Just like last quarter, Solarfun Power
Back in December, the company wrote down the value of its inventories by $12.9 million. This quarter's charge was a much heftier $47.8 million. Inventory write-offs were prevalent among Solarfun's peers in the period, but this charge was still roughly twice as big as the one taken by comparably sized Canadian Solar
Why am I concerned? Most of these inventory charges are a mark-to-market phenomenon, as the prices of polysilicon, solar cells, and solar modules have all taken a nosedive. Last quarter, Solarfun identified "some low-quality materials determined to be unusable" as a component of its write-off. On today's conference call, management conceded that the split was more like 50/50 between mark-to-market and "a B-grade unsalable product in this environment."
Lower-quality solar products had their place when supply was constrained, but the landscape has changed. Solarfun will need to bring its A-grade solar goods from here on out if it wants to keep the lights on.
Like China Sunergy
Given the macro environment, I'd be looking elsewhere for a solar investment that's considerably more liquid.