Yuanda maintained its selling rating on Solar Energy (0757.HK) with a target price of HK $1.40. although the company beat expectations for fiscal year 2009 and raised its earnings per share for fiscal year 2010-11 by 172% respectively, it lowered its target price-earnings ratio from the price-to-earnings ratio of solar cell makers to the price-to-earnings ratio of ingots and wafer manufacturers. In addition, solar stocks' valuations have fallen and are based on 2011 earnings per share.

The bank pointed out that Sunshine made a net loss of 98 million yuan in 2009, mainly due to an one-time inventory charge-off, but the performance was better than the bank's expected loss of 128 million yuan, thanks to higher gross profit margins.

The bank raised its 2010-11 revenue forecast by 61.5 per cent and 81.6 per cent, adjusting shipments in line with the latest solar cell demand outlook and the company's capacity expansion plans.

Sunshine Energy fell 4.42 per cent to HK $1.73 yesterday.