Shares of SunEdison, Inc. ( SUNE ) have shown phenomenal growth over the past year.
Some of the recent optimism about the shares may be attributed to SunEdison's expansion in India, where it is developing two solar projects with capacity of 241 kilowatts (kW) and 159 kW in collaboration with central and state government agencies.
SunEdison's growing exposure to the solar energy market is encouraging. SunEdison solidified its position in the solar space with the acquisition of a number of companies such as California-based Solaicx, Huantai Group, a local solar wafer manufacturer and also completed the acquisition of a 50% stake in Silver Ridge Power, LLC (SRP), a subsidiary of The AES Corporation. These acquisitions and strategic partnerships for different solar power projects not only increase SunEdison's total project count but also expand its geographic reach.
Most importantly, SunEdison spun off its semiconductor businesses into a separate entity via an IPO (initial public offering). The divested semiconductor business, SunEdison Semiconductor Ltd., debuted on Nasdaq Global Select Market on May 22, 2014, with the ticker symbol 'SEMI.' The amount generated from the proposed offering, will primarily be used for the development of its solar farms and for general corporate purposes. This strategy should enable SunEdison to reduce its debt level and emerge as a pure-play solar project developer.
SunEdison is also geared for a better 2014. The company expects to sell 290-320 megawatt (MW) solar energy systems in fiscal 2014. Management has increased its annual MW completion target to a compound annual growth rate (CAGR) of more than 95% (FY09-FY14). In the second quarter of 2014, SunEdison completed 218MW and targets completing 1000 to 1150 MW in 2014 (up from the previous target of 900 to 1150 MW). Moreover, the company expects to complete more than 2000 MW in 2016.
Also, recently, Google ( GOOGL ) invested approximately $145 million in SunEdison through equity funding.
It is worth mentioning that SunEdison swung to profit in the second quarter of 2014 on a 36% year-over-year increase in solar project sales.
Nonetheless, the pricing environment and competition from SunPower Corp. ( SPWR ) and First Solar Inc. ( FSLR ) remain headwinds. Additionally, project development requires considerable time and investments. Hence, any delay or inability to sell these projects at desired prices could impact liquidity.
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