US solar tax credit to help Wacker – Citigroup

07 October 2008 19:01  [Source: ICIS news]

TORONTO (ICIS news)--US legislation extending solar-investment credits is bound to help German chemicals producer Wacker Chemie after its shares plunged sharply in the wake of the global credit and financial crisis, Citigroup said on Tuesday.

 

The analysts confirmed their target price for Wacker’s shares at €220 ($297). This compares with Wacker’s price of €83.45 in Tuesday trading in Frankfurt.

 

While the stock rebounded 4.4% from Monday, it was down 26% in the past three months and 46% in the past year.

 

Citigroup said the US legislation, which was attached to Congress’ larger financial bailout package last week, extended a 30% tax credit for eight years and broadened the benefits

 

The measure would accelerate growth in the photovoltaic industry, thus benefiting Wacker’s polysilicon business and its growing mono-crystalline silicon ingot sales, the bank said.

 

“With legislation in the main markets now in place, we see a healthy demand environment developing over the next years.”

 

Citigroup expected the overall solar market to grow from around four gigawatts (GW) in 2008 to six GW in 2009, with the US, Germany and Italy as the main growth drivers in the short and medium term.

 

On the supply side, polysilicon tightness would be a key constraint on growth, the analysts said.

 

Citgroup described the Munich-based chemicals major as primarily a silicon chemistry company - nearly 80% of its sales were based on conversion of silicon into various end products, it said.

 

($1 = €0.73)

 

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By: Stefan Baumgarten
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