Post on 15-Jan-2016
Clean TechnologyNorth American Wind & Solar Industries
Sung Ha ChungSiming LiStefanie WongWeiting Chen
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Agenda
Overview Revolution of Clean Tech Energy Generation Segment Wind & Solar Energy
Companies First Solar Inc. Canadian Solar Inc.
ETF Global Wind Energy Index Fund
Clean TechIndustries Overview
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Revolution of Clean Tech
In the 1970s, clean tech was considered “alternative” Environmentalism and lifestyle advocates Too expensive & lack of political support
“Clean technologies are designed to provide superior performance at a lower cost while creating significantly less waste than conventional offering – promises to be the next engine of economic growth.” – Ron Pernick
Source: The Clean Tech Revolution by Ron Pernick
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Revolution of Clean Tech
Six reasons why it is prevalent today Costs Capital Competition Consumers, Climate China
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Key Industry Segments
1. Energy Generation wind, solar, geothermal, etc.
2. Energy Storage Fuel Cells, Advanced Batteries
3. Energy Infrastructure
4. Energy Efficiency
5. Transportation
Source: Cleantech Group
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Industry Segments
6. Water & Wastewater
7. Air & Environment
8. Materials
9. Manufacturing/Industrial
10. Agriculture
11. Recycling & Waste
Source: Cleantech Group
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Energy GenerationOverview
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Energy Generation
Wind
Solar
Hydro/Marine
Biomass
Geothermal
Other
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US Energy Production and Consumption 2009
Source: US DOE
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US Energy by Energy Source 2000-2009
Production Consumption
Source: US DOE
12
Cost of Renewable Energy by Technology 2009
Source: US DOE
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Cost of Conventional Energy
Source: First Solar Inc.
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US Capacity & Generation 2009
Source: US DOE
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US Capacity & Generation 2009 (excluding hydropower)
Source: US DOE
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US Capacity & Generation 2009by Source
Source: US DOE
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Top States for Renewable Electricity Installed Nameplate Capacity 2009
Source: US DOE
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Top States Renewable Electricity Installed Nameplate Capacity 2009
Source: US DOE
19
Renewable Electricity Capacity Worldwide
Source: US DOE
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Worldwide Renewable Electricity Generation Capacity
Source: US DOE
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Top Countries with Installed Renewable Electricity
Source: US DOE
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Top Countries with Installed Renewable Electricity by Technology 2009
Source: US DOE
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Industry Development
Global renewable electricity installations have more than tripled from 2000-2009
Renewable energy accounts for 21% of global electricity generation (including hydropower); 3.8% excluding hydropower
Wind and solar PV fastest growing; capacity grew 14x between 2000-2009
In 2009, Germany led the world in cumulative solar PV installed capacity. The US leads in wind, geothermal, biofuels, and CSP
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Government Energy Subsidies
Industry reliant on government subsidies
Subsidies takes 4 main forms: Direct Expenditures Tax Expenditures Research and Development Targeted Programs & Indirect support(i.e.: Loans
Guarantees programs by US Department of Agriculture)
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Feed-in Tariff
Industry benefited from introduction of feed-in tariff (FiT) a policy mechanism designed to encourage the adoption of
renewable energy As a government mandate, utility companies pay the
homeowners, business and organizations to generate their own electricity
First implemented in US in 1978 by president Jimmy Carter As a reaction to 1970’s energy crisis As of 2009, FiT enacted in 63 jurisdictions around the world
Denmark, Spain, and Germany
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Government Energy Subsidies in 2007
Source: US EIA
Wind EnergyIndustry Overview
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Wind Energy Technology
Two modern wind turbines Vertical-axis Horizontal-axis
Vertical-axis wind turbine Horizontal-axis wind turbine
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Wind Farms
Onshore Wind Farm Offshore Wind Farm
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How Do Wind Turbine Works
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Industry Development
US installed wind energy capacity increased almost 14x between 2000 and 2009
US wind experienced record growth in 2009 and nearly 10 GW of new capacity was added
Texas led the United States in wind installations in 2009, installing more than 2,292 MW of wind capacity
In 2009, average price of wind power was about $0.40 per kilowatt hour — a price that competes with fossil fuel-generated electricity
In 2009, China surpassed US as the world leader in annual installed wind capacity, with more than 13.8 GW added.
32
Industry Performance
$13.13 billion in revenues in 2010*
Contracted 0.3% annually since 2005 Recession and competition from other alternative energy
sources
Source: IBIS World*Estimated from 2010 contracts
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Turbine Manufacturers
Source: US DOE
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US Wind Energy Nameplate Capacity and Generation
Source: US DOE
35
US Wind Power Sales Price
Source: US DOE
36
Wind Energy Capacity 2009
Source: US DOE
Solar EnergyIndustry Overview
37
Solar Energy Technology
Solar Thermal Uses energy from the sun to
heat water & buildings or generate electricity
Photovoltaic (PV) Systems Conversion of sunlight directly
into electricity PV solar panels Concentrated Solar Power (CSP)
The solar furnace at Odeillo France
PV CSP
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Industry Development
Solar energy electricity generation has nearly 4x between 2000 and 2009, but still represents a very small part of overall U.S. electricity generation.
Countries with aggressive solar policies—such as Germany, Spain, and Japan— lead the world in solar photovoltaic (PV) deployment.
China is the market leader with nearly 40% of the global PV cell production.
A number of concentrating solar power (CSP) plants came online in 2009, including 12 MW in the United States and 120 MW in Spain.
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Industry Performance
$57.98 billion in revenues in 2010*
Annual growth of 4.7% 2005 Higher levels of electricity generation and higher price
Source: IBIS World*Estimates
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Photovoltaic Manufacturers
Source: US DOE
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US Solar Energy Capacity and Generation
Source: US DOE
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US PV Power Sales Price
Source: US DOE
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Solar Energy Installed Capacity 2009
Source: US DOE
Security Analysis: First Solar Inc.
Stock Performance – 1 Year
Stock Performance – Max
Comparison of 37 Month Cumulative Total Return
Nov-0
6
Feb-
07
May
-07
Aug-
07
Nov-0
7
Feb-
08
May
-08
Aug-
08
Nov-0
8
Feb-
09
May
-09
Aug-
09
Nov-0
90
200
400
600
800
1000
1200
First Solar, Inc.S&P 500NASDAQ Clean Edge Green EnergyPeer Group
Dollar
Source: First Solar Annual Report
Company Snapshot
• Formed in 1999 and launched production of commercial products in 2002
• IPO on Nov17, 2006
• 1st pure-play renewable energy company added to the S&P 500® composite index
• Ranked #7 on Fortune's list of 100 fastest growing companies, and #1 on its list of profit growth for energy companies.
CORPORATE HISTORY
Corporate History
• Glasstech Solar – Founded by inventor/entrepreneur Harold
McMaster in 1984 – Envisioned the opportunity for low cost thin
films made on a large scale– Shifted to CdTe technology and founded Solar
Cells Inc. (SCI) in 1990
• Purchased by True North Partners in 1999 – Investment arm Wal-Mart
• Establishment of First Solar– John T. Walton joined the Board of the new
company– Mike Ahearn of True North became the CEO
First Solar Inc. -- Ownership
18%
3%
First Solar Inc. -- Ownership
Current Position
• World’s largest thin film solar module manufacturer
• 2nd largest Photovoltaic (PV) manufacture
• Approximately 1.2 gigawatt (GW) production capacity operating or announced
• World’s lowest cost solar module manufacturer– $0.93/W, breaking the $1 per watt price
barrier in Q4 of 2008
Source: Modified from Photon International * Based on location of facilities
Current Position
Competitive Cost Environment
Source: First Solar Overview
Acquisitions
July 2010• All-cash transaction valued at $297
million• Solar development firm in North
America• Formed by the inaugural fund of Energy
Capital Partners (Private equity firm)
April 2009• All-stock transaction valued at
$400 million• First Solar issues ~3 million shares
of common stock representing a dilution of about 3.5%
Photovoltaic project pipeline
First Solar Subsidiaries
Subsidiaries Ctry
Ownership (%)
Date of
inform.
Revenue
(mil USD)
No. of Employe
esDirect Total
1. FIRST SOLAR HOLDINGS GMBH DE 100.00
100.00 09/2009 <0,5 n.a.
2. NEXTLIGHT RENEWABLE POWER, LLC
US 100.00
100.00 07/2010 3 30
3. FIRST SOLAR FE HOLDINGS PTE LTD
SG >50.00
n.a. 12/2008 n.a. n.a.
4. FIRST SOLAR GMBH DE - >50.00 12/2008 2,053 94
5. FIRST SOLAR MALAYSIA SDN BHD
MY >50.00
n.a. 12/2008 n.a. n.a.
6. FIRST SOLAR MANUFACTURING GMBH
DE - >50.00 12/2008 433 686
7. FSE BLYTHE I LLC US >50.00
n.a. 12/2008 n.a. n.a.
8. FSE BLYTHE LAND HOLDINGS LLC
US >50.00
n.a. 12/2008 n.a. n.a.
9. FIRST SOLAR ELECTRIC, LLC US MO n.a. 12/2009 <0,5 25Data Source: MintGlobal Database
EXECUTIVE MANAGEMENT
Executive Chairman
Michael J. Ahearn (Age: 53)• Joined First Solar since Aug 2000• Was the Partner and President of JWMA
– Formerly True North Partners– Equity investment firm– Majority stockholder of First Solar
• Practiced law as a partner in the firm of Gallagher & Kennedy prior to joining JWMA
• Served on many boards– Arizona Technology Enterprises– Arizona State University Research Park– Homeward Bound– Arizona Science Museum– German Marshall Fund of the United States (Currently)
• Received both a B.A. in Finance and a J.D. from Arizona State University
Chief Executive Officer
Robert J. Gillette (Age: 50)
• Joined First Solar in October 2009
• President and CEO of Honeywell Aerospace prior to coming to First Solar
• Spent over 10 years at General Electric and served in many senior management positions prior to joining Honeywell
• Received a B.S. in Finance from Indiana University.
President
Bruce John (Age: 48)• Joined First Solar since Feb 2007• Senior executive from Intel Corporation • Engineering graduate of MIT • Guest lecturer at MIT, Stanford and Duke• Published research in many high technology topics
– applying constraint theory to semiconductor process lines
– high-volume factory design– silicon surface defects, oxygen gettering– gate oxide quality, transistor design and statistical
design of experiments
• Currently chairs the US Commerce Department's Manufacturing Council for the Obama administration
Executive Management Team
• Jens Meyerhoff (Age: 45)
– Chief Financial Officer
– Joined First Solar in 2006
– Formerly a CFO from Virage Logic Corp., FormFactor and Siliconix Inc.
– Holds a German Finance & Information Technology degree
• T. K. Kallenbach (Age: 50)
– VP - Marketing and Product Management
– Joined First Solar in 2009
– Formerly a senior executive from Honeywell
– Holds a B.S. in mechanical & aerospace engineering and a MBA from Arizona State University
• Carol Campbell (Age: 58)– VP - Human Resources– Joined First Solar in 2006– Formerly a Regional HR Director at the Dana
Corporation
• James Zhu (Age: 48)– Chief Accounting Officer– Joined First Solar in 2007– Formerly an Assistant Controller, VP, Corporate
Controller for Salesforce.com, Chiron Corporation– Certified Public Accountant, B.A. in Economics &
M.B.A. in Accounting
Executive Management Team
The 2010 All-America Executive Team Leader Board
Rank
Company Sector 1st Place Total
1st Place CEOs
1st Place CFOs
1st Place IR Pros
1st Place IR Cos
1 First Solar Alternative Energy
8 2 2 2 2
2 Staples Retailing/Hardlines 7 1 2 2 2
5 Goldman Sachs Group
Brokers, Asset Managers & Exchanges
6 1 2 1 2
10 Coach Apparel 5 1 1 2 1
10 Intel Corp. Semiconductors 5 2 1 0 2
20 McDonald’s Restaurants 4 2 0 0 2
35 Procter & Gamble Co.
Cosmetics, Household & Personal Care
3 0 1 2 0
50 Exxon Mobil Integrated Oil 2 1 0 0 1
94 Apple IT Hardware 1 0 0 0 1
94 EBay Internet 1 0 0 0 1
Source: http://www.iimagazine.com/Research
Most Honoured Companies Rated by Buy-side Analysts, Portfolio Managers, and Sell Side Analysts
PRODUCTS & SERVICES
Products & Services
• Uses a thin film semiconductor technology to manufacture electricity-producing solar modules.
• Designs, constructs and sells photovoltaic (PV) solar power systems
A CdTe PV Array
Thin Film Semiconductor Technology
• Cadmium Telluride Photovoltaics (CdTe PV)– A semiconductor layer designed to
absorb and convert sunlight into electricity
• First and only thin film PV technology to surpass crystalline silicon PV in cheapness for a significant portion of the PV market, namely in multi-kilowatt systems
Cadmium telluride
First Solar Technology
Source: First Solar Overview
Cross-section of a CdTe Thin Film Solar Cell
Source: First Solar Overview
Two Business Segments
1. Module Manufacturing– Designs, manufactures and
sells solar modules to solar project developers and system integrators
2. System Solutions: provides PV solar power system for commercial systems– Project development,
engineering– Procurement and
construction (EPC)– Operating and maintenance
(O&M) services – Project finance
Representative Projects – PV Modules
Source: First Solar Overview
Announced U.S. Utility Contracts for PV & Solar Thermal
Sales Channel
Established Developers & Integrators
Capacity Growth
Source: First Solar Q3 2010 Earnings Call
Market Overview
Source: First Solar Q3 2010 Earnings Call
Industry Market Demand
Source: First Solar Q3 2010 Earnings Call
Geographical Diversification Strategy
Source: First Solar Q3 2010 Earnings Call
Cost per Watt Trend
Source: First Solar Overview
Risk Factors
1. Migration from Existing Subsidy Markets to Transition Markets is Discontinuous
Source: First Solar Overview
Crossing Over to Sustainable Market
Source: First Solar Overview
2. Limited Number of Customers
MAJOR CUSTOMERS Revenue from 12/26/2009 12/27/2008 12/29/2007 12/30/2006
( th USD)
(%) ( th USD)
(%) ( th USD)
(%) ( th USD) (%)
All customers 2,066,200
100%
1,246,301
100%
503,976
100%
134,974 100%
CUSTOMER 1 0 0% 138,822 11% 74,465 15% 23,023 17%
CUSTOMER 2 0 0% 135,232 11% 51,989 10% 21,568 16%
CUSTOMER 3 264,744 13% 143,857 12% 76,669 15% 25,882 19%
CUSTOMER 4 356,068 17% 231,557 19% 113,664
23% 25,054 19%
CUSTOMER 5 0 0% 149,946 12% 68,492 14% 22,353 17%
CUSTOMER 6 0 0% 0 0% 65,352 13% 0 0%
CUSTOMER 7 261,314 13% 0 0% 0 0% 0 0%
Others 57%
36%
11%
13%
Data Source: MintGlobal Database
3. Government Regulations/Incentives
• Reduction of government subsidies, or other supports adversely impact operating results– German feed-in tariffs will
be adjusted earlier than expected
– California’s RPS goal of 33% of electricity from renewable sources by 2020 has not passed by the CA legislature
– A new feed-in tariff program introduced in Ontario, Canada as a primary subsidy program for future renewable energy projects
FINANCIALS
Balance Sheet (Quarterly) -- Assets
(In thousands, except share data)(Unaudited)
Balance Sheet (Quarterly) – Liabilities & SHE
(In thousands, except share data)(Unaudited)
Source: First Solar Annual Report
Balance Sheet (Annual) -- Assets
Balance Sheet (Annual) – Liabilities & SHE
Balance Sheet Highlights
Source: First Solar Q3 2010 Earnings Call
Consolidated Income Statement (Annual)
Consolidated Income Statement (Quarterly)
(In thousands, except share data)(Unaudited)
Net Sales & Diluted EPS Trends
Source: First Solar Q3 2010 Earnings Call
Income Statement Highlights
Source: First Solar Overview
Balance Sheet & Income Statement Items (Based on 2009 Annual Report, In thousands of USD)
Company name Ctry Revenue Net Income Total Assets Shareholders Funds
Average 2,046,300
78,949 2,521,158
1,545,547
LSI CORPORATION US
2,219,159 (1)
(47,719)(8)
2,967,930 (4) 1,461,104 (5)
ELCOTEQ SE LU 2,180,392
(2) (151,328)
(11)
742,295
(11)
35,687 (11)
AMKOR TECHNOLOGY
US 2,179,109
(3) 155,980
(3) 2,432,909
(7) 383,209 (10)
BENCHMARK ELECTRO
US 2,089,253
(4) 53,895
(6) 1,465,720
(9) 1,090,903 (8)
FIRST SOLAR, INC. US 2,066,200
(5) 640,138
(1) 3,349,512
(3) 2,652,787 (2)
VISHAY INTERTECH US 2,042,033
(6) (57,188)
(9) 2,719,546
(5) 1,516,446 (4)
ANALOG DEVICES INC
US 2,014,908
(7) 247,772
(2) 3,404,294
(2) 2,529,149 (3)
SKYWORTH DIGITAL BM 2,006,322
(8) 61,286
(5) 1,427,392
(10)
561,641 (9)
NICHIA CORPORATION
JP 1,922,789
(9) 3,791
(7) 4,471,562
(1) 4,008,799 (1)
THOMAS & BETTS Co.
US 1,898,700
(10)
107,910
(4) 2,453,407
(6) 1,341,209 (7)
TAIYO YUDEN LTD JP 1,890,438
(11)
(146,096)
(10)
2,298,175
(8) 1,420,082 (6)
The figures displayed between brackets show the position of the company within the groupData Source: MintGlobal Database
Financial Ratios Comparison
Company name Ctry
Current Ratio
Profit Margin ROE ROA Solvency Ratio
Average 3.60 4.07 -35.84 0.41 54.45 LSI CORPORATION US 1.86 (8) -5.89(9) -8.95 (9) -5.15 (9) 49.23 (8)ELCOTEQ SE LU 0.94 (11
)-7.74(10
)-
472.73(11
)-56.92 (11
)4.81 (11
)AMKOR TECHNOLOGY
US 1.54 (9) 5.81(4) 33.02 (1) 13.24 (3) 15.75 (10)
BENCHMARK ELECTRO
US 3.53 (3) 2.48(6) 4.76 (6) 4.74 (6) 74.43 (3)
FIRST SOLAR, INC. US 3.42 (6) 33.22(1) 25.87 (2) 23.41 (1) 79.20 (2)VISHAY INTERTECH US 3.45 (5) -1.94(8) -2.62 (8) -1.27 (8) 55.76 (6)ANALOG DEVICES INC
US 6.44 (2) 14.76(2) 11.76 (4) 9.99 (4) 74.29 (4)
SKYWORTH DIGITAL LTD
BM 1.47 (10)
4.13(5) 14.75 (3) 15.80 (2) 39.35 (9)
NICHIA CORPORATION
JP 10.87 (1) 0.82(7) 0.39 (7) 0.56 (7) 89.65 (1)
THOMAS & BETTS CO.
US 3.46 (4) 7.96(3) 11.27 (5) 8.59 (5) 54.67 (7)
TAIYO YUDEN LTD JP 2.65 (7) -8.85(11)
-11.78 (10)
-8.52 (10)
61.79 (5)The figures displayed between brackets show the position of the company within the groupData Source: MintGlobal Database
Consolidated Statements of Cash Flows (Annual)
Consolidated Statements of Cash Flows (Annual)
Statements of Cash Flows (Quarterly)
(In thousands, except share data)(Unaudited)
Statements of Cash Flows (Quarterly)
(In thousands, except share data)(Unaudited)
Operating Cash Flow & Free Cash Flow
Source: First Solar Q3 2010 Earnings Call
Recommendation
Hold
CANADIAN SOLAR INC.
North America Green Tech Inc.
Stock Market Overview
Stock Market Analysis Ticker Symbol: CSIQ Stock Index Info: NASDAQ composite
(Weight: 0.04%) Listed on NASDAQ Exchange in 2006
Time Frame: 1 YearSource: http://phx.corporate-ir.net/
Stock Performance (1-yr)
Stock Performance (5-yrs)
Stock Performance (Max)
Corporation Background
Company Background
Found in Ontario, Canada 2001 Operate in 7 countries: Canada, China
Germany, Italy, Japan, Korea and US Delivering solar modules to over 30
countries 7 manufacturing subsidiaries, total
facility space of 256,439 sqm and module capacity of 1.3 GW
First solar PV manufacturer to achieve registration with ISO: TS16949
Company Overview
Vertical integrated manufacturer of ingots, wafers, cells, solar modules and custom-designed solar power applications
Major Markets: South Korea, Germany and other
European countries Major Customers:
Solar distributors and system integrators such as WSW engineering Inc., Fire Energy S.L
Manufacturers who incorporate our customized solar modules in their bus stop, road lighting and marine lighting products
Operating Strategy
Vertical integration
Achieving a higher ratio of internal cell production compared to external sourcing
Develop new markets such as Canada, Japan and China for strategic diversification
Major market exposure reduction
Market share expansion
Subsidiaries
CSI Project Consulting GMBH Direct ownership: 70%
Canadian Solar USA Inc.
Management Team
Board of Directors & Executive Team Board of Directors
Shawn (Xiaohua) Qu (Chairman, President & Chief Executive Officer (CEO) )
Arthur Chien (Director)
Robert McDermott (Independent Director)
Lars-Eric Johansson (Independent Director)
Michael G. Potter (Independent Director)
Executive Team Shawn (Xiaohua) Qu (Chairman, President & Chief Executive
Officer (CEO) )
Arthur Chien (Chief Financial Officer)
Mr. Gregory Spanoudakis (President of European Operations) Yan Zhuang (Corporate Vice President, Global Sales and Marketing)
Management
Shawn (Xiaohua) Qu President & Chief Executive Officer Join Canadian solar since founding in 2001 and
serve as board of director in 2005
Background: Bachelor of science in applied physics from
Beijing, China in 1986 Master of science in physics from University
of Manitoba in 1990 Ph.D. degree in material science from the
University of Toronto in 1995
Previous positions: As product engineer in ATS Automation Tooling
Systems, Inc Technical vice president (Asia Pacific region) of
Photowatt International S.A. post-doctorate researcher at the University of Toronto
Management
Arthur ChienChief Financial Officer Was first an independent director from 2005-2007,
then become CFO since 2008
Background: Bachelor of Science degree from the University of
Science and Technology of China Master of Economics degree from the University
of Western Ontario, Canada
Previous Positions: managing director of Beijing Yinke Investment Consulting
Co. Ltd Chief Financial Officer of China Grand Enterprises Inc Chief Financial Officer of the Chinese operations of NV
Bekaert SA
Management
Gregory SpanoudakisPresident of European Operations Join as a Vice-president since 2002
Background: Bachelor of business degree from Concordia University
and University of Essex, England MBA degree on International Business Development from
Concordia University
Previous Positions: 2002 - 2008: Vice President for International Sales and
Marketing Involved in the semiconductor and solar power industries
for 21 years, the last 9 years of which have been in the solar power industry.
1988 - 1999: Senior Executive with Future Electronics, one of the world’s largest distributors of semiconductor components, where he headed the International Division and the Export Development program
Product Overview
Product Overview
Raw material: Polysilicon, Silicon wafer, solar cell
Polysilicon & Silicon wafer: import from supplier Germany and China
Solar cell: Manufacture + import from supplier China and Taiwan
Distribution Channels
Sales contracts to distributors
Sales to “Project Customers” – systems integrators, EPCs and project developers
OEM/tolling manufacturing arrangements
Product Manufacturing process
Solar Cell Manufacturing Process
Solar cell production line has an annual capacity of 420 MW
Sola
r M
odule
s M
anufa
cturi
ng P
roce
ss
Products Standard
High PTC Rating
Power Tolerances
Standard Modules Powered by high efficiency mono-
crystalline or poly-crystalline solar cells
Suitable for all types of solar applications
From large scale solar farms to residential and commercial roof-top systems
Higher energy production Top ranked PVUSA (PTC) rating in California
Withstand heavier snow load Strong framed module, passing mechanical load
test of 5400Pa The average selling price of our standard solar
modules decreased from $4.23 per watt in 2008 to $2.13 per watt in 2009
NewEdge Modules CS6P-PX
Allows for rail-free and fast installation Robust 60 cell solar module incorporating Zep
Compatible frame
Applications Residential roof-tops, commercial/industrial roof-tops,
solar power stations
NewEdge All-black CS5A-MX
Use high efficiency mono-crystalline silicon cells laminated with a black back sheet
Allows for rail-free, fast installation
Robust 60 cell solar module incorporating Zep Compatible frame
Designed for multiple types of mounting system
Applications Residential roof-tops, commercial/industrial
roof-tops, rural area applications, solar powerstations
BIPV Products
Use double low iron tempered glass with solar cells laminated in between
Used as part of the construction material for a building and a source of electricity
Applications roof, façade, skylight, shade
Competitions & Gov’t Regulations
Competition
Other source of renewable/ alternative energy International Companies (Solar):
SunPower, First Solar and Sharp Solar China-based Companies (Solar):
Suntech, Yingli and Trina Recently entered / Future competitors:
Semiconductor manufacturers Competitors employed alternative material &
solar technologies: Thin Film materials Require minimal or no silicon (less affected by
silicon cost) Less efficient (Module conversion efficiencies range
approx. 5% to 11%)
China Gov’t Regulations
Principal regulation governing foreign ownership of solar power businesses: “Foreign Investment Industrial Guidance Catalogue”
Classified as “encouraged foreign investment industry”
Eligible for preferential treatment Exemption from customs and input Value added
taxes, and priority consideration in obtaining land use rights
Apply to construction and operation of solar power stations, production of solar cell manufacturing machines, production of solar powered air conditioning, heating and drying systems, and the manufacture of solar cells.
25% Income Tax
Future operating risk
Decline in market price of raw material decrease in revenue and market share
Demand depends on cost of third-party financing arrangement with customers
Largely depends on Gov’t subsidise for solar power
Exchange rate risk (From 2007 onwards, majority of sales dominated in Euros & depreciation of USD against Euros in 2007)
Financial Analysis
Trends for Key Financials
Overview of Financial statement
Ratios
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Financial Forecast
Recommendation
Current + Liquidity Ratio, Inventory, Operating Revenue, Short-term Borrowing, Total Current Liability
Cash, Total Current Asset, Retained Earning
HOLD
S
Global Wind Energy Index Fund - FAN
Exchange-Traded Funds-ETFs
Agenda- EFTs
What are ETFs?
Types of ETFs
How EFTs compare to others?
Competitive Performance
Tax efficiency Investment Solution
A Liquid Investment Solution
The structural safety of ETFs
Investment strategies using ETFs
ETF Providers in Canada
What are ETFs?
Exchange-Traded Funds (ETFs)
Provide an efficient and simple way for investors to buy and sell an entire basket of securities with a single transaction throughout the trading day.
ETFs are built like an index fund, but trade like a stock.
Designed to track a specific index and offer investors the advantages of lower costs and improved tax efficiency
Types of ETFs
Index ETFs
Inverse and Leveraged ETFs
Commodity ETFs
Currency ETFs
Actively managed ETFs
Exchange Traded Notes (ETNs)
How ETFs compare to others?
How do ETFs compare? ETFs Stocks Index fundsTax effi cient ∆ ∆ ∆Low expenses ∆ ∆ ∆Low investment minimums ∆ ∆ ∆Intraday liquidity ∆ ∆Diversification ∆ ∆Fully invested ∆ ∆ PossiblePortfolio transparency ∆ ∆ PossibleAble to sell short ∆ ∆Able to buy on margin ∆ ∆Able to use limit and stop orders ∆ ∆Listed options available ∆ ∆Ease of dollar cost averaging ∆
Competitive Performance
Diversification
Low expenses
Tax efficiency
Flexible
Transparency
Intraday liquidity
Tax efficiency Investment Solution
The inherent tax efficiency of ETFs
- ETF shares trade, like stocks, on major stock exchanges.
- ETF shares are created and redeemed through “in-kind” transactions rather than cash.
- Low portfolio turnover.
Tax advantages of ETFs
A Liquid Investment Solution
Intraday Liquidity of ETFs vs. Mutual Funds
Liquidity provides Flexibility
ETF Structure Provides Two Levels of Liquidity
Intraday Liquidity of ETFs vs. Mutual Funds
Liquidity provides Flexibility
ETFs are structured to provide superior flexibility and liquidity.
Compare the flexibility in trading of ETFs, stocks and open-ended mutual funds in the table below.
ETF Structure
ETFs offer unparalleled liquidity relative to mutual funds stocks.
ETF Structure Provides Two Levels of Liquidity :
Market supply and demand
Designated Brokers (DBs) - Key to Liquidity in the ETF Market
The structural safety of ETFs
Investment strategies using ETFs
Asset allocation
Portfolio completion
Tax loss harvesting
Investment strategies using ETFs
Core and satellite portfolio structure
Diversification
Hedging
ETF Providers in Canada
Claymore Investments, Inc.
Horizons AlphaPro ETFs
Horizons BetaPro ETFs
BMO Exchange Traded Funds
Deutsche Bank
Barclays Capital
Fund Performance – 1 Year
http://www.bloomberg.com/apps/quote?ticker=FAN:US
1yr & 5yr
Fund Performance – 5 Year
http://www.bloomberg.com/apps/quote?ticker=FAN:US
1yr & 5yr
Agenda- FAN
Fund Objective
Fund Overview & Characteristics
Fees and Expenses of the Fund
Performance
After-tax returns
Principal Risks
Management
Global Wind Energy Index Fund (FAN)
Fund Objective
Seek investment results that correspond generally to the price and yield, before the Fund's fees and expenses, of an equity index called the ISE Global Wind Energy Index.
Fund Objective
The index is constructed as follows:
The wind energy industry are given an aggregate weight of 66.67% of the index
--smaller market capitalizations
A modified market capitalization weighted methodology
Be actively engaged in the wind energy industry
must have a market capitalization of at least $100 million & meet certain investability requirements.
The index is reconstituted and rebalanced semi-annually.
Fund Overview & Characteristics
DetailsFund Ticker FanCUSIP 33736G106Intraday NAV FANIVIndex Ticker GWEIndex Inception Date 06-06-08Fund Inception Date 6/16/08Gross Expense Ratio (9/30/09) 0.95%Net Expense Ratio 0.60%Rebalance Frequency Semi-AnnualPrimary Listing NYSE AreaMarginable YESOptions NOShort Sell YES
Fund DataNumber of Holdings 59Maximum Market Cap. $185.64 BillionMedian Market Cap. $2.17 BillionMinimum Market Cap. $82 MillionPrice/Earnings 17.34Price/Book 1.05Price/Cash Flow 7.19Price/Sales 0.9
Pursuant to contract, First Trust has agreed to waive fees and/or pay fund expenses to prevent the net expense ratio of the fund from exceeding 0.60% per year, at least until May 15, 2011.
Fees and Expenses of the Fund
Shareholder Fees –None
Annual Fund Operating Expenses
Management Fees 0.40%Distribution and Service (12b-1) Fees 0.00%Other Expenses 0.55%
Total Annual Fund Operating Expenses 0.95%Fee Waiver and Expense Reimbursement 0.35%
0.60%Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
Performance
Quarter End Performance Quarter YTD 1 Yr. 3 Yr. 5 Yr. 10 Yr. Since Fund InceptionFund Performance NAV 4.37% -31.28% -35.10% N/A N/A N/A -36.42%After Tax Held 4.37% -31.51% -35.70% N/A N/A N/A -36.74%After Tax Sold 2.84% -20.34% -22.70% N/A N/A N/A -29.46%Market Price 4.59% -31.02% -35.08% N/A N/A N/A -36.49%Index PerformanceISE Global Wind Energy Index 4.11% -30.61% -34.21% N/A N/A N/A -35.78%MSCI World Index 13.78% 2.58% 6.76% N/A N/A N/A -7.09%Russell 3000® Index 11.53% 4.78% 10.96% N/A N/A N/A -4.90%
Annual Total Returns 2009 9/30/10First Trust ISE Global Wind Energy Index Fund 26.01% -31.28%MSCI World Index 29.99% 2.58%Russell 3000® Index 28.34% 4.78%
After-tax returns
After Tax Held returns represent return after taxes on distributions.
After Tax Sold returns represent the return after taxes on distributions and the sale of fund shares.
Market Price returns are based on the midpoint of the bid/ask spread.
After-tax returns are calculated using the historical highest individual federal marginal income tax rates.
Top 10 Holdings
Top 10 HoldingsIberdrola Renovables 7.89%EDP Renovaveis SA 7.65%REpower Systems AG 6.37%China Longyuan Power Group-H 6.21%Vestas Wind Systems 6.01%Gamesa Corporacion Tecnologica, S.A. (Gamesa) 4.63%Infigen Energy 4.45%Nordex AG 4.41%Fersa Energias Renovables SA 3.02%Hansen Transmissions 2.65%
Sector Breakdown
Sector BreakdownConsumer Discretionary 0.64%Energy 6.36%Industrials 39.40%Materials 1.24%Utilities 52.34%Other 0.02%
Consumer Discretionar
y 1%
Energy 6%
Industrials 40%
Materials 1%
Utilities 52%
Other 0%
Top Country Exposure
Top Country ExposureSpain 26.15%Germany 16.60%United States 15.29%Denmark 7.95%China 6.63%Australia 5.51%Japan 3.67%France 3.31%United Kingdom 2.79%Belgium 2.66%Other 9.44%
Spain26%
Germany17%
United States 15%
Denmark 8%
China 7%
Australia 5%
Japan 4%
France 3%
United Kingdom
3%
Belgium 3% Other
9%
Performance
Performance data quoted represents past performance.
Past performance is not a guarantee of future results.
The fund’s performance reflects fee waivers and expense reimbursements
Performance information for the ISE Global Wind Energy Index is for illustrative purposes only and does not represent actual fund performance
Obtain performance information through the most recent month-end by visiting ftportfolios.com.
S
PRINCAL RISKS…RISKS…
Risks
MARKET RISK
NON-CORRELATION RISK
REPLICATION MANAGEMENT RISK
WIND ENERGY RISK
NON-DIVERSIFICATION RISK
UTILITIES SECTOR RISK
LIQUIDITY RISK
NON-U.S. SECURITIES RISK
CURRENCY RISK
Management
Investment Advisor First Trust Advisors L.P. (“First Trust”)
Portfolio Managers
－ There is no one individual primarily responsible for portfolio management decisions for the Fund.
－ Investments are made under the direction of a committee
the “Investment Committee”
S
SELL
Recommendation