Hapoalim Securities Raises Estimates On Yingli Green Energy Holdings

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Hapoalim Securities is updating its forecasts for Yingli Green's
YGE
pricing/demand trends to date, it is raising its 2010 and 2011 estimates. Nevertheless, despite assuming higher capacity and sell‐out, lower poly costs, and a higher 2010 ASP base, it remains below consensus, which it believes underestimates ASP pressures and margin compression next year. More broadly, it has reservations about YGE's capital investment strategy; not only does free cash flow remain a distant prospect for YGE but estimate fully integrating polysilicon capacity would cost ~$1b despite a low IRR. Though its price target goes from $8 to $9 on the higher estimates, Hapoalim maintains a Sell rating on YGE. Following higher 2H10 ASPs and a stronger Euro, Hapoalim raise its 2010 EPS estimate from $0.72 to $1.06 and our 2011 EPS estimate from $0.55 to $1.19 based on assumptions for a 100% sell‐out, ASP declines of 25% y/y to $1.30 by 4Q11, avg. blended poly costs of $0.33/W in 2011, and non‐poly costs dropping to $0.66/W by 4Q11. YGE is trading higher at $11.23
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