Canaccord and Versant Partners on Arise news

This note comes from Canaccord Capital’s Morning Coffee regarding the flurry of activity at ARISE Technologies (APV:TSX). All I can say is that a $260 million market cap predicated upon future production promises (and no current PV revenue) is a remarkable feat; hats off to the riches earned to date by the founders and early, patient, Waterloo-area CPC supporters:

“ARISE Technologies* (APV : TSX : $2.57), Net Change: -0.05, % Change: -1.91%, Volume: 5,703,197

Comparing 5N+ to 7N+ high-purity; is that comparing 7 to 8 minute abs? ARISE announced that it is increasing its 2012 production target for PV Cell production by 56% at its new plant in Bischofswerda, Germany to 560MW. The company also announced that it plans to establish in Canada in 2011 a high-purity silicon plant that will ramp up to an output rate of 10,000-tonnes per year. ARISE’s new PV cell plant in Germany is on schedule to start manufacturing later this month and initially will use off-the-shelf technology on its Line 1 to produce 35MW of PV cells with an efficiency of more than 15%. ARISE expects that Line 2 will be in production in the 2009 first quarter, increasing the plant’s capacity to 80MW annually. The company now
plans to install 10 additional production lines through 2012 and is targeting an annual capacity of 560MW with a step-by-step progression to more than 20 percent cell efficiency. The company previously had planned to have a total of eight production lines by 2012 with output capacity of 360MW. ARISE also announced that it expects to proceed with establishing in 2011 a new silicon production plant in Canada that will ramp up to a capacity of 10,000 tonnes per year. The company’s process uses a proprietary method to produce 7N+ high-purity (99.99999% purity level) silicon – by comparison Timminco (TIM) is at 5N, aiming to get to 6N – for PV applications using a simplified chemical vapor deposition process. Timminco’s market cap is now more than $2.6 billion, while lesser known ARISE has a market cap of roughly $260 million.”

And this from Versant Partners. Huge bump to the share price target. “Game on”, as Shawn would say:

“EVENT

Yesterday, Arise announced a 56% expansion of its German PV production plant to 560MW by 2012, as well as the set up of a 10,000 ton polysilicon producing plant in Canada in 2011.

BOTTOM LINE

We are upgrading our target price to $4.65 (from $2.85) based on a weighted average of our DCF model with 13.3% WACC and comparables.

FOCUS POINTS

Plan to establish a solar polysilicon plant in 2011 with 10,000 ton annual capacity.

Plan to expand the capacity of Waterloo silicon pilot plant to 400 tons in 2010.

Increase PV cell production capacity by 56% to 560 MW by 2012.

First PV cell production line on schedule to start later in April

Second line to be in production in Q1/F09, increasing plant capacity to 80 MW.

Despite considerable discounting of management’s guidance, Arise is an undervalued stock at current levels thereby creating a great opportunity for investors looking for exposure to the solar PV space.”

MRM