Auriga sent over a research report to us this morning, reiterating their cautiously bullish stance on China solar stocks following a 7 day trip throughout China.  The firm visited both public and private companies and while positive in the near term for both shipments and pricing, there is some trepidation due to rising costs.

Commenting on earnings season, they feel that while most companies will post beat and raise quarters, some may reveal some margin pressures (see below).  They believe the bears continue to over-estimate supply while under-estimating demand and that demand will continue to surprise over the next six months.  They singled out Trina Solar (TSL), Yingli Green Energy (YGE), Jinko Solar (JKS) and Canadian Solar (CSIQ) as companies that added capacity and are stilling seeing strong order flow. 

Commenting on poly prices, Auriga says that after a brief dip, prices are rising again which will benefit Daqo New Energy (DQ).  Wafer pricing has followed the same trend and if that should continue through Q1 will benefit Renesola (SOL) and that the company will raise guidance on its earnings call.  On the cell pricing front, Auriga believes JA Solar (JASO) will benefit the most from a recovery in pricing.  

As far as margin pressures related to rising input costs, Auriga believes it puts Jinko Solar (JKS) and Hanwha Solar (HSOL) at some risk.