STR Holdings, Inc. – Q3 2016

OTCMKTS:STRI – 0,16 USD

1kr50öreSTR Holdings, Inc. is a holding company. The Company is a provider of encapsulants to the solar industry. Encapsulant is a component used to protect solar cells and hold solar modules together. The Company has developed ethylene-vinyl acetate (EVA)-based encapsulants for use in commercial solar module manufacturing. The Company’s encapsulant formulations offer a range of properties and processing attributes, including various curing times and temperatures that align with the requirements of its customers’ individual lamination processes and module constructions. The Company’s formulations can be used in both crystalline silicon and thin-film modules. The Company operates production facilities in Llanera, Asturias, Spain and Shajiabang, Changshu, Jiangsu Province, China. It has a total annual production capacity of approximately 5.1 gigawatts. Its customers are solar module manufacturers located mainly in North America, Europe and Asia.. – Google Times.

1. Adequate margin of safety (criterion a) or b) must be met): 

a)

  • P/NCAV < 1x
    • 0,15x 

&

  • EV/Operating earnings(5y&10y) < 3x
    • 5y =  N/A X
    • 10y = -0,5x 
      • Negative operating earnings 5y and negative EV.

b)

  • P/NCAV < 0,75x
    • 0,15x 

2. The risk of permanent loss is low:

2.1 The risk of bankruptcy is low (criterion a) or b) must be met):

a)

  • Debt/Equity < 25 %
    • 0 % 

b)

  • Z-score ≥ 3
    • -5,91 X

2.2 The company’s business model is not totally unprofitable (criterion a) or b) must be met):

a)

  • Positive retained earnings:
    • -190 M$ X

b)

  • Positive aggregate operating income for the last ten years:
    •   224 M$

3. The company does not have a shareholder unfriendly capital allocation:

  • Shareholder yield TTM ≥ -2 %
    • Dividend yield TTM = 0 %
    • Net buyback yield TTM = -1,6 %
    • Net debt paydown yield TTM = 0 %
      • = -1,6 % 

Other notes:

  • P/Net cash = 0,33x
  • P/TB = 0,1x
  • NCAV-burn rate Qx – Qx-4 (YoY) and Qx – Qx-1 (QoQ)
    • Qx – Qx-4 = -30,5 %
    • Qx – Qx-1 = -13,1 %
  • The CEO (Robert Yorgensen) owns 2 % of the company.
  • Insiders together own 11,6 % of the company.
  • Worth of shareholding / salary + bonus
    • CEO = 0,1x.
    • Insiders = 0,1x.
    • See DEF 14A link above.
  • In 2014 Zhenfa Energy Group (a Chinese developer of solar power stations) bought 51 % of STRI for 1,60 USD per share (announcement).
    • In connection with the transaction shareholders received a special dividend of 0,85 USD per share.
  • STRI was delisted from NYSE in September 2015.
  • Other analysis of STRI:
  • STRI is a nano-cap stock: 2,9 M$ in market capitalization. The trading is very illiquid.

MoS

Disclosure: The author is long OTCMKTS:STRI when this analysis is published.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s