Brokers' Views: Hanson WestHouse

Natural resources and cleantech specialist broking house Hanson Westhouse has initiated independent coverage of China-based solar cells and modules maker Jetion Solar Holdings with a buy stance and 101p price target. With the shares, issued on AIM in 2007 at 151p, now trading at 60.5p, analyst Barney Gray sees potential upside aplenty.
He notes that the robustness of its business model enabled Jetion to maintain margins in the first half to June in the face of  ‘unprecedented turmoil’ in the solar industry. Though destocking and the decimation of prices led to a  51 per cent fall in revenues, output increased 40 per cent and the company generated a $2.4 million profit, despite large one-off write-downs.

Capacity increase
Moreover, a recent strong recovery in orders and plans to increase cell and module production capacity should ‘drive continued output and profit growth over 2010 and 2011’. For 2009, Gray forecasts a near halving of sales and profits to $130.3 million and $12.1 million respectively, ahead of recovery  in 2010.

Meanwhile, his colleagues concur with the board of wind-power specialist Novera Energy that the recent mandatory cash offer at 62.5p from Infinis Energy, significantly undervalues the business.

Although a repeat of 2008’s 90p bid is ‘unlikely’, the broker believes its valuation of 86p per share ‘represents fairer value’.