SunEdison looks to build on its polysilicon expertise with a giant 30000 ton plant in China

SunEdison (SUNE) has been one of the best performing solar companies in the recent past, as the management has successfully transformed the company into one of the world’s biggest solar developers and solar power plant developers. The company has been the first one off the blocks into sponsoring a yieldco which has caught the investor’s fancy and crossed the $2 billion market cap mark. The company has also hived off its semiconductor wafer division into a separate company which has helped unlock investor value. This division has been a drag on SunEdison due to a perennial glut in the market and has not really grown at the pace the management wanted. With new focus on the company by a new CEO and his top management team, this company should probably do better.

SunEdison is not using its polysilicon manufacturing technology to build new plants in Asia. SunEdison will use its patented FBR technology to build a giant plant in China with a Chinese partner. The investment will top $2 billion as SunEdison looks really up to its game in the solar market. SunEdison has adopted a partner strategy to expand in all parts of the solar supply chain whether it is modules, cells or polysilicon. SunEdison recently signed a deal with a Saudi Arabian state owned investment firm to build an integrated silicon based solar manufacturing plant in the kingdom. The technology will be provided by SunEdison, while the capital will be provided by the Saudis.

SunEdison has not really gone down too much, despite other solar shares taking a huge hit during this oil price decline. Even the US solar stocks such has SolarCity (SCTY), First Solar (FSLR) and SunPower (SPWR) have decreased sharply from their peaks as energy stocks have fallen sharply. SunEdison has not gone down much and once the solar sector recovers, I expect it to make new all-time highs.

SunEdison is one of the best stocks to play the long term secular growth in the solar market. The company is present in all parts of the supply chain and has developed strong expertise in the EPC and solar development part. The company is technology and component agnostic. It is also following an asset light model. The company has developed a business model which is a good template for other solar companies to copy.