Bookkeeping: Restarting Yingli Green Energy (YGE)

Still not a huge fan of the solar space but I am going to restart one position in the sector - Yingli Green Energy (YGE) has been one of the better operators in the space, and has one of the better combination of size and scale in the Chinese solar space. There are more speculative names that might return more, but this whole group moves together... unfortunately traders treat this like group like a derivative to oil but that's the nature of the beast nowadays.

Yingli has had a huge run, and recently topped out at $16 before pulling back to the $12s; it priced a share offering today at $13 and has held that level which is a good sign. It also had some positive things to say about the sector earlier in the week. This is another "flip a coin" sector as all the names tend to move together - I was also considering ReneSola (SOL) which also had a good chart... a few others have decent charts but Yingli is a clean play here as it sits right at its 20 day moving average with no gaps in its chart. And one of the better fundamental stories in the space - but I am buying more on chart than fundamentals nowadays. It's been almost a year since we last held this name [Aug 6, 2008: Closing Yingli Green Energy] - we sold in the mid $16s then.

I started a 3.2% stake at just over $13.00. This is a speculative play and if the market breaks down this will swoon... fast. I will set my stop below today's low of $12.49, so $12.45 since there is a huge amount of "air" between support levels here.

Here is what they had to say earlier this week

• Chinese solar panel maker Yingli Green Energy Holding Co Ltd (YGE) on Monday said it has seen a substantial increase in demand since the beginning of the yea.
  
• In a statement, Yingli forecast shipments would be up 70 percent in the second quarter from the previous period, citing progress in government solar incentives in the United States and China, improved weather conditions in Europe and "a visible change of industry sentiment" since the Intersolar trade show in Germany last month.
• The solar industry has been hit hard since the end of last year by a lack of available financing for big projects and an oversupply of solar panels that has sent prices into a freefall.
• Yingli, which is based in Baoding, China, said better market conditions combined with lower polysilicon prices gave the company confidence it could meet its second-quarter gross margin target of 18 percent to 20 percent. (we used to aim for near 30% 12-18 months ago, but the bar is much lower nowadays)
  
• In recent weeks, however, solar players including U.S.-based SunPower Corp(SPWRA) and top Chinese panel maker Suntech Power Holdings Co Ltd (STP) have said they see encouraging signs of a recovery in the solar market.

They had 128M shares (ADS) going into the offering so 18.6M is meaningful but not a game changer. 3 of the 18.6M were from a shareholder however.

• Yingli Green Energy intends to use the net proceeds from the offering, after deducting underwriting discounts and offering expenses, to repay certain existing indebtedness, including repayment of approximately US$50.0 million in a loan facility provided to its subsidiary, Yingli Energy (China) Co., Ltd., by Asia Debt Management Hong Kong Limited, and for general corporate purposes.

Long Yingli Green Energy in fund and personal account