Day4 Energy: Solar Isn't Always Hot


Solar stocks have been volatile, but mostly hot throughout 2007. Jefferies Company put out a notably positive note on a number of solar plays last week, including Suntech and Sunpower. But Day4 Energy’s Toronto Stock Exchange debut last Thursday received a somewhat chilly reception from investors.

Day4’s initial public offering of 13.8 million shares on the Toronto Stock Exchange raised C$100 million, pricing at C$7.25 per share (pdf). The company’s shares, trading under the symbol DFE, ended their first day at C$7, and slipped another 5 percent on Friday to close at C$6.66.

According to the company’s prospectus, Day4 hasn’t actually made any money. The company saw its first sales in 2006,w hen it generated C$1.9 million dollars in revenue. Through the first three quarters of 2007, the company had sales of C$14.1 million, and a loss of C$8.1 million.

Investors might be thinking Day4 Energy’s potential is limited because it’s a small player in a market of rapidly expanding companies. The Jefferies note pointed out that Suntech is planning a gigawatt of manufacturing capacity by the end of 2008. Day4 has an order of magnitude less capacity:

We currently have an annual PV module manufacturing capacity of 12MW at our facility in Burnaby, British Columbia. In order to satisfy our existing contractual sales requirements and to address potential additional market demand, we plan to expand our annual PV module manufacturing capacity to 40MW in the second quarter 2008 and to 90MW in the fourth quarter 2008.

And that’s if they hit their targets, which VC Eric Straser reminded me requires a level of flawless execution that isn’t a given.

Without some breakthrough technology for investors to hang their hopes on, Day4 could turn out to be just another public solar company. Co-founder and CEO John MacDonald hopes not, telling Clean Break:

“There was a lot of demand for the stock, even in a bad market, so I guess that’s a positive thing. . . My own philosophy is that this company achieve its objectives. I don’t worry about the stock market too much. I just hope things go well.”

The company’s core technology is a “a better way to connect solar PV cells to solar modules and each other,” which it claims lead to solar panel efficiency of 14 percent with standard polycrystalline cells. The technology can also increase the efficiency of thin-film cells in a panel. That sounds more evolutionary than revolutionary to me, which could make it a valuable acquisition down the line for a bigger solar player.


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