young, high technology companies.

In contrast to the previous two months in which Solar had led the way

with big gains, power storage and energy effi ciency companies proved

most capable of surviving the crises in investor confi dence that dominated

the start of 2008. Out of the 18 stocks on the NEX that fi nished the period

in positive territory six fell into those two categories while biofuels and

biomass companies were also well represented.

The remainder of the index suff ered signifi cant loses with many stocks

falling by around 25%-30%. Solar stocks lost around 28% on average,

possibly a refl ection on the aggressive valuations investors had put on some

companies in the sector.

Top performer for the period was Ultralife Batteries, which manufactures

long-life lithium ion batteries, with a rise of 39%. The company reported

new orders worth over US$150m during December and January, and

realises most of its revenue from the economically resilient military and

defence markets.

The second top performer was LDK Solar, an anomaly within its sector.

The company had a stellar month in December on the back of news

that it signed a huge 10 year silicon supply deal, and relief that previous

inventory accounting allegations appeared to be subsiding. LDK gained

78% in the last month of 2007 before falling in line with other solar

stocks during January, to finish up 37% overall.

Worst hit was Power-One which lost around 65% of its value in 2007 and

had a 49% fall in December and January. The company manufactures

energy conversion systems for the infrastructure markets and has been

losing money steadily since the end of 2006. While the company had

no bad news during December or January the fall could reflect investor

worries over its exposure to rising commodity prices.

Vertically integrated solar company Renewable Energy Corporation

was the second worst performer with a 48% drop over the period. The

company announced ambitious expansion plans in mid-January that

would require a doubling of spending.

CEO Erik Thorsen appeared to be aware that the share price was plunging

as he came to the end of a four and half hour announcement; he berated

analysts, saying: “if any of you thought that this would be done with no

cost, shame on you”.

Other solar companies to be hit hard were Sun Power, Q-Cells, Suntech

and Conergy. Some analysts have welcomed the downgrading of

valuations within the sector although typical p/e ratios of 100 still look

ambitious compared to the S&P 500 average of 14.5. Energy efficiency

companies such as Zhejiang Yankon Group, Capstone Turbine, Cree and

Itron saw gains of up to 22%, an indication that analysts continue to like

the business models of these companies, amid high energy prices and

increasing political backing for the sector.

Tom Greenwood

About the author:Tom Greenwood is business reporter for New Energy Finance, the leading international analysis company covering investment in clean energy.

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Markets

renewable energy focus March/April 2008 29

NEX Output: to 31 January 2008 (best and worst 20 performing companies)

No. Name Country Primary Sector Exchange Ticker Local Currency

Market Cap USD

Dec-07 Jan-07 2 Months Performance

72 Ultralife Batteries Inc. US Power Storage NASDAQ NMS ULBI USD 258 62.11% -14.5% 38.6%

43 LDK Solar Co. Ltd. ADS China Renewable - Solar NYSE LDK USD 3684 79.51% -25.0% 34.6%

20 Cosan S/A Industria e Comercio

Brazil Renewables - Biofuels & Biomass

Sao Paulo CSAN3 BRL 2946 -2.35% 32.2% 29.1%

80 Zhejiang Yankon Group Co. Ltd.

China Energy Effi ciency Shanghai 600261n CNY 506 18.67% 5.3% 24.9%

15 Capstone Turbine Corp. US Energy Effi ciency NASDAQ NMS CPST USD 216 33.88% -8.6% 22.4%

5 Anhui BBCA Biochemical Co. Ltd. A

China Renewables - Biofuels & Biomass

Shenzhen 930 CNY 1083 19.70% 1.4% 21.4%

21 Cree Inc. US Energy Effi ciency NASDAQ NMS CREE USD 2512 11.22% 7.6% 19.6%

41 Japan Wind Development Co. Ltd.

Japan Renewable - Wind Tokyo 2766 JPY 259 5.58% 11.8% 18.0%

3 Actelios S.p.A. Italy Renewables - Biofuels & Biomass

Milan ACT EUR 658 12.62% 1.1% 13.8%

44 Maxwell Technologies Inc. US Power Storage NASDAQ NMS MXWL USD 163 9.54% 3.9% 13.8%

77 Verenium Corp. US Renewables - Biofuels & Biomass

NASDAQ NMS VRNM USD 258 37.67% -17.8% 13.1%

57 REpower Systems AG Germany Renewable - Wind XETRA RPW EUR 1826 -0.21% 9.6% 9.4%

39 Itron Inc. US Energy Effi ciency NASDAQ NMS ITRI USD 2472 26.72% -14.1% 8.8%

10 Ballard Power Systems Inc. Canada Hydrogen & Fuel Cells Toronto BLD CAD 522 22.20% -12.3% 7.2%

7 Aventine Renewable Energy Holdings Inc.

US Renewables - Biofuels & Biomass

NYSE AVR USD 402 36.50% -25.1% 2.3%

11 BKW FMB Energie AG Switzerland Renewable - Other SWX BKWN CHF 6642 8.35% -5.6% 2.3%

78 Vestas Wind Systems A/S Denmark Renewable - Wind Copenhagen VWS DKK 17525 16.83% -13.6% 1.0%

63 Sharp Corp. Japan Renewable - Solar Tokyo 6753 JPY 19205 9.78% -8.5% 0.4%

33 FuelCell Energy Inc. US Hydrogen & Fuel Cells NASDAQ NMS FCEL USD 572 16.74% -15.2% -1.0%

76 Verbund AG Austria Renewable - Other Vienna VER EUR 9859 6.61% -7.9% -1.8%

79 Yingli Green Energy Holding Co. Ltd. ADS

China Renewable - Solar NYSE YGE USD 2582 37.75% -47.5% -27.6%

64 Solar Millennium AG Germany Renewable - Solar XETRA S2M EUR 439 -16.81% -13.7% -28.2%

6 Arima Optoelectronics Corp.

Taiwan Energy Effi ciency Taiwan 6289 TWD 154 -7.62% -23.5% -29.4%

28 EnviTec Biogas AG Germany Renewables - Biofuels & Biomass

XETRA ETG EUR 329 23.94% -43.0% -29.4%

18 Conergy AG Germany Renewable - Solar XETRA CGY EUR 887 -2.72% -27.4% -29.4%

52 Plug Power Inc. US Hydrogen & Fuel Cells NASDAQ NMS PLUG USD 240 0.00% -30.6% -30.6%

61 Schmack Biogas AG Germany Renewables - Biofuels & Biomass

XETRA SB1 EUR 142 0.32% -31.1% -30.9%

60 Sanyo Electric Co. Ltd. Japan Power Storage Tokyo 6764 JPY 2499 -25.24% -7.8% -31.1%

75 VERBIO Vereinigte BioEnergie AG

Germany Renewables - Biofuels & Biomass

XETRA VBK EUR 221 0.58% -31.9% -31.5%

69 Suntech Power Holdings Co. Ltd. ADS

China Renewable - Solar NYSE STP USD 8210 2.24% -33.5% -32.0%

13 BYD Co. Ltd. Hong Kong Power Storage Hong Kong 1211 HKD 825 -18.82% -16.7% -32.3%

49 Novozymes A/S Series B Denmark Renewables - Biofuels & Biomass

Copenhagen NZYM’B DKK 4129 2.11% -33.8% -32.5%

42 Kingspan Group PLC Ireland Energy Effi ciency Dublin KSP EUR 2346 -25.07% -10.0% -32.5%

55 Q-Cells AG Germany Renewable - Solar XETRA QCE EUR 7247 5.05% -36.5% -33.3%

17 Comverge Inc. US Energy Effi ciency NASDAQ NMS COMV USD 363 6.56% -40.8% -36.9%

70 Takuma Co. Ltd. Japan Renewables - Biofuels & Biomass

Tokyo 6013 JPY 246 -5.44% -34.3% -37.9%

12 Brasil Ecodiesel Industria e Comercio de Bioc

Brazil Renewables - Biofuels & Biomass

Sao Paulo ECOD3 BRL 291 1.92% -40.9% -39.8%

68 SunPower Corp. US Renewable - Solar NASDAQ NMS SPWR USD 2695 5.31% -47.0% -44.2%

56 Renewable Energy Corp. ASA

Norway Renewable - Solar Oslo REC NKK 12394 5.75% -50.5% -47.7%

54 Power-One Inc. US Energy Effi ciency NASDAQ NMS PWER USD 199 -11.09% -42.6% -49.0%

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