Green Investing in Japan – Panasonic Discovers a Green Goldmine in Sanyo Acquistion

Panasonic hits upon a Green Goldmine in Sanyo

Panasonic has hit upon a Green Goldmine with its acquisition of Sanyo .It is now capitalizing on  Sanyo’s Solar and Energy Storage Technology by making huge investments in this space.Sanyo had been already been metamorphizing into a Green company from an Electronics company before Panasonic bought it for a very cheap price.Sanyo had never found much success in the cut-throat Electronics Sector with Operating Margins very near to break-even.However under Panasonic it could become a potential leader in the extremely fast growing Green Sectors.The Solar Industry has been growing at a scorching 50% CAGR over the last 10 years while Energy Storage is also entering a parabolic growth phase driven by Electric Vehicles and Grid Storage requirements.

Panasonic Trails Sharp and Chinese Companies in Solar Rankings

Panasonic “HIT” Technology is known for its high quality and efficiency.It rivals Sunpower in being the highest efficiency commercially available Solar Cell.However a Lack on management initiative and execution has pushed the Japanese behind the Chinese Solar companies in Solar Rankings.But recent investments by Sharp and Panasonic seems to mark a turnaround in their strategies.Though these companies trail the Chinese in Cost ,their advantages in Technology could again push them to the top slots.

Panasonic rapidly expanding  Green Buildings and Solar Business

Panasonic has completely changed its strategy to become a major Green Player targeting a Major Percentage of Sales in the future to come  from Green Products.Panasonic which is the world’s biggest Plasma TV producer is going to spend $1 Billion on Green Building investments.Panasonic will combine its Green Strengths with Sanyo’s to sell a complete Eco-Friendly Home complete with Solar Power,LED Lighting and Energy Storage and Efficiency capabilities.In Solar where Panasonic  is the No. 3 player in Japan behind Sharp and Kyocera ,it is speeding up the expansion of solar capacity.It will spend more than $500 million aiming to triple its energy solutions business in Europe to 800 Million Euros by 2016.

Panasonic a World Leader in Energy Storage but Competition Increasing

Panasonic has almost a 30% share of the world market in Batteries.Sanyo has a huge presence in supplying Lithium Batteries for Laptops and Cellphones.It is also winning customers for NiMH batteries used for Electric Vehicles.Major automobile producers  like Honda,Toyota ,Ford and Volkswagen are already customers of Panasonic.However Competition is fierce  in the Battery Segment.Companies like NEC,Toshiba are making major investments while startups like A123 Systems,Ener1 are also making big efforts .

Panasonic Valuation

Like other Japanese conglomerates, Panasonic ha Low Margins bordering close to zero.It is quite cheap on a EV/Sales basis at 0.3 times and has almost no debt.Its stock price is trading near a 52 week low at $12.67 (ADR).If it manages to even eke out a 10% Net Margin from its Green Business,Panasonic has the potential to be a multibagger.However this will require Management to execute solidly in its strategy of becoming a major player in the Green Industry.

Panasonic Will Invest $1 Billion in ‘Green Home’ Plan – Bloomberg

Panasonic Corp., the world’s biggest plasma-TV maker, will invest $1 billion by 2012 in a plan to make its principal business equipping homes and buildings with solar power and energy-saving technologies, the president said.The move focuses on solar-panel and energy-storage technology that Panasonic will gain from its purchase of Sanyo Electric Co., coupled with systems that Panasonic has invented, President Fumio Ohtsubo said yesterday in a New York interview.

“This is what Panasonic has to do,” said Osamu Hirose, an analyst at Tokai Tokyo Securities with an “above average” rating on the stock. “Wherever you look, consumers in developed and developing markets are interested in environmental products.”

“Our growth is not enough compared to Samsung,” Ohtsubo said. “So we want to change our fighting ring from our current categories to a different field.”