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FirstSolar Inc. (FSLR - Analyst Report), a worldwide solar products manufacturer, inked a contract with PT. Pembangkitan Jawa Bali Services (PJB Services), a business wing of Perusahaan Listrik Negara (“PLN”), for the supply of 100 megawatts (MW) of photovoltaic modules (PV) for the development of solar power plants in Indonesia.

As per the agreement, the two entities will pool resources on matters related to the procurement, construction, operation, engineering and maintenance of a roughly 100MW pipeline for the solar PV power plants which includes PV hybrid solutions. The advanced thin-film PV modules manufactured by FirstSolar and its related system services as well as components will be used to develop the large-scale solar plants.

The agreement is expected to meet the escalating demand for renewable energy in Indonesia. The country is vehemently seeking options for steadfast and cost-effective energy sources. FirstSolar with this contract will enter the Indonesian market for the first time.

The company has been steadily foraying into the prime Asian markets and has considerably expanded its geographic footprint, globally. FirstSolar with its increasing focus on India completed an agreement for the supply of 50 MW of thin-film solar modules to Kiran Energy Solar Power Pvt. Ltd. and Mahindra Solar One Pvt. Ltd. The modules will be utilized for two solar PV power plants to be constructed in the Indian state of Rajasthan. The company also announced its plans to collaborate with India’s Tata Enterprises for the supply of modules to help off-grid villages in India’s northern region to receive clean energy for safe drinking water and irrigation.

The solar industry is currently witnessing a downward trend in average selling prices. Also, the current macro environment does not bode well for the solar industry, which thrives mainly on subsidies and grants.

However, we believe the increasing usage of solar energy as power source in the U.S. will enable FirstSolar to accrue substantial gains in the coming years. In addition, the company’s strategic operational expansion in Asia will help sustain its growth prospects.

For 2012, First Solar expects adjusted earnings to be in the range of $4.20-$4.70 per share. Sales are expected in the band $3.6-$3.9 billion. The Zacks Consensus Estimates for the third quarter and full year 2012 earnings presently stand at $1.10 per share and $4.47 per share, respectively.

Competitor Suntech Power Holdings Co. Ltd. initiated its largest silicon photovoltaic 44 MW power plant in Thailand. The program is expected to meet 20% of the country’s total renewable energy consumption by 2022.

Arizona based FirstSolar engages in the design, manufacture, and sale of solar modules using a thin-film semiconductor technology in the U.S. and internationally. It currently has a Zacks#3 Rank (Hold rating). Over the longer run we maintain our Neutral recommendation on the company.

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