LOS ANGELES - The shares of Chinese solar power companies JA Solar Holdings Co Ltd and Solarfun Power Holdings Co Ltd rose as much as 13 percent on Wednesday after an analyst raised price estimates for the companies.
Results for the companies and other Chinese solar players, such as Suntech Power Holdings Co Ltd, Canadian Solar Inc and Yingli Green Energy Holding Co Ltd will likely prove stronger than seasonal, Oppenheimer and Co analyst Sam Dubinsky wrote in a note to clients on Wednesday.
Demand for solar power products has rebounded after a difficult 2009, when the global credit crisis dried up available financing for new projects and panel prices plummeted.
Chinese players in particular have seized on rising demand, turning their low cost structures into sales, and several plan to boost production capacity in 2010.
Dubinsky noted that in Germany, the world's top solar market, installers are rushing to build systems because of anticipated government cuts to solar aid later this year.
That rush is expected to pull in demand, bolstering shipments of solar panels and parts and creating expectations that many solar players will report bright financial results for the fourth quarter of 2009 and first quarter of 2010.
The shares of JA Solar, one of the solar power sector's lowest cost producers of the silicon cells that help convert sunlight into electricity, hit a new 12-month high of $6.95 on Wednesday on the Nasdaq. Its shares closed at $6.80 each, up more than 7 percent.
The shares of Solarfun, which also makes photovoltaic solar cells, closed up 13 percent at $9.99 each on the Nasdaq.
The jump in share prices mirrored brisk movement in the options markets, where some speculated there would be a further run-up in the solar sector.
Activity in JA Solar and Solarfun was heavy as calls far outpaced puts, according to options analytics firm Trade Alert.
A total of 9,986 call options changed hands in JA Solar, more than three times its average daily turnover compared to 1,099 puts traded.
Traders exchanged about 27,000 contracts in Solarfun, 11 times its average daily turnover, with 23,000 calls and 3,359 puts traded.
Investors often turn to equity call options, which give them the right to buy the stock at a fixed price within a specified period, to speculate on share price appreciation. A put option conveys the right to sell the stock at a given price and time.
(Reporting by Laura Isensee in Los Angeles and Doris Frankel in Chicago)