Friday, November 14, 2008

Solar cell maker Motech dismisses rumors of defaulted payments by China clients

Nuying Huang, Taipei; Adam Hwang, DIGITIMES [Thursday 13 November 2008]

Motech Industries, the largest Taiwan maker of crystalline silicon solar cells, has seen its stock price drop for five consecutive business days, having plunged 30.23% as of Wednesday since November 5. Market sources have indicated that the drop has been due to rumors that Motech's clients in China have decreased orders, some of them have defaulted on payments, and therefore Motech's revenue in the near future is likely to drop by 40%.

Motech clarified in its filing with the Taiwan Stock Exchange Wednesday that it has required advance payments for a portion of order value from all of its clients in China and thus it will not suffer large losses if clients are unable to pay. So far, none of its clients in China have defaulted on payments and the average time taken to clear accounts receivable remains 25.9 days, Motech emphasized. Revenues from the China market are less than 15% of its total revenue currently, compared to 30% for the European market and the US market each, Motech noted.

Motech recorded a gross margin of 19.93% in October 2008, the highest monthly level so far this year, the company said. Motech's total production capacity in Taiwan has been fully utilized for a while and Motech is confident of attaining the 2008 target output of 280MWp, it indicated.

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