I think this is finally it -- the last of the solar companies to report its second-quarter numbers. I would say last but not least, but Solarfun Power's (NASDAQ:SOLF) results are indeed about the least electrifying of the whole group.
Sequential revenue growth was a tepid 13% compared to doppleganger Canadian Solar's (NASDAQ:CSIQ) 24%. Of course, capacity additions are a lumpy phenomenon, and you can't extrapolate a trend from any single quarter. But combine sales growth softness with a persistent polysilicon pinch and an uptick in spending levels, and you've got a recipe for a pretty uninspiring set of results.
That said, there are several positive points that an angry Mr. Market may be ignoring.
First and foremost, the company has secured 100% of its silicon feedstock needs for 2009. Recent deals include a big 8-year contract with GCL Silicon, a company that's made similar arrangements with everyone from Trina Solar (NYSE:TSL) to Suntech Power (NYSE:STP). That provides some very strong visibility into what ought to be a strong year for the company -- assuming, of course, that new entrants into the polysilicon space actually come through with the goods.
Second, the company's cash management is looking quite strong. On its call, Suntech noted a reduction in days sales outstanding (DSO) to 41 days. Solarfun beats that with a 37 DSO figure. Cash collection can't be emphasized enough in this ramp-up rat race.
This is especially relevant if a company doesn't even have enough cash on hand to fund capital outlays for the balance of the year. Solarfun appears to be in that boat, by stating that "Cash on hand and access to additional commercial debt is viewed as adequate to fund the Company's capital outlays for the remainder of 2008 [emphasis added]."
Solarfun raised money subsequent to quarter's end and is already looking at the debt markets? This solar scene is certainly no cakewalk.
