Shares in Norwegian solar power firm Renewable Energy Corp (REC) (REC.OL:
Quote, Profile, Research) soared on their debut on Tuesday, giving one of the
world's leaders in exploiting the sun as an alternative to oil a value of $9.3
billion.
Buoyed by prospects for stellar growth, REC shares traded at 115.75 Norwegian
crowns ($18.79) per share by 1153 GMT, up 22 percent from an initial public
offering (IPO) at 95 crowns which was already at the top of an indicated range.
REC said the offering, Norway's largest since oil group Statoil (STL.OL: Quote,
Profile, Research) was listed in 2001 and among the top 10 IPOs in the world so
far this year by raising $1.08 billion, was 15 times oversubscribed.
"We've seen very great interest for REC, as for the entire solar energy
business," chief Executive Erik Thorsen told a presentation at the Oslo bourse,
beside two REC solar panels.
Founded in 1996 and with 1,100 staff, REC calls itself the world's biggest
integrated solar power group. It says it is the biggest maker of solar-grade
silicon and of multi-crystalline wafers, and among the top 20 makers of solar
cells and modules.
Thorsen said other wafer and panel makers were hindered by a lack of access to
solar-grade silicon. "We are not dependent on other suppliers to generate
growth," he said.
Rivals include SolarWorld (SWVG.DE: Quote, Profile, Research), Q-Cells (QCEG.DE:
Quote, Profile, Research), Suntech (STP.N: Quote, Profile, Research), Sunpower (SPWR.O:
Quote, Profile, Research) and ErSol (ES6G.DE: Quote, Profile, Research).
Among specialist silicon producers are Hemlock, Wacker Chemie (WCHG.DE: Quote,
Profile, Research), with a market capitalization of $6.3 billion, and MEMC
Electronic Materials (WFR.N: Quote, Profile, Research), worth $10.2 billion.
"The position of REC is probably the best in the industry with its upstream
integration," said Ottar Haugerud, an analyst at SEB Enskilda. "Others will
follow but for the next three to five years, REC is probably uniquely placed."
GROWTH OUTLOOK "FORMIDABLE"
"The solar market offers formidable growth prospects," Thorsen said, projecting
that solar energy could be the main source of power by 2100, eclipsing fossil
fuels and other renewable energies such as wind or hydropower.
He said REC was aiming to outstrip growth in the overall solar market and cut
costs by 50 percent over five years. Solar stocks have been popular with oil
prices above $70 a barrel.
President George W. Bush has spoken of breaking a U.S. addiction to oil and many
other rich nations are seeking to cut use of fossil fuels to reach goals under
the UN's Kyoto Protocol to restrict emissions of heat-trapping gases.
In 2005, REC had revenues of 2.5 billion Norwegian crowns, up 93 percent from
2004, and net profit of 3.9 million crowns.
Norway's DnB NOR Markets recently projected REC's net profit would soar to 1.12
billion crowns in 2007, giving a price/earnings ratio of 47 -- far above an
average 13.7 for big companies on the Oslo bourse.
"REC'S received a strong reception," said Bruce Diesen, a strategist at
Handelsbanken Markets. REC is the sixth biggest stock on the Oslo bourse, behind
food-to media group Orkla (ORK.OL: Quote, Profile, Research) and ahead of cruise
group Royal Caribbean (RCL.OL: Quote, Profile, Research).
Thorsen said that solar power was becoming competitive with other energy in
Japan, where electricity is expensive, but lagging in major markets such as
Germany and the United States. "We believe it will be competitive in five to six
years," he said.
REC is based in sun-starved Norway partly because the Nordic nation has long
traditions in producing metals -- including silicon -- thanks to abundant
hydropower built a century ago.
REC sold 73 million new shares in the IPO, giving gross proceeds to REC of 6.91
billion crowns. In addition, 1.6 million existing shares were sold by
shareholder Rebelijo Invest AS. REC has 494 million shares outstanding.